Since the turn of the 21st century, Michigan manufacturers have struggled with a few key issues that have begun to change the shape of several industries that drive Michigan’s economy: 1) Increased competition from foreign countries where workers are paid lower wages; 2) increased competition from an influx of foreign competitors doing business in Michigan; 3) tremendous increases in raw material prices; and 4) inordinately high increases in basic costs necessary to run business, such as health care. Many business owners have never experienced a multitude of issues such as these, and have found themselves either unable to effectively manage their companies during these trying times, or are unwilling to make the investments necessary in their business to remain competitive.
The practical objectives in investing in Michigan should be to provide superior economic returns to investors by executing the following key elements of an investment philosophy:
- Find and evaluate attractive acquisition / investment opportunities, where we identify and define the value drivers and improvement opportunities prior to the completion of due diligence;
- Consummate the acquisition or investment at a price which is attractive to the shareholders yet conforms to the investment guidelines established for the acquisition / investment to drive the desired returns;
- Execute the post-closing growth plan to improve / increase the value of the operation, through increased market competitiveness and financial stability; and
- Exit the investment in a timely manner to generate superior returns for the investors.
In the process of improving their competitiveness and establishing growth strategies for the companies invested in, one should attract and invest capital not only from a broad network within Michigan, but from investors and partners from the greater United States, North America, and the globe. The network of contacts and investors should include a variety of different types of individuals and organizations, all who have a basic understanding in manufacturing.
A portfolio of companies that are undervalued but fundamentally sound should be targeted
for investment either through the acquisition process or partial ownership and investment. Sound growth strategies, operational improvement, product development, market positioning, cash flow management, international expansion, and the application of the most advanced technology available should be developed prior to the investments and become a fundamental content of an action plan.
The Principals, Advisors, and associated executives need to be brought together and should be bound by the common belief that a thriving manufacturing base is a fundamental component of the greater economic, social, and cultural strength of our country, the region, and our State. The Operating Management and Investors should have successfully invested in, acquired, improved, and built businesses within the State of Michigan, across the United States, and abroad.
The practical objective should be to provide superior economic return to investors through the acquisition / investments for improvement of underperforming companies which manufacture or distribute durable goods. In the process of improving their competitiveness and establishing growth strategies for these companies will attract investment capital not only from within Michigan, but from investors and partners from around the United States and beyond. The philosophy should be based on the experience that the probability of success is enhanced by bringing together a team of the most diverse talents available from each sector of the private, public, academic, and commercial worlds.
The conditions for significant value creation exist in the State of Michigan. Michigan-based assets such as resident technical and engineering knowledge, existent infrastructure, and the high level of research and development investment rival those found anywhere in the world. Current challenging economic conditions provide a watershed moment, however. Companies that we believe have become de-valued beyond a reasonable measure will continue to struggle, or worse, without proper guidance and improvement.