A MERGING OF MINDS

Thermoguard Equipment Inc., a Spokane-based manufacturer of equipment for the corrugated box industry, has a new owner and is adjusting to life without founder Roger Crawford.

Crawford, who started TEI in 1983, sold the company this summer to J&L Industries, a related manufacturer based in Keithville, La., and its parent company, H Enterprises of Minneapolis.

Jim Weissenfels, TEI president the past 10 years, has a two-year contract with the new owners to help ensure a smooth transition. "Anytime a company is purchased there is apprehension about what the new owner is going to do," he said. "For TEI, the first six months in that process is critical. We have already lost a few people in the process."

TEI began as a subdivision of Thermoguard Insulation Co., also owned by Crawford. Three years later TEI was spun off as a separate entity. Weissenfels described Crawford as the perfect silent owner, usually just coming in once a month to review financial records.

"The traumatic part for me, even though I was involved in the process of selling the company, is that TEI essentially was my company to run one day, and the next day it wasn't," said Weissenfels. "I hope I can help the new owners understand what a great company and staff they have purchased.

"It's like seeing your daughter get married," he said. "You know the man she has chosen is a nice guy, but it still hurts to give her away, and you want to make sure he understands what treasure he has been blessed with."

Both TEI and J&L Industries will retain their names under the auspices of an umbrella corporation, Alliance Machine Systems International.

TEI has more than quadrupled its production level in the past seven years. Half of the growth has come from international sales. The employee base grew from 60 in 1992 to 235 in 1997. The past two years, increasing paper prices and decreasing profits among box manufacturers have cut into TEI's sales, and staffing was cut to 165, Weissenfels said.

"For 18 months it was like someone just shut off the spigot," he said. Now, TEI is growing again and staffing exceeds 200.

Weissenfels said since he and Crawford are in their mid-60s and no others in the company or family were interested in taking over the company, Crawford opted to sell. Of the 10 companies that were interested in buying TEI, Weissenfels said J&L International was chosen for one major reason: "Our primary goal was to make sure that TEI would stay in Spokane and that the purchaser would take care of our employees."

"J&L's management made that commitment to us and has indicated that it wants to see TEI succeed and increase its market share. Now, we just need to figure out how to make that happen."

One J&L executive said, "the plan is for it (TEI) to retain its own identity, remain where it is and grow indefinitely."

The corrugated box industry now has too much production capacity. So, manufacturers worldwide are battling for market share. "We don't make boxes," said Weissenfels. "We just provide machinery and software to automate the process and make production more efficient. We specialize in just one small phase of the corrugated box industry. We're a niche of a niche of a niche."

TEI produces equipment with such specific functions as feeding cardboard sheets into a folder or cutter and stacking, rotating and putting flattened boxes on pallets.

"We can automate a company's present facility and significantly increase its production capability, which eliminates that organization's need to buy more land and build another manufacturing plant," said Weissenfels.

"We have taken great efforts to make sure our equipment is compatible with everyone else's machinery. We can supply one machine to help automate a segment of a production line, or we can supply a variety of products to automate an entire system," he said.

J&L Industries targets a different segment of the box industry, Weissenfels said. It manufactures off-line folding and gluing machines that produce speciality boxes. Part of the reasoning behind the purchase is the synergy the two companies will have in marketing and research.

"The fit between the companies is excellent," Jerry Phillips, president of J&L Industries, said in a statement. "The product lines are complementary, and both companies enjoy a respected position in the industry."

A J&L Industries official said there are no plans for job cuts at either company. In fact, there have been numerous staff additions since the purchase.

Keeping TEI in Spokane is good news for the local economy, Weissenfels said. TEI purchases nearly all of its materials and supplies from local vendors and has a payroll of $5 million per year, he said.

Copyright 1999 Cowles Publishing Company
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