Compass Automotive Group Inc, a holding company for several aluminum and magnesium casting operations, has reached a deal to buy Citation Corp.’s aluminum diecasting and machining operations. The two plants are Grand Rapids and Lowell, MI, and will be absorbed into the Compass organization.
The terms of the sale were not reported.
Compass targets the automotive casting market with “safety-critical” aluminum and magnesium components produced as high-pressure diecastings, squeeze castings, and VRC/PRC castings. Other operations in the group include Casting Technologies Co. in Franklin, IN; Magnesium Aluminum Corp. and SRC, both in Cleveland; and several former operations it bought from the former Alcoa Aluminum Castings organization.
For its part, Citation stated that it has completed the business transformation it began midway through 2008, ahead of schedule. The company said the organizational revamp was developed “to improve profitability and allow greater diversification and expansion across industrial and transportation markets.”
Citation has concentrated its strategy on iron casting and machining operations, which resulted in selling off the diecasting operations and buying a lost-foam casting plant in Bessemer, AL, from Foseco-Morval Ltd. It also closed its Lufkin, TX, ferrous foundry.
“We launched this turnaround plan in April 2008 with the expectation of completing it over 15 months. I’m pleased to say we completed it in less than one year,” stated Doug Grimm, Citation’s CEO. “The plan was necessary for Citation to remain competitive and secure its leadership position in the marketplace. The initiatives we undertook were focused on rightsizing our automotive capacity, while expanding in emerging markets such as wind energy, agriculture, mining, military and global infrastructure. We did this through a series of divestitures, a strategic acquisition, as well as securing important new business contracts.”
Grimm also pointed to $255 million worth of new sales contracts for Citation, from 71 customers across all markets. “No customer will be greater than 9% of Citation’s revenue base in 2009, which is critical during this recessionary downturn,” noted Grimm.
Compass CEO Jim Squatrito said the new diecasting and machining plants are “a great compliment to the Compass platform.”
“Despite its current turmoil, the auto industry is here to stay, and Compass will continue to seek additional market share and assets as the automotive supply chain continues to consolidate,” according to the CEO. “The acquisition of these Citation facilities extends our operations into machining and greatly expands our offering of high-quality and cost-effective components to the industry.”
Editor's Note: The original draft of this news report indicated Citation had sold the Alabama lost-foam casting plant. FM&T regrets the error.