In the past decade, West Michigan has evolved as a hub for automation alongside — and perhaps powered by — JR Automation Technologies LLC.
One of the powerhouse companies in the West Michigan automation technology industry, Holland-based JR Automation completed a sale last month to Tokyo-based Hitachi Ltd. for $1.425 billion.
Since New York-based private equity firm Crestview Partners initially bought the company in 2015 from Huizenga Group in Grand Rapids, JR Automation invested heavily in people, systems and infrastructure, growing in new geographies and end markets and becoming a platform to consolidate the fragmented automation industry.
At one point, Crestview Partners considered taking the West Michigan company public before deciding on a sale, JR Automation CEO Bryan Jones confirmed to MiBiz. However, the “significant interest” shown by Hitachi “just made more sense,” he said.
“(The two companies) complement each other in a lot of different ways,” Jones said. “I think more of that will be made public as we continue to grow together, but when you look at what Hitachi is very good at doing and when you look at what JR has been very successful in doing, it further connects Hitachi to the manufacturing industrials and it further connects us in capabilities in IoT.”
Jennifer Owens, president of Zeeland-based economic development organization Lakeshore Advantage Corp., believes the lakeshore region around Holland has become an “automation cluster” of sorts, with companies like JR Automation leading the implementation of Industry 4.0 technologies for manufacturers of all sizes across the state and nation, even globally.
“We have a very trailblazing region that has embraced new ways to manufacture products,” Owens said. “(We) don’t run away from and instead run into new ideas and new technologies, and that has really served us well to continue to be strong as things change so significantly.”
Established in the founder’s garage in 1980, JR Automation grew by designing and delivering robotic and automated manufacturing systems to the region’s automotive, consumer products, life sciences, aerospace and construction industries.
Under Crestview’s ownership, the company grew organically by more than 20 percent annually and by more than 40 percent including acquisitions, according to Mike DuBose, the outgoing chairman of JR Automation and a senior adviser at the private equity firm. Over the same time, JR Automation’s sales also more than tripled, from $170 million to more than $600 million.
While JR Automation became one of the largest independent providers of custom automation systems in North America, it simultaneously increased international revenue to approximately 25 percent of total sales, DuBose said.
Today, the company has manufacturing facilities in North America, Europe and Asia and employs more than 2,000 people, including approximately 700 employees in West Michigan.
“JR Automation continued to change and evolve significantly over time, based on the needs of area employers or national employers,” Lakeshore Advantage’s Owens said. “Our region has such a strong concentration of manufacturers that there is definitely a certain supply base and opportunity for customers nearby. Plus, there is a very strong market demand right now for any kind of automation or technology implementation that can reduce the costs of making products and, in some cases, replace individuals or people because the labor force is so tight.”
To meet this demand, many more automation companies have developed in the shadow of JR Automation — some of which were started by former employees of the giant — all of which has been valuable to the overall health and development of the industry in the region, according to Owens.
“For us in economic development, our goal is to make sure companies go through different stages, so that we have early-stage firms, established companies, and we’re working to grow our garden,” she said. “When you get to a point where companies merge, that will still mean some growth, but a lot of times it’s not the same amount of growth. We want to make sure we’re continuing to keep the early-stage startup base strong and have that diversity of companies in each stage.”
With the deal now complete, JR Automation and Hitachi expect to leverage their common values to strengthen and accelerate the partnership. They also plan to move quickly to pair JR Automation’s global strengths in robotic system integration with Hitachi’s expertise in artificial intelligence and internet of things (IoT) solutions for manufacturing.
However, JR Automation’s past growth spurts have been powered by the company’s diversified approach to innovation across many commercial sectors, said Mark Ermatinger, CEO of Zeeland-based automation distributor Industrial Control Service Inc.
“They were really more of a catalyst of different change in industries through automation,” he said. “Before this (sale to Hitachi), they were growing into a lot of different industries, which was good for the community and good for JR to continue to grow and expand. I’m concerned that may not be the case going forward.”
Ermatinger is taking a wait-and-see approach in weighing how international ownership could change JR Automation’s direction from a focus on solutions that could affect industries as a whole, to those that are reserved for just one company.
“They have developed leading-edge technology and were in a sweet spot of finding new techniques and procedures for solving vertical problems that would apply to certain industries across all of the different competitors in that industry,” he said.
According to Jones at JR Automation, the company is ready to seize opportunities to integrate Hitachi’s digital solutions into the robotic systems JR Automation produces.
Hitachi, which generated $84.4 billion in consolidated revenues for the 2018 fiscal year and employs approximately 296,000 people worldwide, is no stranger to the manufacturing sector and also works with companies in I.T., mobility and energy.
“The Hitachi Group will help expose JR and our portfolio of companies to a broader customer base based on Hitachi’s longstanding global relationships with any number of manufacturers,” Jones said. “In addition to exposing us to a larger audience or customer base, Hitachi has developed significant tools in the digital space that will further enable us to really take bigger advantage of what’s happening in the digital transformation of the manufacturing space.”
Integration into Hitachi and a focus on cyber solutions will continue to spur growth and stability at JR Automation, and presumably the region that supports it, Jones added.
“It gives us tremendous long-term potential to really do some transformational things within this industry,” he said.