Made in Michigan
Royal Technologies Corporation was founded in 1987 and is a manufacturer of injection molded components for the automotive, furniture and consumer goods industries. The company is based in Hudsonville and has three production facilities and a corporate headquarters in West Michigan. Royal also has a facility in Cullman, Ala. to service clients in southern states and is in the process of acquiring Hi-Tech Plastics in Mission, Texas.
HUDSONVILLE — A local manufacturer already had a presence in the southern states, but it is hoping to strengthen its ties to customers and its Michigan operations by adding another location.
That’s the thinking behind Hudsonville-based Royal Technologies Corp.’s acquisition of Hi-Tech Plastics of Mission, Texas.
While Royal Technologies was already well established in the south with a facility in Cullman, Ala., President and CEO Jim Vander Kolk said the new acquisition should better help the company serve its customers.
“It became apparent that we had to have capabilities to satisfy our customer base in areas outside of Michigan,” Vander Kolk told MiBiz. “About a year ago, we looked to establish ourselves in that region of the country and found a company called Hi-Tech Plastics.”
The deal started as an alliance with Hi-Tech, a custom injection molding manufacturer, but progressed toward an acquisition when the Texas company’s owner, Doug Bennett, decided it was time to retire.
“It was about six months ago that the owner of Hi-Tech, who’s 65 years old, said, ‘You know, why don’t you buy me out?’ In effect: I want to retire,” Vander Kolk said. “So, seeing that we’d worked with them for over a year, it just made sense that we acquire them.”
Vander Kolk and Bennett worked out an owner-to-owner agreement that was formalized through a letter of intent earlier this month. Currently, Vander Kolk and Royal Technologies are working through the due diligence around the deal, but the plan is to complete the acquisition within the year.
Hudsonville-based Royal Technologies manufactures parts through injection and urethane molding for customers in the furniture, automotive and consumer products industries. Founded in 1987, the employee-owned company currently employs a total of 850 people in four facilities, including three in Michigan and one in Alabama.
When auto companies began moving manufacturing operations to the southern states, Vander Kolk saw this as an opportunity to follow the automakers and simultaneously grow his customer base.
This expansion continued from the facility in Cullman to the partnership with Hi-Tech, he said.
While the acquisition will certainly increase Royal Technologies’ production capacity, Vander Kolk said that was not the driving force behind the deal.
“We really didn’t acquire from an added capacity standpoint as much as being in the region to service our existing customers,” he said. “But we see opportunity for increasing that customer base.”
The acquisition of Hi-Tech is part of a natural progression the company followed over the past few years, Vander Kolk said.
“It’s not really that dissimilar to what we’ve done before in Alabama,” he said. “Eight years ago, in order to grow our business and in order to satisfy our customer base, we had to have manufacturing capabilities outside of West Michigan.”
The company founded the Alabama operation to service customers in the southeast, especially those in the growing automotive industry in that region. The Alabama operation also supplies furniture companies in south, he said.
By focusing on growing in new markets, Royal Technologies hopes to retain market share in the north at its Michigan locations. Vander Kolk said the expansion actually helps the company strengthen its customer base at home.
“I look at this move as something that will protect jobs and protect our business here in the north,” he said. “I have no intentions nor do I like to think about us not being here.
“(Customers) really need you to service them in the south, and if you can’t service them in the south, it will only be a matter of time before they don’t need you in the north, either. … Because we’re down there, we’re seeing opportunities with our existing customer base, and we have aspirations to expand on that customer base.”
Amid these growth opportunities, Royal Technologies faces some major challenges going forward, particularly with talent. Similar to many West Michigan manufacturers, the company struggles to find skilled labor, Vander Kolk said.
He said it’s obvious that when many of the auto manufacturers left the Midwest, the skilled workforce followed them. The challenge now is either attracting that workforce back to the region or developing a new talented workforce from within.
“My grandpa always said that when the sheep go, they take their wool,” Vander Kolk said. “When businesses leave Michigan, they take the workers.”
Looking ahead, he said he sees educational programs and state and local government programs as being crucial to develop a talented workforce that will help Royal and other manufacturers grow their businesses. But for now, the challenge to fill the workforce with talented people remains, he said.
“I think there is a response building to that,” VanderKolk said of workforce training. “I know the schools are working harder. I really do believe that it’s a recognized problem … (we) are going to have to put some energy into.”