FormTech was added to the HHI portfolio in 2009. Among its various forging capabilities is cold forging of automotive shafts, shown here at FormTech in Fraser, MI.

New HHI Owners Bullish on Automotive Sector

Nov. 9, 2012
Group produces hot, warm, cold forgings, and rings … also, wheel bearings, timing gears

Private-equity fund American Securities LLC is the new owner of HHI Group Holdings, a portfolio of automotive forging companies assembled over the past seven years by another fund, KPS Capital Partners. The value of the sale was not reveled.

KPS and George Thanopolous, who will remain in place as its CEO, formed HHI in September 1995. By acquiring distressed or bankrupt operations, it accumulated numerous operations, including Jernberg Forge, Iron Mountain Forge, Impact Forge, Omni Forge and Net Forge. These are organized now as HHI Forging LLC.

In October 2009, HHI acquired FormTech Industries in a bankruptcy sale, adding that to its list of forging operations.

"HHI is a validation of the KPS investment strategy, and we take immense pride in the company's accomplishments,” according to Michael Psaros, a KPS managing partner. “HHI is the result of five unique acquisitions and subsequent turnarounds of companies that were formerly operating in bankruptcy or in distress. Under our ownership, these assets were transformed into a diversified, value-added, highly specialized company in the automotive industry."

American Securities indicated its new holding consists of 12 manufacturing plants in Arkansas, Illinois, Indiana, and Michigan, with a total of 2,000 workers. The group’s hot, warm, and cold forged products and rolled rings are directed mostly at the automotive and light vehicle market, including applications for drivetrains and engines, steering and suspensions, transmissions and transfer cases, and wheel ends.

Acknowledging the KPS turnaround success, American Securities managing director Kevin S. told the Wall Street Journal, "We are happy we were not investors in the (automotive) industry 10 years ago. Every time we looked at the industry it was consistently unappealing."

Now, Penn added, “the nature of the industry has shifted in a way that American manufactures could compete more effectively."

In the course of KPS’ ownership HHI also acquired the North American wheel bearings business of Delphi Corp, now Kyklos Bearing International Inc. And, HHI includes Cloyes Gear and Products Inc., which is a Tier One manufacturer of timing gears and sprockets supplied to North American automakers.

"We are proud of the significant organic growth of the HHI business and are grateful to KPS for providing our team with leadership, expertise, capital and other resources as we built this platform," Thanopoulos stated. "We look forward to partnering with American Securities to continue our commitment to quality, innovation, customer service and manufacturing excellence."

American Securities LLC has a varied portfolio, listing more than $8 billion under management. Currently, it is investing from its sixth fund. Other industrial and manufacturing assets include Fairmount Minerals, General Chemical, GT Technologies, and Unifrax Corp., but its holdings range among consumer and hospitality, energy and real estate, among other sectors.

"HHI is an excellent fit in our portfolio of companies as a leader in its market of highly specialized products," according to Penn. "We look forward to working with a highly talented management team as we continue to strengthen and grow this business in the automotive-component market."