MUSKEGON — After a career spent in a variety of management and sales roles in the packaging industry, Rich Wilson decided it was time to strike out on his own.
The 20-year industry veteran recently purchased Muskegon-based Westpack LLC, a manufacturer of corrugated industrial packaging, as company founder Dale Deveau transitions to retirement.
Under his leadership, Wilson plans to enact a multi-part growth strategy that includes expanding into new markets — particularly the Grand Rapids metro area — while also integrating additional value-added services into Westpack’s operation.
“Dale’s focus has really been on the lakeshore. … He’s never really pushed into the Grand Rapids metro area as much as he may have liked to,” Wilson said. “I have a plethora of contacts in the greater Grand Rapids area that I’ve worked with in the past. I know the businesses that would fit with Westpack that may not be serviced as well as they could be.”
Westpack focuses on low-volume, niche packaging for entrepreneurs and a variety of larger organizations in the office furniture, automotive and other industries that do one-off or experimental production runs. The company specializes in manufacturing packaging with unique geometries, support structures and other features that don’t lend themselves well to high-volume production.
In particular, Wilson hopes to move into the Grand Rapids area and service smaller customers whose current packaging suppliers have grown too large to adequately support them, he said.
“A lot of the players that used to furnish that part of the market in the Grand Rapids metro area have grown a lot,” Wilson said. “As you get bigger, (you’re) geared more toward the higher-volume stuff and larger customer segments. If you’re doing the $200,000 a year account, a $15,000 account becomes less appealing just because the cost of doing business is disproportionate. There are some opportunities in there as those companies expand to pick up some of that slack.”
Westpack also plans to invest around $30,000 to create a packaging fulfillment center in the next year, Wilson said. The expansion would allow the company to incorporate more light assembly, printing, finishing and retail packaging capabilities.
Currently, Westpack owns approximately 30,000 square feet of manufacturing and warehouse space.
The expansion plans play a key role in Wilson’s expectations to double the business in seven years. Westpack currently generates about $3 million in annual sales and projects 10 percent sales growth for 2017. The company also employs eight full-time workers, and Wilson expects to add three additional new hires in the coming year as the business expands.
Overall, the corrugated board packaging market is expected to reach $269 billion in 2021, growing 3.6 percent annually over the next five years, according to a report by Smithers Pira, a U.K.-based market research firm focused on the packaging industry.
That growth comes amid a wave of consolidation within the corrugated packaging industry, particularly among the sector’s top players.
For example, Georgia-based Rock-Tenn Co. in 2015 spent an estimated $9.2 billion to acquire rival MeadWestvaco Corp. of Virginia, according reports.
Westpack plans to capitalize on the consolidation in the industry, albeit on a smaller scale. As the company expands its reach into Grand Rapids, Wilson said it could be in the market to purchase other packaging companies whose owners are also contemplating retirement or exiting the industry.
Wilson originally found Westpack after receiving an email solicitation from Zeeland-based Rua Associates LLC, a business brokerage hired by Deveau to seek a buyer.
For Rua Associates, the transaction represented a fairly straightforward deal, said Travis Ernst, transaction manager at the firm.
Ernst noted that the transaction did take longer than normal because of unique lease agreements that had to be negotiated between the parties and lender, and because of the thoroughness on the part of the seller.
“We had it down to two buyers, and the seller deliberated for three or four weeks, going through an internal process to vet the two buyers,” Ernst said. “Our process worked where he had two highly qualified buyers and he had to make the final determination between the two. Then, throw hunting season in the middle of it and that cost another week.”
For his part, Wilson called the deal a “smooth transaction.”
“To be honest, (Dale and I) just really hit it off and have become really great friends in the process,” he said.
Deveau plans to stay on with the company for at least five years to advise Wilson.
Wilson financed the transaction through Huntington Bank. Grand Rapids-based law firm Smith Haughey Rice & Roegge PC served as the legal adviser on the deal, the terms of which were not disclosed.
Despite Westpack’s growth strategy, Wilson said he plans to focus on the “carefully laid out” process that will unfold over the next six months for him to immerse himself in the business.
“The number one thing on our plate for the next year is that we grow within our core competencies and make sure we’re taking care of the people that work for us and the customers that have made it a great company,” Wilson said.
Made in Michigan: Muskegon-based Westpack LLC has changed hands and is now under the leadership of Rich Wilson. The new owner plans to use his industry contacts to expand the manufacturer of corrugated industrial packaging into the Grand Rapids area. Previously, Westpack focused primarily on the lakeshore market. The company currently generates approximately $3 million in annual sales. Wilson hopes to double the business in the next seven years.