Hot Rods Edlebrock Problems? _ Auto parts maker Edelbrock, with 270 employees, closing Torrance facility

Just saw this posted on a website and wondered if this was just a belt tightening move or a portent of things to come? I seriously hope not.

 

Everything is moving to Tennessee after they bought Comp Cams.

 

Is this why a lot of the stuff on their website has 'out of stock' in red against for some time....?

 

Only the foundry is going to stay in California. It won't be long before it will be a name only selling import junk.

 

Cost of doing business in California running another small manufacture out.

 

https://www.dailybreeze.com/2021/01...with-270-employees-closing-torrance-facility/

 

Stuff happens when an investment company is the shot caller.

 

Had some flathead ford heads ordered thru local engine shop and they have been backordered for months,still waiting

Sent from my SM-G930R4 using The H.A.M.B. mobile app

 

Putting it that way it sounds like another "faux" Halibrand in the making!
They're throwing out the old business model of our cherished aftermarket industry.
Hello Hoffman.

 

Probably doesn't really matter , GM just announced that they plan to stop production of all gas & diesel powered vehicles by 2035 , they means the cost of fuel will continue to raise to force owners into alternatively powered vehicles.....since we aren't allowed to be political , that's all that can be said....

 

If you read other sources of information, it appears that they are keeping facilities in North Carolina to serve NASCAR and ARCA. To those "debbie downers", I would point out how difficult it is to do business in California.

 

No, just buy emissions credits. Lol. Now a real business we can tax your ass off.

 

The foundry is fairly new in the San Jacinto/Hemet area which is considered the "sticks" to those who live in the LA basin and is very efficient. If not for the Edelbrock sign you would not know or have any idea what its made there. That county is not as restrictive as LA or Orange Counties.

 

It's probably a heck a lot cheaper in Tennessee and a whole lot less restrictions on manufacturing. If that's the case you can only blame California. You can't even lick a postage stamp in CA. without reading a warning label.

 

Yes I seen that ,i am concerned for our hobby with that news as others will soon follow

 

I will be taking a dirt nap by then if actually would happen.

 

Edelbrock died when Vic Jr. died and it was only a matter of time before this happened. Vic Sr. and Vic Jr. ran this company for two generations with passion for what the Edelbrock name stood for. It was never easy but they kept it going since 1938 with that passion and succeeded for 81 years. Without successors willing to carry on that passion, Vic Jr., before he died, set this up to allow the family to cash out but still have some control over the company. (and not much in my opinion!).

Vic Jr. sold out to a "Private Equity Firm" called Industrial Opportunity Partners.

What does a private equity firm do?

The purpose of private equity firms is to provide the investors with profit, usually within 4-7 years. It comprises of companies or investment managers that acquire capital from wealthy investors to invest in existing or new companies. These firms that were once known as leveraged buyout shops are now thriving and control many of the companies in the USA. Think of the 1987 movie "Wall Street" and the line "Greed Is Good" and you'll get the idea.

What happens when a private equity firm takes over?

In fact, private equity firms cause significant unemployment. Economists at Harvard University and the University of Chicago found that when private equity take over companies, employment in the private-equity backed companies decreases by over 4% in the first two years following the buyout. Why due you think wages are stagnant?

Read more here:
https://www.forbes.com/sites/mayrar...b-losses-and-more-are-coming/?sh=2e2fd6907bff

Here is they way Industrial Opportunity Partners tell it:

Edelbrock’s founding family sought liquidity but wanted to retain management control and a meaningful portion of equity.

Our investment in Edelbrock is a prime example of how we can build on the value of a treasured brand by making operational upgrades while respecting its heritage and working closely with the founding family.

Edelbrock is an iconic manufacturer of high-performance aftermarket engine components with an 80-year history of innovation. Edelbrock’s core products include superchargers, intake manifolds, carburetors, electronic fuel-injection systems, cylinder heads, crate engines and various accessories. The company operates six facilities in California and North Carolina, including machining operations, a distribution center, a sand-cast aluminum foundry and a permanent-mold foundry.

The founding family sought liquidity but wanted to retain a voice in management and a meaningful portion of equity. Vic Edelbrock selected IOP as a partner due to our willingness to structure a partnership that gave his management team the opportunity to demonstrate their capabilities. He also had confidence in IOP’s manufacturing expertise and vision for the company, and wanted to his family to benefit from the operating improvements that IOP would make.

In Edelbrock, we saw an opportunity to back a company with an unrivaled brand, leading product development capabilities and a vertically integrated manufacturing operation that provides a competitive advantage not only in cost, but also in quality and speed to market. We also saw that the company could benefit from operational discipline, a strategic evaluation of its distribution channels and the implementation of advanced manufacturing techniques.

IOP made a control-equity investment in Edelbrock and developed a number of operating theses, all focused on maintaining the company’s emphasis on quality, research and new product development. We aimed to optimize the operational footprint and implement management tools to improve operations and efficiency. We also wanted to make strategic changes to the product portfolio, expanding several existing lines and adding new ones. We saw an opportunity to establish an e-commerce channel and to add direct-to-consumer sales.

Operational Improvements With Cost Savings. (in other words, screw the employees)

By enacting lean manufacturing principles and rationalizing the company’s operating footprint, we upgraded operations while trimming costs.


New Distribution Channel (in other words, compete with their loyal dealers/distributors)

With a new e-commerce offering, Edebrock’s consumers can purchase products directly.


Product Line Support. (in other words, sell and develop less product)

We exited the non-strategic exhaust and suspension product lines, putting more focus on the supercharger and other core technologies. We also made acquisitions to enable in-house manufacturing of carburetors and acquired new components that complemented Edelbrock’s offerings.

Transitioning Management While Maintaining Culture. (in other words, not a car guy in the place and we've got our bean counters running it)

We successfully addressed the transition in leadership after Vic Edelbrock’s passing, while maintaining management stability and preserving Edelbrock’s culture.

One of their biggest lies on their website...........just ask the 270 employees at Torrance.

"We seek to fundamentally improve the performance of our businesses to the benefit of employees, customers, suppliers and community, as well as shareholders."

So there it is folks, this is what's happening to Edelbrock and its associated companies of Russell Performance, the newly acquired COMP Performance Group that includes COMP Cams, TCI Automotive, FAST Fuel Air Spark Technology, Racing Head Service (RHS), ZEX, Inglese Induction Systems, Powerhouse Products, COMP VThunder and COMP GoParts.

But will it work?

These private equity firms are focused only on profit for themselves and investors, who expect a high return on their short term investment. In simple terms, think of it this way, instead of the company making enough money for the Edelbrock family, they now have many more people to pay, like the money managers and the investors. It has to come from somewhere, so the wages are cut or frozen, jobs are lost or outsourced out of the country by an entity that is focused only on short term gain (4 to 7 years) before selling the business and moving on. Do you think Edelbrock, the company will be the same after ripping its guts out and moving it across the country? What will happen to the quality without the institutional knowledge of those employees?

Wise up people, forget your ideology, open your eyes and learn what this means and what is happening to us. The fact is wages have been stagnant for the past forty years for most people. It's just not as simple as "It's impossible to do business in California!". If that were true, the California economy wouldn't be the largest in the United States, or ranked the 5th largest economy in the world, behind Germany and ahead of India. It is much more than sinister than that, our country has changed and the people that control the wealth, control our destiny. This is but one example of that. and it isn't looking good, but I hope they can make it.

 

This pretty much explains why: https://www.hoover.org/research/california-businesses-leave-state-thousands Here in Arizona we see businesses coming from other States often that had a high tax base eating away at their profits and that is creating a lot of jobs and population growth here in AZ. Not wanting to sound political because that's a NONO here but a lot of these newcomers vote the same way they did in the States they fled from,AZ is now "blue". This is the article I first saw. https://www.thedrive.com/news/39011...cQgPtFKm23P3XVxdqQc73MaIEkPorutcU_ZVnzbn7H03U

 

I remember meeting Jr. at a trade show where he was signing copies of the Edelbrock book and giving away hats. I asked how come he was so proud of the Mfd in US tag on his manifolds but sourced the hats from China? No comment and no smile!

 

I can't help but wonder how this company will f up Comp Cams.

 

vintagehotrods.... I agree completely, 125%, and have been singing this tune for years. It's interesting that there are quotes from Harvard and U of C decrying the impact of equity groups, yet they pride themselves on pumping out MBA's, the greedy, lowlife bastards, by the thousands.
In my 72 years, I've seen more more businesses fucked up by 'business majors', than have been improved by them! All they see is the bottom line and return to investors to keep stock prices high.
In most cases, these 'acquisitions' are by groups that have absolutely no knowledge of the industry or market they are entering, but don't care...$$ is king, suck the blood out of it and run. They don't believe that although the owner of company built it with the help of dedicated employees, that business success was based on a co-dependent relationship. I trust lawyers and used car salesmen more than MBA's.
And..... Vic Sr and Jr built a business with passion and foresight, to provide jobs and security for their family and employees. As leadership passes through the generations, the passion dies, interest and knowledge wanes, and pretty soon it's "I'm gonna get mine and move on".
Blood-suckers thrive, while the blood, sweat and tears-letting employees suffer.
Off the soapbox now.

 

Ain't that the truth......

 

@vintagehotrods is right on the money, point by point, and I know from experience, I lived through it at Electro-Motive when GM wanted to “cash out” of the locomotive business. And @‘28phonebooth touched on another thing that is right on the money too- MBA’s sometimes hurt businesses but it is to the detriment of the employees, not anyone else. GM held EMD from the early ‘30’s, first as a subsidiary, and then as a corporate division starting in 1941. For almost 50 years EMD enjoyed 80% of the market producing the Cadillac of the rails as RR’s described the locomotives.
In most of those five decades the General Manager came up from the shop floor, an engineering type concerned with the best product available. We were highly integrated, meaning much was made in house and they held many secrets regarding certain processes. Many times I witnessed tour groups of industry people come through but some areas were off limits, or at least protected from prying eyes with welding shields.
And when I think about it many of those secrets came from engineers working BC, before computer- they designed using a pencil on a drafting table, slide rules and sometimes just intuition.
From engineering types the general managers position transitioned to accountants beginning in the early 1980’s. GM was losing money and it was decided to cut non-core businesses, for example locomotives, electronics with the Electronic Data Systems division purchased from H. Ross Perot, Hughes Aircraft and more.
EMD actually borrowed a General Electric loco from CSX railroad and disassembled it at our plant to see how we might cheapen up our product line. Hmmm, so much for the Cadillac of the rails.
Interestingly, at the same time GE took one of our locos apart and looked to see our competitive edge. Soon our Service Department was decimated, they were charged with solving problems in the field, in fact some of them had office space at major railroads to be close at hand. Around the same time the 50 Series locomotives were introduced with some advancements and some things redesigned to cheapen them up. Rushed to production they suffered many issues and confidence in EMD began to slip.
I think it was 1989 when Booz, Allen, Hamilton, a consulting firm was brought in and their recommendation was to exit the business, but first a private equity firm was brought in to make the sale more attractive.
The private equity group must have installed a revolving door in the general managers office, turn over was high. There was always a meeting to introduce the new guy when he came on board and the most memorable one actually had the audacity to open his meeting with the shop forces with this statement- There are too many of you people and you make too much money. How’s that for a sure fired way to instill confidence and endearment in your blue collar employees?
Layoffs as a result of farming out much of the in-house production (remember the highly integrated operations we had?) meant large areas of the buildings were now non-productive, with that you have fixed costs being a burden on profit, so hey, let’s knock down the main building. More layoffs, more consolidating and pretty soon it was attractive enough for Caterpillar to buy it.
I could go on and on, but enough already. I disagree with the statements that taxes, employee wages, unionism or whatever the arguments might be are the cause of firms moving out of state or producing things offshore.
Edelbrock will have its machinery auctioned off, manufacturing will be outsourced in many cases, some of it will go offshore and much of their workforce will enter the same position much of our country is in- how can I support my family and provide for their future?

 

I am surprised how many people think a company that produces carbs, intakes, heads for push rod motors, etc. has a future.

 

This is precisely what is going on here and continues to . A grim outlook? Yes.

 

This was one of the original press releases: https://www.onallcylinders.com/2020/02/04/edelbrock-acquires-comp-performance-group/

 

It never ceases to amaze me how big corporations bring in top level people who have no background in the business they are attempting to run. Perfect case in point, look at what happened to my beloved International Harvester when it capsized in the late 70’s to its death in 1984. It seems that the corporate types only care about themselves and their investors, never about customers or employees.

 

Hey Andy. What do you call 20 corporate types chained together at the bottom of the ocean. Answer? A GOOD START!