It’s been a good year for Concert Industries. Less than two years since the once-strapped airlaid producer was purchased by Brookfield Asset Management’s (formerly Brascan) Tricap Fund, Concert has been able to return its Gatineau operation, which contains two side-by-side airlaid lines, to profitability.
According to CEO Tony Molluso, Concert achieved its goal, several months ahead of schedule, by drastically changing the way it does business. For one, it started running its machines only when customer demands warranted it; for another, it exited businesses that were not profitable. These changes meant a workforce reduction of 30% but executives hope to hire back workers as Concert continues to grow its business.
“We had to really rationalize our business,” Mr. Molluso said. “We took out several millions of dollars worth of product that didn’t make us any money so now we are making less product but what we are making we are making money on.”
Under its prior ownership, Concert used to run its line 24/7 but was left with excess product, which was either stored indefinitely in a warehouse or, even worse, wasted. Now, the company works closely with its customers to forecast their needs and runs its machines on an as-needed basis.
Another major initiative was a reduction in its consumer wipes business, an area where Concert’s technology cannot fetch the price it deserves. While, Concert still targets wipes, the percentage of its business targeting this market has dropped from 20% to 5%.
“Our machines were made for fem care and home care products so that’s what we are making. We still have some wipes business but it’s sporadic, not something that we do on a regular basis,” Mr. Molluso said. “Wipes are generic products that sell cheaply and don’t make any money. What is the sense of committing machine time to this area when we can commit it to profitable businesses?”
Restoring profitability also meant idling a smaller airlaid line in Thurso, Quebec, an action that could be reversed if Concert’s business continues to grow. In fact, expansion is a definite plan for Concert’s future as the company’s European operation in Falkenhagen, Germany is completely sold out.
“We are able to serve our North American needs from Gatineau so we didn’t need to keep running Thurso,” Mr. Molluso said. “But, we have to definitely add capacity to Falkenhagen because you cannot achieve topline growth when you are operating at a sold-out status.”
Concert executives are currently examining strategies for this growth, which come in the form of an acquisition, a plant expansion or even a greenfield location in a completely new area.
“Returning to profitability was one year ahead of schedule,” Mr. Molluso said. “This gives us a little more time and resources to decide our next move. We are not just looking for ways to fill up our lines, we are looking at specific products that highlight our technology.”