With many customers looking to bring manufacturing back to the United States amid ongoing supply chain challenges, Milwaukee-based
MPE Inc. saw the acquisition of
Racine Metal-Fab as a chance to add capabilities and capacity to its Wisconsin footprint, said Hank Kohl, chief executive officer of MPE.
“We’re growth investors, so we’re looking to invest pretty significantly in the operations and the people down in that area,” Kohl said of the RMF operations in Yorkville. MPE’s acquisition of RMF was
announced this week.
MPE is a designer and manufacturer for OEMs in the medical device and technology markets and Kohl said there is interest in onshoring production from customers.
“It’s a bit of a chicken and an egg thing right now,” he said. “Even though there’s an appetite for companies to re-shore, some of it being long-term planning, some of it being reactive, there’s really no place to plant that business right now, so they’re stuck.”
Kohl said much of the manufacturing capacity left when work moved to Asia and China specifically. Part of MPE’s strategy is to build the infrastructure to bring production back.
In Racine Metal-Fab, MPE found a company with particular capabilities in light gauge metal stamping, Kohl said. He added that metal stamping, in particular, is a process that is well-positioned for onshoring. It isn’t particularly labor intensive, so there is less advantage for companies to move it to low-cost labor countries. He said China was able to lure the work initially with subsidies on raw material. Now that those subsidies have dissipated and fabricated components are subject to a 25% tariff, domestic production is more attractive, especially with rising transportation costs.
Kohl said MPE is looking for other acquisitions that would add value for its core customer base in the medical device sector. He pointed to machining, 3D printing and sintering, automation and robotics as potential areas.
The Racine Metal-Fab deal came about as Kim Nichols was looking to the future. Kohl said Nichols was looking to retire and her children had pursued other professional careers. Feeling as though she had taken the business as far as she could, Nichols worked with Milwaukee investment bank Taureau Group on an exit strategy, Kohl said, adding he was contacted by Taureau about the potential opportunity.
“We took a hard look at it and one thing led to another and we ended up closing on the acquisition,” Kohl said.
MPE itself received a majority equity investment from Chicago-based private equity firm Beecken Petty O’Keefe & Company. Kohl said that backing is “critically important” to MPE being able to pursue deals like the Racine Metal-Fab acquisition, noting it provides access to capital when traditional banks may be hampered by regulations in their ability to support the growth of the business.
