Hot Rods What's up with Edelbrock lately?

There is that possibility......

 

My soon to be 15 year old plays elite level baseball, cost me as much as college! My new second job is working concessions to pay for the "fundraising"

 

I had that job once…..jazz band, marching band, CODA band, wind ensemble….I have $6,000 in horns in the kid’s bedroom closets. That would build a 390 Cadillac.

 

I really like rohner’s it’s north of willmar mn. They don’t have 30’s or 40’s but man they do have 50’s 60’s. They sit on maybe 100 acres and is very full with a lot of double decking cars

 

Owens Salvage Wellington, TX
@FLAT-TOP BOB

 

Go back?
Picked up parts from my supplier (junk yard) yesterday

 

Market place has tons of old parts
But raw materials like tubing and sheet metal has been an issue.
Both places I use have had issues getting metal.
I’ve heard of issues with paint supplies due to a resin plant that burned and issues at the dock.

 

At the rate I work, I think I am safe.

 

You are fortunate for the opportunity to shop locally & not pay shipping costs, Anthony
On the other hand, it is fun to build a network of sources around the country. I'm building a nice list of people in the last year I can contact to ask around. Yeah, the socializing part makes that fun. I've had the opportunity to meet a lot of nice people.

Joe

 

The problem is after they move out they come back!!

 

I converted their rooms. Sorry kids.

 

This is one reason why I talk to people with off topic rides
I’ve bought cool vintage parts from the tuner and LS guys.

 

I suspect that when the family sold the business to Industrial Opportunity Partners, LLC, a private money investment group, the whole philosophy of managing and running the business changed. The legacy and history of the company went into the trash can and the profit and wealth growth became the number one priority. This is from their website: "IOP was founded in 2005 by a group of like-minded finance and operations executives who came together to build a private equity firm......" First they closed the Torrance facility and moved to it Mississippi to cut their overhead and labor costs, but I thought the foundry was staying put in California because it was new and worth keeping, but still miles away from the machining operation in Mississippi. Doesn't sound like a great idea to me. Vic Edelbrock would have still made the vintage stuff even if it wasn't generating as much profit as LS stuff because it was his legacy. I would also guess they concentrate their manufacturing on high volume, high profit products, so the lower production traditional stuff is waiting for enough orders to be produced when they have enough to warrant it. The other issues of shortages of material. transportation and labor are piling on top of that. This scheme of business isn't new and if you know the stories of all the companies the Eckler's conglomerate bought up, that is the same thing that happened here. They are owned by another investment group, Century Park Capitol Partners. Buy successful family businesses and put them all under a management system that puts profit for its investors before everything else, which is you the customer, dealers and its employees. Welcome to the new world folks.

 

I wrote this on Hemmings eight months ago..........

This is what is happening at Edelbrock. This news just broke and it says they are leaving because of the high wages and competition for machinists due to the booming aerospace industry. The race to the bottom in a low wage non-union state.

Edelbrock Is Leaving California Partly Because SpaceX Hires Too Many Machinists

https://www.thedrive.com/news/39112...rtly-because-spacex-hires-too-many-machinists

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?

Think of what happened to Peterson Publishing, it barely exists anymore. And Eckler's, you all know what they've become.

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.

 

Do you think its time we start building our own products in the U.S. and tell China to kiss our ass.

 

And how do you propose to make this happen?

 

It's not as nefarious as a "scheme." If you're opening a large savings account (an 'investment'), and your choices are a 0.1% interest account or a 5% interest account, which would you choose? Money goes where it works the hardest.

 

I ordered a side mirror from Mac's in July, still don't have it.

 

It's too late for that. There are too many mouths eating off of that plate.

 

Thanks for reading my comment. That's not the real choice, your question should be "If you're opening a large savings account (an 'investment'), and your choices are a 0.1% interest account or a 5% interest account that made that interest at the expense of others, which would you choose?"

So forget "scheme" and substitute "business model" instead and ask yourself if the Industrial Opportunity Partners model works for the majority of Americans, which includes us the customers, their dealers and the employees? Or is this taking from the many for the wealth of the few by cannibalizing existing profitable businesses and flipping them for a handsome short term profit?

 

Where do you think interest (or profit) comes from? It's not new money. It comes... ^^^ Businesses are in business to make money. Businesses that don't make money either change what they're doing or they go out of business. I'd love for them to make more parts for vintage engines... but they've determined that there is a more viable market elsewhere... so they go elsewhere. I'd also love for companies to be more benevolent toward me (and you), but what's in it for them if they can't make enough money off of us to keep the presses running.

 

@vintagehotrods
Thanks for posting your well thought out description of today's 'business model'. The current state of our economy and shortage of goods is (and has been ) directly related to this greed-based way of doing business. We see it as a hardship because we can't get parts, but what about the hardship that former Edelbrock employees are facing, and their California based suppliers? What about the distributors and dealers that aren't catering to the high-volume (tuner) market? As is typical of these business moves, lower wages and benefits paid to workers in a lower wage state doesn't mean lower consumer prices to keep competitive, it means more profits to pay back investors, and line the pockets of those who take pride in raping successful companies then throwing away the dregs. As a group of (hopefully) thoughtful consumers, we should all make ourselves aware of the multitude of businesses that are being run this way, and boycott the hell out of them!!! A lot of people don't have the social or economic awareness to understand what all this means in the overall health of our economy, as it may not have a direct impact on them, but we should all remember we are in this boat together, and we (or our jobs, financial health, our kids) will all suffer if this trend continues and we sit back and ignore it because "it doesn't affect me". Just add "YET" to that, because sooner or later it will!

 

I think you are ignoring the reality of this situation and why we are talking about Edelbrock. I think businesses should make more money, but by building a better product, giving better service and by inventing and making new products that we want to buy, just like Edelbrock has done since 1938! You know, the well known American "build a better mouse trap" business model. Since making the most money possible is what you are implying, then businesses could make even more money cutting wages and benefits, ignoring labor and environmental laws or by employing child or prison labor,. That's not the country I've known all my life or want to live in the future. Or they could move production offshore like many other American businesses have (the Walmart model), except Edelbrock didn't and it was still a viable and healthy company, enough so that Industrial Opportunity Partners sought it out. I've never heard of these complaints of poor service about Edelbrock before this. Look where they have taken Edelbrock in just eight short months, or the Eckler's situation and tell me that "purchased by private equity group" is what you want. It basically means your prize horse is now the property of the glue factory. Private Equity does not know or care one twit about the actual business they purchase.......they only see assets on a spread sheet. Few businesses survive intact.

Thanks '28phonebooth for really understanding what this is all about.

 

This is literally what companies do every chance they get. You are describing late-stage capitalism. And my ability to understand the reality of how it works is not the same as your apparent belief that I am in favor of it.

 

The speed equipment business has been in the cross hairs of businesses outside our industry for years. WR Grace and Whitiker took the plunge in the seventies and bailed out soon after. The success of the speed equipment business has been based on producing niche products and doing so with passion. Add in a loyal customer base and you have a winning combination. I've talked to more that a few Fortune 500 execs that were convinced that their people with newly minted MBA's could take a speed equipment manufacturer founded by a high school educated machinist and make it REAL PROFITABLE. We saw how that worked. It appears that the private equity firms finally found the key to the speed equipment industry.

 

I didn’t realize that they had sold the business. That’s too bad. I get it, but hate to see it.

 

it ain't 52' or 62' or even 2002 anymore....the hot rod life as we knew it is done......maybe was done before now, but being stubborn, hard headed, resilient folk we have powered on....events have conspired to complicate the issue far beyond ol'cars . The raw materials of our avowed existence ( the cars )have become scarce, parts scarcer still, manufacturing is dead or gone if you're relying on the way things were to get parts.....junkyard prowling is going away with the junkyards and the ageing out deal for a lot of us....the old body dont muck around the scrap yard like it used to. deny, defy, it don't matter the whole game is in trouble and I dont see a fix.

 

We are in both late-stage Capitalism, and late-stage Hot Rodding.

Whether we like it, or not, it's coming to an end, as we know it.

 

Please Please do not use that material for anything structural.

Sadly, the private equity operations have been devouring companies in every sector of American business for years and I have yet to see any real benefit to the consumers. Investors really don't care where their profits come from.

 

China didn't move US business to China.

US business moved operations overseas to maximize profits.

If they somehow magically moved back, maintaining the same profit margins would make every manufactured good unaffordable, and our economy would quickly collapse.