SPARTECH BECOMING BIG FISH AMONG SMALL OPERATIONS

Bradley B. Buechler, center, is president and chief executive officer of Spartech Corporation. With him is Tim Simmers, left, general manager of Spartech Compounding, and Randy Martin, corporate vice president of finance.

In an industry dominated by small operations, Spartech Corp. is fast becoming a giant.

Through acquisitions and expansion into new uses for its products, Spartech has grown into one of the leaders in the plastics processing industry.

Spartech, based in St. Louis, has two facilities in Cape Girardeau that provide about 150 jobs. Net sales for the company are expected to top $500 million this year, up substantially from $169 million in 1992.

Five years ago, the company had nine facilities. Through acquisitions, the company has grown to 22 facilities, with more growth expected in the coming years. It employs more than 1,800 workers.

In North America alone, the industry produces more than 80 billion pounds of plastic annually and continues to grow by a healthy 5 to 7 percent a year.

"Plastics is one of those markets that will have a good run for the next 40 to 50 years," said Bradley B. Buechler, Spartech's president and chief executive officer.

There are about 2,200 plastics processing companies in North America. Of those companies, only about 375 top $50 million in annual sales.

Buechler said the industry is moving toward consolidation, a trend he expects to continue for the next five to 10 years.

When the industry boomed in the 1960s and 1970s, companies were founded by individuals who maintained small operations. Now those founders are reaching retirement age, making conditions ripe for aggressive companies such as Spartech to grow.

"A lot of businesses out there are looking to be sold," Buechler said.

In the past four years, Spartech has acquired four companies with a total of 13 facilities. Two acquisitions last year added eight plants.

With equity of $115 million, debt of $95 million and borrowing power of $60 million, Buechler said Spartech is appealing to owners wishing to sell.

The company's assets and industry reputation make it an attractive suitor. Buechler said Spartech's minimal corporate operation -- only 12 employees -- is another plus when wooing smaller, family-owned companies. Such owners are reluctant to sell if they feel their employees will lose their jobs.

"We tend when we buy somebody to keep as many as their people as we can because we run a fairly lean ship in St. Louis," Buechler said.

While acquisitions will continue, even without them Buechler said the company should reach about $700 billion in sales within five years.

"I expect the business to grow solidly over the next five-plus years. I would not be surprised if we became a $1 billion company in that time," Buechler said.

Aside from acquiring other companies, Spartech grows by spreading out into products traditionally made of other materials, such as wood, metal or glass.

The light weight, durability and recyclability of plastic makes it a superior substitute, Buechler said.

Spartech is divided into three groups -- extruded sheet and rollstock, color and specialty compounds, and molded products.

The larger of the two Cape Girardeau facilities is Spartech Plastics at 1 Atlas Drive. The plastics division, which produces sheet and rollstock, accounts for 13 of the company's plants and 74 percent of sales. With 36 percent of the market share, the company is the largest single producer in that aspect of the industry.

Its products are used by the sign, spa and automotive industries.

The other local facility is Spartech Compounding at 4753 Nash Road. It is one of four plants in that group that accounts for 18 percent of the company's sales.

It makes products primarily for the cosmetics, lawn and garden, electronics and transportation industries.

The third wing, molded products, makes items such as food containers and materials for the toy industry. It accounts for 8 percent of sales.

Of the $9.6 million the company expended for capital improvements last year, nearly a third went to the Cape Girardeau facilities. A new production line went into each of the plants in 1996.

An additional $1 million in capital improvements is budgeted locally this year.

Both plants are regional hubs for other Spartech operations, meaning the general managers in Cape Girardeau also oversee the operation of plants in other communities.

The local plastics plant oversees facilities in Wichita, Kan., Atlanta, and Arlington, Texas. The Cape Girardeau compounding plant is the hub for a similar facility in Goddard, Kan.

"As these businesses grow, there is an opportunity for the number of people at Cape to grow because they oversee these other plants," Buechler said.