South Bend's Royal Adhesives acquires another company

SOUTH BEND - It's the third acquisition in six months for Royal Adhesives & Sealants in South Bend.
With 66 years of experience in the aerospace and recreational marine markets, Clifton Adhesive in Wayne, N.J., is the latest company to become part of Royal Adhesives.
"One of the markets that we focus on in terms of growth is the aircraft market, both military and commercial," said Ted Clark, president and chief executive officer at Royal.
He explained that Clifton makes in excess of $10 million in sales just in the aerospace market. But it also makes adhesives for inflatable boats that the military, Coast Guard and river rafters use. Added to Royal's products for ski boats and other recreational boats, "it gives us a broader footprint in the overall market," Clark said.
The New Jersey plant -- which will do business as "Clifton, a division of Royal Adhesives" -- will be slowly integrated into Royal over time, but will retain the Clifton brand name. As its market grows, Clark said, some of its products will move to South Bend's larger facility, which in the long term could mean more jobs for the area.
Royal Adhesives, which is headquartered at 2001 W. Washington St., was once the adhesives division of Uniroyal Technology Corp., Clark said. It was the final Mishawaka holding of the company, until Uniroyal sold it in 2001 to Quest Specialty Chemicals Inc.
Clark and a few investors acquired Royal in 2003. At the time, it had about 50 employees, earned about $35 million in sales and primarily serviced the RV market in Elkhart and the roofing industry.
Since that time it has made nine acquisitions, has grown to more than $250 million in sales and employs about 130 in South Bend and 365 across the U.S. It services all of the U.S. and parts of Mexico and Canada.
The company also has diversified its products, which include adhesives for the construction industry, which can be used instead of nails or fasteners to adhere vinyl or engineered wood flooring and carpet to the floor; adhesives for the aerospace industry that bond seams on inflatables such as an aircraft's escape slides and life vests; and insulating and sealing compounds for the automotive industry, which are used in the ignition coil of a distributor-less ignition system.
Arsenal Capital Partners, a private equity firm in New York City, acquired Royal in 2010 and has supported its growth strategy.
"Our strategy was to choose the markets we wanted to participate or compete in and then grow our own products or acquire them," Clark said, explaining that the targeted markets are construction; transportation and assembly; and printing, packaging and lamination.
"Four of the nine acquisitions were moved to South Bend," he said. "We've invested in South Bend to improve those companies we acquired."
Royal completed a $4.3 million expansion in 2010, adding an 8,300-square-foot manufacturing area, a 5,100-square-foot product development lab and a 22,500-square-foot warehouse.
The biggest challenge a company such as Royal faces, Clark said, is to successfully integrate an acquisition without losing people or business. He feels that the Royal team has managed that skillfully.
The recent trio of acquisitions -- New Jersey-based Craig Adhesives in November, New Hampshire-based Extreme Adhesives last month and now Clifton Adhesive -- is the most Royal has ever acquired during a six-month period, Clark said. But the company's transition team from human resources, sales and marketing, operations and information technology has grown with the company, and that helps.
"We acquire a lot of small companies and then we bring our big company disciplines for safety and financial control and management systems. All of our plants have the ISO 9001 quality (certification)."
It also helps that the company chooses its acquisitions carefully.
"We do a lot of due diligence. We look for the kind of companies that have pretty positive characteristics. They're fairly steady; have good, reliable cash flow; and equipment that is not capital intensive," he said. "We look for real opportunities for organic growth. Once we've acquired them, we have opportunities to grow them and reinvest in the business going forward."
Staff writer Alice Culp: aculp@sbtinfo.com 574-235-6343