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INSIGHT KUTTAWA, Ky - USA Principal owner Jim Grimes had targeted his Alliance Surface Finishing plant for the Clarksville, Tenn., area, but two days before the deal was to be signed, Sullivan convinced him that Kuttawa was better. They agreed the two firms could help each other. Lyon County's largest manufacturer, Diversified ships about 100,000 injection-molded nameplates and emblems daily, mainly for auto companies. Much of the work is coloring the underside of clear decorations; many of the products are sent as far away as Canada for plating before going to customers. The $2 million Alliance plant, to be built beside Diversified starting this summer, will employ 100 people within two years to provide plastic-plating services for the automotive, plumbing, appliance and electronics industries. That will save considerable shipping and inventory costs for Diversified, and could create work molding and assembling parts for Alliance customers, Sullivan said. "It's an opportunity for us to grow our business as well as enhance Alliance's business opportunities," he said. Grimes said "it made a lot of sense" to share technology, equipment and other aspects of the industry. "If you get the right strategic partners, your business synergies are significant," he said. "I think that truly applies here." The deal could add $3 million to $4 million in annual revenue for Diversified, Grimes said, which would mean 10 to 15 percent growth and 10 to 15 new employees. It is the latest is a string of good fortune for Diversified, which has gone from famine to feast in four years. In July 1997, CIT Group of Chicago, a leading national commercial lender, was ready to foreclose on a $2.5 million note that the former owners of the plant -- founded in 1970 as Shawnee Plastics -- couldn't pay. The business had collapsed under heavy debt fueled by a long industry slump, labor unrest, shaky financial decisions and other trouble. A once-hearty work force of 265 had dwindled to virtually nothing. Sullivan, a management consultant with considerable experience in the injection molding industry, was brought in to help. While assessing the long-term viability of Shawnee, he helped arrange a short-term loan between one of its major customers and CIT. That bought time for a national investment banking firm, specializing in arranging financing for mid-market companies, to look for buyers of Shawnee. When none came, the firm's principal owners and Sullivan formed a group of private investors to acquire selected Shawnee assets at a foreclosure sale. Sullivan inherited an idle plant whose revenues had dropped by half in the previous four years. "It was a classic example of a distressed company," he said then. "Even so, Shawnee continued to deliver products of outstanding quality." Changing the name, Sullivan steered the plant back to its core business: making high-quality plastic nameplates, emblems and logos costing 75 cents to $1.25 apiece. There are now 30 to 40 active customers, three-fourths of which are automakers. The rest are various companies such as Microsoft, for which Diversified is making new Xbox video game emblems, and Whirlpool, whose Jacuzzi nameplates are fashioned at Kuttawa. Employment has grown from 100 to 280 since 1998. In the past two years, sales have jumped from about $6 million to more than $20 million, and the plant has installed more than $2 million in new equipment, including robotics, in the last year, plant manager Chuck Rivard said. The main reason for the surge is that automakers are relying increasingly on markings to distinguish their vehicles in a somewhat homogenous market, Rivard said. "A lot of cars and trucks are looking more and more alike," he said. "They're using more and more emblems and names on them. It's brand identification." The plant is finishing decorations for 2003 models and starting work for 2004 models. A leading customer is General Motors, which receives 20,000 Chevrolet truck hubcap emblems daily from Diversified. "You've always got to be working ahead," Rivard said. "Otherwise you'll have a void somewhere down the line."
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