TriMas Corp.

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TriMas Corp.

315 East Eisenhower Parkway
Ann Arbor, Michigan 48108
U.S.A.
(313) 747-7025
Fax: (313) 747-6565

Public Company
Incorporated: 1986 as Campbell Industries Inc.
Employees: 3,400
Sales: $.43 billion
Stock Exchanges: New York
SICs: 8600 Manufacturing Industries; 8660 Metals and
Metalworking

TriMas Corp., through its diversified subsidiaries, is a leading manufacturer of fasteners, towing systems, specialty container products, and other miscellaneous products. During its short history the company has achieved meteoric growth through cautious acquisitions and a hands-off management style.

TriMas is the indirect progeny of Masco Corp. of Ann Arbor, Michigan. Founded in 1929 just before the Great Depression, Masco realized stunning growth during the 1960s, 1970s, and 1980s, making it one of the largest 150 companies (by sales volume) in the United States by the early 1990s. In fact, Masco increased its revenues at an average annual rate of 19 percent between 1957 and 1989, and its net income rocketed at an average of 22 percent each year. By the 1990s, Masco was capturing more than $4 billion in annual revenues.

An understanding of Masco’s distinctive style during its growth years grants insight into the success of its stepchild, TriMas Corp. Masco flourished during the middle 1900s by purchasing a multitude of small and medium-sized manufacturing companies, most of which were leaders in their market niche. Unlike many other holding companies, Masco did not strive to profit by purchasing undervalued or underperforming companies that it believed it could turn around. Instead, it purchased healthy, innovative companies. It would then simply allow the companies to continue doing whatever they did best.

In addition to its hands-off management approach, Masco operated an extremely efficient, streamlined operation. Despite its size and strength in several industries—it owned several recognized manufacturing companies, such as Delta and Peerless faucets, Drexel Heritage, and Henredon—Masco’s headquarters was a relatively small, low-profile facility located among a string of industrial parks west of Detroit. Just a few hundred employees managed one of the country’s largest holding companies, earning Masco a reputation as one of the leanest, best-run corporations in the world.

A chief contributor to Masco’s rampant expansion was Brian Campbell. Campbell joined Masco in 1974, bringing with him a decade of valuable experience in the investment banking industry. He served as vice president of business development for Masco for 12 years, during which the conglomerate bolted from $250 million to more than $1.5 billion in annual sales. Campbell played an integral role in fostering internal growth. More importantly, however, he helped build an aggressive acquisitions program. Campbell also developed a reputation as an astute, people-oriented businessman.

After his successful stint at Masco, Campbell indulged his entrepreneurial bent by breaking away in 1986 to form his own holding company, Campbell Industries, Inc. With $10 million in financial backing from Masco, Campbell started his company with the purchase of Lake Erie Screw Corp., of Cleveland, Ohio. Shortly afterward, he bought Di-Rite Company in nearby Lakewood, Ohio. The start-up was generating profits of about $9.5 million annually from sales of $100 million by 1988. In addition to his two Ohio gems, Campbell developed a list of more than 100 companies that became potential targets for his takeover team.

Campbell had access to credit that he could have used during the late 1980s to add some of those 100 manufacturers to his portfolio. Instead, he surprised analysts by sitting on the sidelines during the takeover binge of that period. In what Campbell later called a feeding frenzy, institutions and investment funds poured huge dollars into corporate buyouts during the late 1980s, thus over-inflating the value of many of Campbell’s prospective acquisitions. His patience during that period reflected the aversion to risk that had characterized his endeavors at Masco. “People expected Brian to go out acquiring from day one,” said John Nicholls, TriMas’s treasurer, in a July 1990 issue of Detroit News, “but he practiced extreme caution.”

Although Campbell Industries did not engage in any takeovers during the late 1980s, it did significantly expand its holdings through a deal with Campbell’s business partner and former employer, Masco Corp. Actually, Campbell cut a deal with Masco Industries, a subsidiary of Masco Corp. Masco Corp. created that subsidiary during the 1980s as a way to more efficiently operate and run several of its smaller holdings. Then, in 1988, Masco Industries used Campbell Industries to serve a similar purpose. Since its inception in 1984, Masco Industries had grown through acquisition to $1.5 billion in annual sales. In an effort to jettison some of the smaller companies to which it felt it could no longer devote sufficient attention, Masco Industries arranged for Campbell to buy them.

In 1988, Campbell purchased ten divisions of Masco Industries. Campbell Industries Inc. was dissolved and renamed TriMas Corp. The new organization immediately had $300 million in sales. It also had less debt, more investment capital, and much more profit potential. In return for its holdings, Campbell agreed to transfer $200 million in cash and debt to Masco Industries. The end result of the sale was that Masco Corp. and Masco Industries owned a total of 71 percent of TriMas stock, while Masco Corp. shareholders divided another 25 percent. Campbell himself retained the remaining four percent ownership share of TriMas, effectively making his company an independent division of Masco Corp.

Through a single transaction Campbell had broadened his company from a maker of industrial screws and fasteners to a manufacturer of heat treating equipment, tooling machines, gas cylinders, and various defense-related metal products. TriMas was particularly focused on the production of metal industrial fasteners, which are used to connect and bind parts in cars, tractors, airplanes, furniture, and a plethora of other products. It also produced a large amount of towing systems for cars, trucks, and heavy equipment. Although it would later reduce its emphasis in this market, TriMas garnered most of its revenues immediately following the Masco deal from the manufacture of defense products, such as rocket motors, missile casings, and various ordinance components.

During 1989 Campbell and his talented staff worked to consolidate and streamline TriMas’s new group of companies and to prepare for new acquisitions in the 1990s. Campbell planned follow the same trail he had blazed at Masco. He would continue to buy undervalued, well-run manufacturing companies with profit margins of 15 percent or more, allowing their managers to continue to run them autonomously. He would then use their strong cash flows to service debt on new acquisitions. Like Masco, TriMas would function with an almost skeletal staff. Before it purchased the Masco companies, in fact, Campbell ran the entire operation with just three other coworkers. That number jumped to a still-meager 13 by 1989. The overall strategy seemed to be paying off as TriMas’s sales climbed from $100 million in 1988 to $221 million in 1989 and net income also doubled to $18.6 million.

Almost four years after his first acquisition, Campbell again fired up his buyout machine in 1990. The United States had fallen into a deep recession and the takeover binge of the late 1980s had faded. Prices on several of the acquisition candidates targeted by Campbell had plummeted more than 20 percent. He purchased three more companies from Masco in January of 1990: Compac Corp., Reese Products Co., and Fulton Manufacturing Co. These new purchases increased his reach into Australia and Canada. In June, moreover, Campbell bought Draw-Tite Inc., a trailer-hitch manufacturer with annual sales of more than $50 million.

The new additions to TriMas’s portfolio all had several characteristics in common. Campbell looked for low-tech market leaders that had minimal research and development requirements and were less susceptible to technical obsolescence than high-tech firms. He also sought organizations that lacked the deep pockets necessary to implement needed improvements, such as increased manufacturing automation or better information systems. Campbell also wanted the managers of his subsidiaries to have an entrepreneurial attitude and philosophy congruent with his own. “You develop over the years an intuitive feel when you walk through a factory and talk to management,” Campbell related in a July 1990 issue of Detroit News. “It’s sort of an art form.”

Campbell’s treatment of two of his new purchases exhibited his unique treatment of his subsidiary companies. Both Draw-Tite Inc. and Reese Products Co. were leading U.S. manufacturers of trailer hitches and related accessories. Despite the fact that the two companies were battling toe-to-toe with one another, TriMas did not interfere with their management styles or their fiercely competitive rivalry. “I don’t want to take away that competitive edge,” explained Campbell in the Detroit News article. “The key is that TriMas doesn’t come in and force a lot of changes here,” added Draw-Tite president James Mellow.

Despite a sporadic string of acquisitions during the latter half of 1990 and throughout the early 1990s, some observers were still puzzled by the seemingly slow rate at which TriMas was adding new manufacturers to its portfolio. However, Campbell sustained his extremely disciplined expansion approach, citing his aversion to unnecessary risks. Besides, TriMas was achieving remarkable internal growth by increasing the efficiency of its holdings and by taking advantage of market and economic trends that were increasing the value of many of its subsidiaries. For instance, TriMas was able to substantially increase fastener sales with minor labeling and marketing changes. It had also invested large amounts of cash into improving the manufacturing efficiency of several of its subsidiaries through increased automation.

Campbell’s efforts bore fruit during the early 1990s, surprising many analysts that doubted his ability to grow TriMas without relying heavily on a steady stream of new acquisitions. Sales increased about 50 percent to $328 million in 1990 as a result of new purchases. Revenues continued to climb steadily to $388 million during 1992, from which a healthy $17 million in profit was gleaned. Importantly, TriMas was making strides in several areas that would set the stage for future growth and acquisitions. It announced plans to significantly expand several of its manufacturing facilities, for example. It also pared its heavy debt load down to a manageable 45 percent of its total capital by 1992.

By 1993, TriMas was a fast-growing, truly diversified international manufacturing company. It owned 15 manufacturing subsidiaries with operations in Mexico, Canada, Australia, and throughout the United States. Although it focused on only four relatively specific product categories, its revenues were somewhat evenly spread across a healthy variety of markets, including construction, transportation, chemical, and maintenance. Although the staff at TriMas’s headquarters remained bare in comparison to most holding companies its size, the number of workers employed by its subsidiaries had ballooned to nearly 3,500 going into 1994. Furthermore, its assets had swelled to a big-league $490 million.

The largest of its four product divisions was specialty containers, which manufactured containers and dispensers for various fluids and gases. Companies in that division included Lamons Metal Gasket Co., Norris Cylinder Company, and Rieke Corp. Towing systems contributed the second greatest share of TriMas revenues. Companies in this important division included Draw-Tite, Inc., Fulton Performance Products, Inc., and Reese Products. TriMas’s specialty fasteners branch included industry leaders Commonwealth Industries, Eskay Screw Corporation, Lake Erie Screw Corporation, and Monogram Aerospace Fasteners, Inc. Finally, TriMas held six miscellaneous companies that manufactured fiberglass insulation, industrial tape, and precision cutting tools.

As each of its divisions continued to post healthy gains, TriMas’s revenues surged during 1993 to $443 million, reflecting average annual growth of 35 percent since 1988. Likewise, net income soared to $38 million by 1993—a 58 percent jump over 1992 earnings. In addition, as evidenced by its 1993 purchase of Lamons Metal Gasket, TriMas’s cautious acquisition strategy was still intact going into the mid-1990s. At least one major investment house predicted that TriMas’s sales would increase a minimum of 20 percent in 1994 and would likely stay a similar course throughout the decade. When asked about the possibility of his retirement in an April 1990 issue of Crains Detroit Business, the 53-year-old Campbell replied, “It’s unlikely, because I’m having too much fun…. The ability to find good companies goes on and on. They’re always there.”

Principal Subsidiaries

Commonwealth Industries; Compac Corporation; Draw-Tile, Inc.; Eskay Screw Corp.; Fulton Performance Products, Inc.; Keo Cutters and Kee Services; Lake Erie Screw Corp.; Lamons Metal Gasket Co.; Monogram Aerospace Fasteners, Inc.; Norris Cylinder Company; Punchcraft Company; Reese Products, Inc.; Reska Spline Products Co.; Richards Micro-Tool, Inc.; Rieke Corp.