Brea Rubber Factory Sale Would Enrich Workers
In a deal that could put six-figure checks in the hands of hundreds of factory workers, an aerospace company said Monday that it plans to buy Kirkhill Rubber Co. of Brea for about $80 million.
Kirkhill, whose products range from space shuttle parts to ultra-bouncy toy balls, is owned mainly by its 700 workers. Using loans, the employees teamed up in 1988 to buy two-thirds of the closely held company’s stock.
“They will get cash for their shares,” said Brian Keogh, a spokesman for the purchaser, Esterline Technologies Corp.
Details of the deal were still being worked out Monday, but Kirkhill, one of Brea’s largest employers, is expected to operate as a subsidiary of Esterline.
“As we anticipate it, everything will remain status quo,” Keogh said. Kirkhill’s chairman, Don Finefrock, declined to comment.
Officials said it will take 60 days to figure out exactly how big a check each eligible employee will receive.
“A lot of people are thinking about retiring,” said one grinning employee outside the plant.
Employee stock ownership plans, or ESOPs, have become more common in the decade since employees bought Kirkhill, said Corey Rosen, head of the National Center for Employee Ownership. There are large tax advantages for the sellers, typically families.
Sales of ESOP-owned companies have become more common in the last year or two, with the strong economy and low interest rates helping buyers pay high prices, Rosen said.
Esterline’s annual sales are about $400 million. Kirkhill, founded in 1919 by T. Kirk Hill, generates about $60 million in annual sales.
Keogh said Esterline will pay “somewhat less than 1 1/2 times” the $60 million, which would value the deal in the low $80-million range.
At that price, some 800 eligible current and former employees at Kirkhill would receive an average payment close to $70,000. However, Rosen and others said longtime workers could easily get three or four times that amount.
“This is the way an ESOP is supposed to work,” one company official said. “To a $9-an-hour rubber factory worker, a six-figure check is something to dream about.”
Esterline, based in Bellevue, Wash., makes commercial and military aerospace products. About 40% of Kirkhill’s business is aerospace-related.
Esterline recently acquired two other Southern California companies, TA Manufacturing of Valencia and Kai R. Kuhl Co. of Los Angeles. Like Kirkhill, they specialize in engineering rubber to withstand the stresses of aerospace use.
The companies share many customers, including Boeing Co., General Electric Co., Thiokol Corp. and B.F. Goodrich Aerospace.
Esterline said federal antitrust officials have given the go-ahead for the purchase.
