By Eric Peterson / CompanyWeek | Apr 26, 2016
Arvada, Colorado (HQ: Portland, Indiana)
Founded: 1895 (Priority Plastics was incorporated in 2008)
Employees: 350, with about 100 in Arvada
Priority Plastics is the result of three acquisitions by Srenco's private-equity team at Hatch Street Capital in St. Louis: Fortco Plastics (founded in 1895), Sho-Me Container, and CCW Products.
After buying Fortco in 2004 and Sho-Me in 2005 and merging them in 2008, Priority acquired Arvada-based CCW in 2012. "I was looking for smaller companies that were in niche industries," Srenco says of the investment strategy.
Blow-molding polyethylene plastics manufacturers fit the bill, says Srenco, because the fragmented industry has a quirk that prevents centralization. "Versus a lot of industries, having more locations is not necessarily an advantage," he explains. "You can only be competitive within a 300- to 500-mile radius from the plant. . . . We basically ship air across the country."
Because of this logistical issue, Srenco, adds, "I see very little overseas competition. It doesn't make sense to ship a five-gallon container from China. It's just too costly."
It follows that Priority's plants in Indiana, Iowa, Colorado, Nevada, and Arizona blanket most of the U.S., supplying containers for health and nutrition products; food and beverage; industrial, agricultural, and household chemicals; and motor oil and other automotive supplies.
"We have stock and custom containers," says Srenco, noting that Priority's sales are roughly evenly split between the two. One specialty: UN-certified chemical containers that are tested in-house in saunas and freezers.
Priority uses innovative processes and materials to help solve problems with its custom jobs. One customer, Govino, makes stemless wine glasses and other drinking vessels. "The problem they were having was their existing glasses weren't dishwasher-safe in a commercial dishwasher," says Srenco. "We worked with our suppliers to get the right resin."
In Colorado, acquiring CCW "was a good cultural fit," he adds. "It was also a way to extend our product line."
Most of Priority's products are made with blow molding, but the Arvada facility "is different from our other plants in that it's all extruded PVC and extruded PET," says Srenco. It's a differentiator, he notes. "There just aren't many people doing PET extrusion."
While extrusion is more expensive than blow molding, the process is also a faster means of getting a new shape or size of container to market, Srenco adds, and it's a good fit for lower volumes.
Srenco recruited McIntosh to run the plant in Arvada from a packaging company in Wisconsin. "He looked at my background and wanted me to be on his team," she says of joining Priority in 2015. She made the move because the company offered "more room to grow," and didn't mind relocating to Colorado. "I'm an Army brat so I'm used to moving all over the place."
And McIntosh has ties to Colorado manufacturing: Her family owned Delta Brick and Tile on the Western Slope before it shut down in the late 1950s.
She quickly made changes after the move. "My goal at this plant was to come in and expand capacity, bring in automation, and restructure processes," McIntosh explains. "There are going to be a lot of changes at this plant to take it to the next level. . . . We understand we could lose business if we don't innovate."
Not only did McIntosh hit the ground running at the plant, she also became co-chair of Colorado's Women in Manufacturing chapter soon after her move. In just a few months, "We've probably doubled our membership," she says. "We're creating this big magnet snowball and pulling people in."
"We have the customers we do because of our service levels and quality levels, and the ease of working with us," says Srenco.
Sales hit $65 million in 2015, and growth has been steady in recent years. While Srenco doesn't rule out future acquisitions, he notes, "Right now, we're just focused on what we have and growing organically."
Challenges: "The main challenge for the company is attracting labor," says Srenco. In Colorado, it's more pronounced than other locations due to low unemployment. "It's just difficult to find and attract new employees."
Opportunities: While Priority's plants typically have a 500-mile shipping limit, the Arvada facility has a much bigger market because of its focus on extrusion, says McIntosh. "Our geographic area is actually the entire United States." The aforementioned innovation with Govino "opens up a huge market," she adds.
Srenco identifies 2.5-gallon containers introduced in 2015 as a hit with agricultural customers.
Needs: "We have a strong sales force and a strong focus," says Srenco. "We have everything we need to grow and become more profitable."
McIntosh says space is an issue at the company's roughly 130,000-square-foot facility, compounded by Priority's short lead times.