Berthoud manufacturer turns around again

BERTHOUD – The world was a different place just a few short years ago.

In 2005, defense industry giant BAE Systems Inc. acquired military container manufacturer Engineered Plastic Designs Inc. in Berthoud. The company that had been posting about $9 million in annual sales suddenly became BAE Container Solutions Division, part of the second-largest arms producer in the world.

By 2007, with EPD’s original founders still on staff, the local facility had doubled its staff from 79 to 150, was the second-largest private sector employer in town, and was hiring to fulfill defense contracts that just kept coming.

In 2008, Rob Carr was transferred from BAE headquarters in Minneapolis to become general manager in Berthoud. He took over from the founders and managed the facility back up to the standards of the parent company.

In 2009, in the face of defense spending cuts, BAE first reduced the Berthoud workforce, then decided that the facility no longer fit its strategic goals and announced it would be closed.

And here’s where the story gets really interesting.

“I felt the business case did not support closing the facility, or moving it to another location, because that would disrupt delivery to our customers,” Carr said. “And, I thought the company had asked a lot of the employees here to turn the operation around, so it was only fair to try to hold on to the services we provide.”

So, Carr did what any good manager would do. He asked the multinational BAE if he could buy the Berthoud facility. And he kept asking, and asking, until this summer, when BAE said, “Sure, just make it snappy.”

Carr and his wife created Rocky River Holdings LLC and signed a letter of intent to buy the facility and all its equipment on Sept. 1. The deal closed on Oct. 20, with Rocky River paying a reported $1 million cash.

To BAE, which reported sales of $36.2 billion and a workforce of 107,000 worldwide last year, that could be a rounding error on a balance sheet. To Carr and the 55 employees in Berthoud, the transfer of ownership is huge.

“The employees here are all local, some who have been working here since it was EDP,” Carr, now CEO of Rocky River Holdings, explained. “These are highly skilled, primary jobs that we have kept in the community.”

Team effort

Carr is quick to give credit to various local professionals who made the purchase possible.

Kennedy and Coe served as the lead adviser to Rocky River for the transaction and consulted on entity and deal structure, finance, financial modeling, due diligence, human resources and tax planning.

“I was extremely impressed with the level of expertise and resources Kennedy and Coe was able to bring to help us complete this deal,” Carr said.

Another player who was “absolutely essential to getting it done in the short amount of time we had,” according to Carr, was Adams Bank and Trust. “They really stepped up to the plate and made decisions quickly.”

He said Berthoud Town Administrator Mike Hart and Mayor Tom Patterson also played key roles in bringing all the pieces together, along with The Birdsall Group and Upstate Colorado Economic Development.

“This purchase is a great success for all parties involved and Northern Colorado as a whole,´ said Jeff Wald, a member of Kennedy and Coe’s office in Centerra.

Now that the purchase is completed, Carr said his company will be doing business as Summit Solutions, which is leasing all its assets from Rocky River Holdings. It will continue to build and test specialized containers for munitions and other military applications.

“We’re a small business now,” Carr said, estimating that sales over the next couple of years will be in the neighborhood of $8 million – about the size of EPD before its acquisition.

Before the cutbacks began in 2009, the workforce had been at about 125. While the current workload for the facility will only support about 55 employees, Carr’s goal is to grow the company to about $23 million, and start rehiring former employees who had been let go.

As a goal, it might not be that far off.

“Over the past year, we couldn’t bid on new work because of our backlog,” Carr explained. “But now we can start bidding for jobs to be subcontracted to us.”

The Berthoud facility still has all of the things going for it that made it valuable to all of its various owners: Ball Aerospace Corp., which sold it to EPD’s founders, Barry Van Everen and John Dinsmoor; United Defense Industries, headquartered in Minneapolis, which acquired EPD just months before UDI was snapped up by BAE in a $4.2 billion stock deal; and BAE itself, which used the onsite testing equipment as a major selling point to land contracts from the likes of Raytheon and General Dynamics as well as for the U.S. Armed Forces.

Summit Solutions’ biggest customer right now is BAE. The corporation may have gotten leaner by shedding operations like the one in Berthoud, but it still has obligations under contracts that it still must fulfill. And it knows it can count on Carr and his crew to deliver the goods.

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