Thursday, August 15th, 2024
German firm to buy Loc Products
By William Kincaid
A Germany-based supplier of defense systems announced a nearly billion dollar agreement to acquire Loc Performance Products Inc. to strengthen its core business of producing land vehicles for military customers worldwide.
Rheinmetall Group in a news release said it has signed an agreement to acquire all equity interests in Loc Performance Products. The purchase price for Loc Performance is based on an enterprise value of $950 million, according to the release.
Headquartered in Plymouth, Michigan, Loc Performance Products also has locations in Lansing and Lapeer Michigan and St. Marys, home to an 800,000-square-foot plant that sits on 108 acres, employs 443 workers and manufactures products 24 hours a day.
The move would expand the Düsseldorf-based firm's business with the US Department of Defense, increase its industrial base in the United States and create further access for its technologies in North America, per the release.
Furthermore, Rheinmetall said it's bolstering its production capacities in the United States "with a view to targeted high-volume major orders for U.S. Army vehicle programs with a total potential of over" $60 billion.
"We are making this investment because we have a clear strategy for growth and the United States will be an important core market for us in the coming years," said Armin Papperger, CEO of Rheinmetall AG, in a statement. "The acquisition of Loc Performance proves that we are consistently focussing on success in the USA and want to expand our share of the large market volume. Everything speaks in favor of this acquisition: Loc Performance is already pursuing a sustainable business model there with robust organic growth, has a highly qualified workforce and offers us significant capacity reserves for the orders we are targeting in the USA."
Loc Performance Products in December 2021 acquired the St. Marys plant where it manufactures rubber track products for agricultural, construction and defense industries.
Plant manager Krista Larmore earlier this year said about 30% of the facility's output is designated for military purposes. At the time, Larmore said the plant was creating rubber tracks for vehicles being supplied to Ukraine in its battle against Russia.
The tracks are used on the M-1 Abrams tank, M-2 Bradley Fighting Vehicle, armored multi-purpose vehicles and others. Additional products include doors, hatches and underbelly armor to help protect troops in the vehicles.
The St. Marys operation is also the home of the Trackman brand of agricultural and construction rubber tracks and related products. Loc Performance invested $17 million in capital equipment at the facility in June 2022 to increase production for the Trackman brand, according to a Loc Performance news release.
The new equipment was projected to increase production capacity for the Trackman product line by 33% and increase rubber track output by 4,000 tracks annually.
The St. Marys plant was originally built by Goodyear Tire and Rubber Company in 1939 on farmland along State Route 66. At the time the facility opened, World War II had begun in Europe, and the U.S. was on the cusp of entering the fray.
Wartime production began in 1942. During the war, the facility was one of just 206 plants to receive five Army-Navy awards in the form of a pennant for production of high quality items, according to local news articles.
The plant continued production into the post-war era. It employed 1,686 people in 1948 and hit a peak of about 2,300 in 1954. In 1968, the plant had 2,000 products, making it the largest manufacturer of molded and extruded rubber goods in the world, according to local media reports.
