by Maureen Flanagan
Goldman Industrial Group of Boston, MA comprises several leading machine tool companies that have set standards for quality within their respective industries and technologies. In an August 1999 going-private transaction, Goldman added the well-known Bridgeport Machines Inc. to its portfolio of companies. Under Goldman's leadership, Bridgeport has dramatically cut costs, re-engineered its existing product line and introduced a new line of vertical machining centers (VMCs). VMCs are automated machine tools that make one or multiple machine parts according to computerized instructions.
Providing long-term capital for Goldman, American Capital Strategies (Nasdaq: ACAS) invested $30 million of senior subordinated notes with warrants in an April 24, 2000 transaction. American Capital's investment, the largest it has ever made, provides permanent financing to refinance a third-party bridge facility made to fund Goldman's 1999 acquisition of Bridgeport.
"American Capital's investment provides us with a long-term financing partner," said Gregory I. Goldman, the President and CEO of Goldman Industrial Group. "We are now fully focused on an aggressive sales and marketing strategy for Bridgeport that we are confident will build on the brand's reputation for high quality and durability. Bridgeport has long been recognized as the world's best milling machine. In the 21st century, it will also be known as the best VMC."
With an installed base of more than 350,000 machines, Bridgeport's manual milling machine is the industry standard. Bridgeport also manufactures a full line of computer numerically-controlled milling machines in addition to vertical machining centers, lathes and surface grinders. The company has recently launched a new, redesigned VMC line with higher specifications, faster cutting speeds, and the industry-standard GE Fanuc control.
Bridgeport is also the most well-known name in machine tools in the UK, where it manufactures sophisticated, high specification VMCs for the British and European markets. These Bridgeport VMC lines are designed for a wide variety of uses, from low-volume parts production in job shops to the more sophisticated, higher precision milling of tools and dies for the plastic mold and aerospace industries.
Goldman Industrial Group also includes Bryant Grinder Corporation (founded 1909), which makes precision grinding machine centers, and Fellows Corporation (founded 1896), manufacturer of precision gear production machines, gear cutting tools, and optical inspection machines. Each is the U.S. leader in its respective technology and a vital partner for its customers. Goldman acquired these companies from their corporate owners in the 1980s and turned the businesses around through substantial cost reduction programs. Together, these companies now have an installed base of more than 58,000 highly engineered, custom-made machines used by the big 3 U.S. auto companies, major auto industry suppliers and leading precision bearing manufacturers.
Goldman Industrial is owned by the Goldman Group, founded in the early 1980s. The company branched out into acquiring under-performing industrial companies through leveraged buyouts during the industrial restructuring of the 1980s. The Goldman Group has successfully positioned these acquisitions in the market, increasing their profitability even during the industrial market downturn in the late 1990s.
"An investment in Goldman is an investment in a vital component of American industry," said American Capital President and COO Adam Blumenthal. Noting that the investment was the largest ever made by American Capital, Blumenthal remarked that Goldman represents an exceptional opportunity to partner with a strong middle market company. "Goldman came to us because conventional equity and debt markets have been turning their backs on companies with good assets, strong brands, high market shares and real cash flow. We hope to see substantial long term value realized from this investment, and we expect to see other, similar opportunities this year," Blumenthal said.
Focusing on middle market companies, American Capital provides financing for management and employee buyouts, acquisitions, growth, liquidity and restructurings. In 1999, it invested $176 million in companies in a wide variety of industries.
"The Goldman companies are well positioned to capitalize on their technologies and brand names as well as their extensive installed base of machine
tools," said Ira Wagner, American Capital Principal and Senior Investment Officer. "The new owners and new management at Bridgeport will be able to take Bridgeport forward with a retooled domestic product line. In particular, they are poised to expand within the important and growing market for vertical machining centers."
Over the years, Bridgeport metal cutting tools have kept pace with changing manufacturing needs. The technology has evolved from manual milling machines, to numerically-controlled milling stands (NCs), to computer numerically-controlled milling stands (CNCs) and machining centers. Each new advance in technology represents a step-up in speed, efficiency, and control. CNC machines, for example, can be programmed from the shop floor, have higher precision cutting capabilities and greater capacity for mass production than NCs. CNC machining centers add the ability to cut along multiple axes with multiple tools that can be positioned automatically. These innovations, coupled with more powerful motors, more sophisticated part manipulation capacity and vibration-dampening materials vastly increase machine production.
The newly re-engineered VMC machines to be manufactured and sold in the United States offer even higher specifications and faster cutting speeds. Combining technology, price and quality — and the Bridgeport name — these new VMC machines have the potential to capture even more market share.
Under Goldman ownership, Bridgeport's prospects look stronger than ever. In addition to ongoing cost reductions and product re-engineering and the launch of the new VMC line in the U.S., the company also plans to strengthen Bridgeport's strong foothold in the British and European markets and pursue opportunities through Bridgeport's strategic joint venture agreements in key machine tool markets around the world.
With the Bridgeport addition, Goldman Industrial Group has added to its stature as a major player in the domestic and international machine tool market. Its companies have a large installed base and proven ability to design, build and provide outstanding customer support for a broad spectrum of tooling machines used in major industries in the United States and abroad. The extensive installed base and customer relationships the companies have developed over the years will serve Goldman well as it implements further product enhancements.
Bridgeport is a key part of that future. As its owner, Goldman is looking forward to realizing opportunities to maintain the brand at the forefront of the marketplace and continuing to advance a world-class line of machine tooling products.
