by Maureen Flanagan
Sunvest Industries LLC, a newly formed holding company in Orange County, CA, has set its sights on becoming a leading contract manufacturer for Original Equipment Manufacturers, producing capital equipment for the semiconductor, telecommunications, medical and power generation industries. By offering OEMs integrated manufacturing capabilities, Sunvest is capitalizing on the growing trend to outsource the manufacturing of capital equipment. Two recent acquisitions give the company a platform for building a base of operations that will eventually provide customers with a full range of services, including fabrication, machining, assembly, and testing.
In December 2000, Sunvest obtained financing to establish a platform company and acquire its first two companies, Dyna-Fab, Inc. and Advanced Fabrication Technologies, Inc. Both companies are high-precision sheet metal fabrication shops producing parts or assemblies to customer specs and orders. To complete these acquisitions American Capital Strategies Ltd. (Nasdaq: ACAS) provided Sunvest with a $12 million financing package.
"American Capital's financing will help Sunvest fill the manufacturing niche as industries move towards narrower supply chains and increase their reliance on key suppliers to perform assembly and other value-added services," said Terry Swain, Sunvest's CEO.
Sunvest's outsourcing model changes the paradigm of the manufacturer-supplier relationship with respect to the production of short run, complex parts. Today most OEM capital equipment suppliers contract with many different job shops that provide discreet machined parts, fabricated parts or specialized services such as metal coatings. Very few shops offer any combination of these capabilities or provide subassemblies or fully tested systems. They also usually supply only one OEM industry. In contrast, Sunvest's model will give their OEM customers a full range of contract manufacturing services, enabling them to focus on their core business and outsource to fewer, more integrated and capable suppliers.
Sunvest's initial acquisitions serve as a base fabrication company, offering assembly capabilities. Founded in 1968, Dyna-Fab offers sheet metal fabrication in addition to designing and building prototypes. Based in Rockland, MA, Dyna-Fab primarily serves semiconductor, telecommunications and medical OEMs. In most cases, Dyna-Fab is a Tier 1 sole supplier with a long tenure of working with its customers. Founded in 1984, Advanced Fabrication Technologies (AFT) specializes in close tolerance, precision metal fabrication with design, prototype, painting and silkscreening capabilities. Located in the Silicon Valley area of California, AFT primarily serves medical and pharmaceutical customers as well as semi-conductor and specialty consumer products OEM markets.
The combined companies offer a solid manufacturing platform that can provide specific fabrication and sub-assembly to a wide range of industries. The combination also will provide cross-company benefits in customer relationships and added capacity.
"Sunvest is led by Terry Swain and David Smith, who will be President and CFO," said Jeri J. Harman, ACAS Principal. "They are an experienced management team and in an excellent position to implement their strategy at Sunvest."
"Sunvest is an excellent addition to American Capital's portfolio of companies, which bring innovation and entrepreneurial vision to the manufacturing sector," Harman continued. "We are confident Sunvest can execute a growth plan that will make the company a leading systems integrator for its OEM customers."
Sunvest's experienced management team and long-term relationships with blue-chip companies put the company in an ideal position to capture a share in the growing outsourcing markets. One of Sunvest's focuses is to assume a key position in the manufacturer-supplier chain and provide additional sub-assembly and value-added services.
For Sunvest, the continued strength of OEM outsourcing presents opportunity for growth, and a fragmented market offers opportunities to acquire small niche contract manufacturers. In the long term, additional acquisitions will enable Sunvest to offer OEMs even more capabilities and services. This should further increase the company's opportunities by providing one-stop shop advantages to customers, including higher margin and value-added assembly work. Cross-selling opportunities also should boost the potential of combined companies, enabling companies to sell capabilities across different industries and to clients in different geographic areas.
Sunvest is building its capabilities towards becoming a leading supplier in its markets. Serving a wide range of capital equipment OEMs, the company is poised to make a mark as outsourced manufacturing takes on a vital role in U.S. industry.
