Originally created 08/29/96

Purchase pleases companies

When Augusta Bag got serious about courting potential acquirers, President Hugh Hamilton knew he had a strong playing card - a highly efficient modular production process.

That card played well.

Augusta Bag, with roots in Augusta that reach back to 1932 with Augusta Bag & Burlap Co., is now Intertape Augusta, after it agreed to be acquired by a U.S. subsidiary of Canada-based Intertape Polymers.

"The modular concept is not unique," said Dale McSween, executive vice president and chief operating officer for Intertape Polymer in Montreal. "But it was an attractive aspect of the Augusta operation. ... The Augusta Bag Co. was a highly efficient producer of FIBCs," or flexible intermediate bulk containers, he said.

The giant, industrial-strength bags are used by a variety of industries - one of them is Augusta-based NutraSweet - usually to hold powdered products.

The acquisition, expected to result in expansion of the Augusta operation, closed Aug. 5. Both companies declined to discuss terms of the purchase, but Intertape has said the purchase was made using "current cash positions."

"We're positioned now across North America," Mr. McSween said, adding, "... We've invested close to $15 million to accomplish that objective."

Augusta Bag, based along Industrial Parkway in Columbia County, abandoned the old, linear production line in favor of teams, or modules, each of which makes a particular bag, sometimes even for a specific customer. Modules are independent and self-policing, and, ideally, team members are cross-trained to fill in for one another. The adaptation lets Augusta Bag customize mass production, and helps cut time needed to fill orders.

"We've eliminated just about all cost to the customer in terms of indirect labor - just about everyone who touches the product adds value. Our competition doesn't do that. It's quite an advantage."

Mr. McSween said the modular process works well, especially where there is low turnover.

"In an area where you have high turnover, it's not the way to go because your training walks out the door before your efficiency improves."

So, he said, the quality and availability of Augusta's work force was also a major factor in making Augusta Bag a desirable buy.

Mr. Hamilton said he began seriously considering selling the company in 1995. "After a lot of thought, prayer, and consideration, I decided we were going to test the market to try to decide what the company would be worth."

Augusta Bag hired a marketing company for the effort, but company officials already had an eye on Intertape Polymers, Mr. Hamilton said. Intertape, whose stock trades on the Toronto Stock Exchange, had emerged as one of the largest players in the $275 million FIBC industry since entering the arena in 1993.

By the time it bought Augusta Bag, it already had acquired one FIBC plant and started another from scratch. A third plant in Nova Scotia also makes the plastic fabric used in the bags.

Believing the time was right, Augusta Bag made its move. An anonymous intermediary contacted Intertape.

"Once all confidentiality documents were signed, they were informed who they were talking to," Mr. Hamilton said.

"The rest is history," although he acknowledged he wasn't comfortable the deal was solid until after Intertape finished due diligence - a detailed scrutiny of Augusta Bag.

But, "it all makes sense, and it made sense from the start. It was a classic case of a win, win, win situation. Those don't come along very often."

Through the acquisition, Augusta Bag's production will "at least double" by 1998, the companies said, and ultimately add about 90 employees.

Mr. Hamilton will become operations manager for Intertape Augusta.

"Part of my role is to assist managers from those two plants (of Intertape's) in learning what we have done (at Augusta Bag)," teaching them the advantages and disadvantages of the process, and how they can incorporate it into their processes, he said.

Mr. Hamilton is well-known within the industry, Mr. McSween said. "He's a strong entrepreneurial individual, and also a technically competent individual. We see that as a definite strengthening of our management, having someone of Hugh's capability join the company, and it certainly will provide continuity."

And Mr. Hamilton - who said "I've never worked for anybody else, except my grandfather" - admits the buyout might expand his own opportunities, too.

"I'm not going to close any options."


Trending this week:


© 2018. All Rights Reserved.    | Contact Us