By Agnieszka Opalka
ASC Industries, Inc. is the leading US manufacturer of new, aftermarket water pumps for automobiles and light trucks. A North Canton, OH-based company, ASC Industries' dedication to superior quality products, outstanding customer service and expertise in technology, have enabled ASC to continuously grow and outperform its competition. Its success has allowed it to capture significant market share in an industry that mainly consists of three major participants, as well as achieve a dominant market share of retail stores carrying automotive parts.
The heart of the automotive cooling system, the water pump provides continuous circulation of coolant through the radiator and coolant passages within the engine in order to maintain engine temperatures within a safe range. Due to the automotive water pump's critical role, a vehicle cannot operate without one that is properly functioning and in good condition.
In an October 29, 2002 transaction, American Capital Strategies Ltd. (Nasdaq: ACAS) completed a $36 million recapitalization, providing ASC Industries, Inc. with growth financing to continue to increase its global presence as well as expand its product offering. GMAC Business Credit assisted in the transaction by providing senior debt and revolving credit.
"ASC's significant competitive advantages set it apart," said American Capital Principal Robert Klein. "ASC's extensive product offerings and order fullfillment capacity, flexibilty in meeting customer needs, and ability to develop new model water pumps to adapt to a changing market, among other things, have resulted in its ability to outperform the competition."
ASC Industries was originally founded in 1976 by four engineers, including current company CEO and President Ted Swaldo, as American Switchgear Corp., a custom high voltage power equipment manufacturer servicing the electrical utility market. In the late 1980's, the company diversified and entered the new replacement water pumps segment of the automotive aftermarket industry. To reflect its new product line and customer focus, the company changed its name to ASC Industries, Inc. With its world headquarters in North Canton, OH, ASC has two additional facilities in China, ASC Tianjin and ASC Liancheng, which house manufacturing, casting and forging operations.
"The company's strong management has demonstrated its ability to capitalize on ASC's core competency as a high quality supplier of goods with superior supply chain management," added American Capital Principal Brian Graff. "The company's decade-long manufacturing presence in China has provided ASC with an unrivalled cost advantage for sourcing its component parts, combined with a 'just-in-time' fulfillment capability at its assembly operations in North Canton, Ohio."
Throughout the years, ASC's significant competitive advantages have attributed to its success, steady growth and market leadership. Perhaps ASC's key competitive advantage is that it produces exceptionally high quality water pumps which, when compared to those in the industry, last considerably longer. This superior quality is a result of ASC's dedication to the manufacturing of water pumps that meet or exceed OEM standards. With high quality products and low cost supplying of goods through its Chinese sourcing capabilities, the company is able to competitively price its products. Furthermore, ASC is able to meet the needs of its consumers because of its extensive line of aftermarket water pumps - over 700 SKUs - that meet the needs of the market, regardless of automobile make, model or country of origin. This multi-SKU production is made possible by ASC's state of the art facility in North Canton, Ohio, which was recently built in order to meet the company's high market demands. In addition to diverse product manufacturing, the facility enables ASC to maintain a high order fill rate (the amount of the total order filled on the first shipment). ASC's superb supply chain management enables the company to maintain its just-in-time assembly strategy and, therefore, gives it maximum flexibility in immediately meeting its customers' demands. In addition to the abovementioned competitive advantages, ASC is able to offer more aftermarket water pumps on newer model vehicles.
As an aftermarket water pump manufacturer, ASC serves customers through the industry's two distribution channels: warehouse distributors and retail chains, serving the repair shops and auto part stores, respectively. ASC has captured the majority of the retail chain market by being the sole provider of water pumps to three out of the top four retail chains. With a stable position in the retail chain market, ASC is strategically planning to expand its customer base within the warehouse distributor market.
The automotive aftermarket industry encompasses all products and services for automotive and light truck vehicles purchased after the original sale and include replacement parts, accessories, tires and appearance products. For over a decade, the industry has grown at an average annual rate of 5.6%. The steady industry growth is a direct result of the continuously growing number of passenger vehicles on the roads as well as the increasing number of drivers traveling longer distances, consequently causing more wear and tear to their vehicles. While currently the US economy is experiencing a slowdown, the overall automotive aftermarket industry, especially segments consisting of essential replacement parts, such as water pumps, has continued to be successful with sales remaining steady. As a matter of fact, the economic condition actually delays consumers purchasing new vehicles and therefore, in order to maintain their current vehicles, consumers must conduct the necessary automotive repairs, such as water pump replacements. ASC specifically operates in the aftermarket water pumps segment, which is part of the broader heating and cooling section of the automotive aftermarket industry. This segment of the overall industry is profitable given that water pumps are a non-discretionary replacement part and therefore, without replacing one's damaged water pump, the consumer's vehicle will not operate.
With an excellent reputation for superior quality, exceptional customer service, and state of the art technology, ASC is well-positioned to expand business as it offers new products, broadens its customer base and enters new geographic markets.
