One Mold Builder Becomes Three Through Strategic Acquisitions
A small mold builder acquires a larger mold builder with equipment capabilities to handle larger molds.
You do not often hear about a mold builder your size acquiring another shop. How did you know it was time to make this move?
Dave LaGrow, Owner: When the acquisition of Michigan Mold presented itself in October 2015, I just knew it was time to grow. The success of that acquisition gave me the confidence that I needed to grow further after a few customers requested that we invest in larger equipment to handle larger molds. It was then that I developed a business plan to construct a new building and begin adding bigger equipment. However, when the Mach Mold opportunity surfaced, it was a perfect fit with our business plan because the purchase included an equipped building, an established customer base and a quality workforce. So, we chose to buy Mach Mold instead of constructing a new building.
We are a smaller mold builder and about one-third the size of Mach Mold, so the acquisition was the sensible next step toward real growth. This move allowed us to capture a lot of the job-shop work that was available in the area and put us in the market of building head tooling for plastic injection and blow molding machines. The purchase increased our press size, EDM and larger boring mills to enable greater capabilities and capacity at our tooling shops.
What factors did you consider prior to purchasing Mach Mold?
LaGrow: Our four main considerations were the customer base, facility, employees and equipment that Maximum Mold did not possess on its own. Here is a simple rundown of those factors:
• Diverse customer base. We had two customers specifically request an investment in larger equipment and others who were interested but did not ask. Mach Mold was already building large tools, and its customers were quite different from Maximum Mold’s, giving us a wider base of customers who are interested in the capabilities of all three companies: Maximum Mold, MAX2 and MAX3.
• Newer building. Since the recession, industrial buildings have not been valued the same as they were 10–15 years ago. Mach Mold’s building was turnkey with a very professional appearance. The option of constructing a new building would have been significantly costlier than purchasing Mach Mold’s building.
• Employees. Mach Mold has 40 trained employees, with many of them having 20–30 years with the company. I even worked at Mach Mold prior to starting at Maximum Mold, and many of the same people whom I respect still work there. This greatly influenced my decision to purchase the company. Let’s face it, the only way you earn profit in a tool shop is to have hardworking, smart, dedicated people designing and building the tools.
• Equipment. The purchase of Mach Mold diversified our capabilities as well as theirs. Mach Mold did not have access to wire EDM, five-axis high-speed machinery, and coordinate-measuring-machine and laser-scanning technologies for inspection and reverse engineering. Maximum Mold did not have access to gun drills, boring mills, large horizontal machining centers, five plastic molding machines for mold sampling and small production runs, and laser welding for mold and die repair and engineering changes. MAX2 has larger-capacity lathes and mills with fourth-axis rotary tables for milling round components and ID/OD grinding.
What is the meaning behind the Maximum name, which continues with Max2 and now Max3?
LaGrow: In 1996, my wife Cindy chose the name Maximum Mold because we were committed to doing what had to be done to grow the company. We believe our current and potential customers prefer to see the people with which they do business investing and growing. It sends the message that the company is doing something right and delivers a comfort level to customers. By changing Michigan Mold to MAX2 in 2015 and now Mach Mold to MAX3, we are continuing to build and promote the Maximum Mold brand to build more trust with our customers.
What is the business strategy behind your current three companies?
LaGrow: Through effective management, teamwork and continual technology investment, we are building three state-of-the-art mold and die manufacturing companies that are all connected by a common goal: to prove our current capacity to customers, so we can win larger packages and push as much work as we can through the three companies. It does not matter where the sale occurs, or which company does the work. The key is building more sales, delivering successful jobs and earning profit.
Effective management involves consistent focus and clarity through communication and employee recognition for a job well-done. Teamwork is promoted with meetings that bring every facet of the facility together, from engineering and design to machining, to vet projects from kick-off to debriefing meetings at job completion. We also continually invest in technology to ensure the most efficient programs.
Do you have any advice for other mold builders considering this acquisition growth strategy?
LaGrow: Get advice from your accountant on payback time. Do not go solely with your gut. A long slow down can hurt a shop if it has too much debt, and everyone knows how fast the economy can change because of events that are out of our control, like new interest rates or federal tax regulations about which we are not well versed, for example. So, we have our banker and accountant sit on our vetting team to help plan any expansion. Their respective expertise helps them view a project through a different lens and see things we might not see.
What technologies do you have your eyes on?
LaGrow: Our investment plans include new five-axis machining technology, EDM technology, and toolholding and fixturing systems to improve setup efficiency. More specifically, we are planning to purchase a five-axis bridge machine. We already have an 800-millimeter five-axis machine, but the larger five-axis will enable us to eliminate EDM and reduce lead times. After much research, we are considering machine tools from FPT North America, Parpas and Makino. We are also looking closely at the OPS-Ingersoll Gantry Eagle 1200 sinker EDM machine, which we’ve heard can drastically reduce electrode wear and reduce burn times by up to 50 percent, especially in graphite.
Lastly, in the past we discussed your visit to China for what you called a “reverse trade show strategy.” Can you explain what that means and share the outcome or impact of that strategy?
LaGrow: The reverse trade show was our strategy for breaking into the international moldmaking marketplace for building and selling tools outside of the United States. Basically, after learning about the large die casting and plastic injection molding market in China and its rising tool prices, we decided to promote Maximum Mold at a die casting show in Shanghai in July 2016. We have not won a job yet, but we have quoted work to companies in China and have established a solid network of suppliers and vendors internationally. Two challenges to exporting to China are customs and maintaining local tool-shop support.