Newark, Del.-Based Production Firm Saves Delaware Jobs, Thriving International Export Business, and Manufacturing Sector Growth Potential, Thanks to SBA Financing
At its Newark, Delaware production facility, O’Connor Belting International crafts products that touch almost every aspect of modern life and every corner of the globe. O’Connor Belting produces European-style conveyor belting that sorts and packages product for customers worldwide, including household names as Kraft Foods; National Gypsum; and Tootsie Roll Industries (O’Connor Belting’s are the only conveyor belts used in its Junior Mints candy production).
Since first opening its doors in Delaware as a production facility 20 years ago, O’Connor Belting has built on its international roots to develop both a thriving stateside and international export business. In 1993, O’Connor Belting was opened by European manufacturer Fabreeka International under its own name and then joined the Holland-headquartered Derco BV corporate family in 2007. In 2011, O’Connor Belting International took its current form, following its purchase by its American plant manager, Paul O’Connor. Today, O’Connor Belting is the only east-coast-based producer of customized European-manufactured conveyor belting and the sole American distributor of sought-after Derco brand belting. From its convenient mid-Atlantic location, O’Connor Belting ships European-manufactured belting customized at its Delaware facility across the nation and around the globe with customer service support, shipping rates and efficiency unmatched by European-based competitors. Along with a thriving stateside customer base, O’Connor Belting now exports to customers in a host of foreign countries, including Brazil, Argentina, South Africa and Zimbabwe, as well as other African and Indonesian countries.
The Future Hangs in the Balance
But the business world is fickle and provides no guaranty of success, even for a promising, proven business like O’Connor Belting. Since launching O’Connor Belting for its then-owner, Fabreeka International, in 1993, the Delaware facility’s head, Paul O’Connor, has grown the business exponentially. By 2010, demand for the Delaware facility’s European-manufactured belting made the Delaware site a strong candidate to become a full-blown belting manufacturing facility with unlimited job growth potential. Nonetheless, in 2010, the Delaware facility’s future – including the jobs of the growing number of employees relying on the facility for their livelihoods – hung in the balance; a sell-off of the facility by its then owner, Derco BV, threatened to close the Delaware operation’s doors for good.
Saving the Delaware production facility’s cadre of jobs and bright future would take every ounce of business savvy, perseverance and resource available to its leadership. But, if anyone was up to the task, it was Paul O’Connor – a Delaware native, Vietnam War combat veteran, and former U.S. Army Special Forces Green Beret with nearly 30 years of belting industry experience. And, if any business resource was equipped to stand shoulder-to-shoulder with O’Connor to secure the business he had built, it was the U.S. Small Business Administration.
An Offer He Couldn’t Refuse
In 2010, Derco put the Delaware facility – its belting division – on the market for sale, seeking to exit the fabrication business entirely to focus purely on manufacturing. The realities of the conveyor belting industry meant that the Delaware facility would most likely be purchased by a big-business Derco competitor located far from Delaware, and the Delaware-based enterprise’s cutting-edge equipment and solid jobs would be moved out-of-state.
Without a local buyer, the Delaware facility’s fate was all but sealed.
Paul O’Connor knew all too well what was at stake when Derco’s management approached him with the offer of a lifetime. If O’Connor could muster a sufficient cash down payment, he could purchase Derco’s Delaware-based enterprise and continue the business in Delaware as the only U.S.-based Derco distributor. Closing this deal would secure the future for Paul O’Connor, his family, and the entire Delaware-based team, as well as preserving the facility’s potential to grow into a significant manufacturing facility, benefitting the entire region’s economy.
By 2010, Paul O’Connor had invested his entire career in the belting industry. Working his way from the shop floor to management, O’Connor knew every aspect of the business. There was no doubt that O’Connor’s career was built in in the belting industry, but, by the same measure, O’Connor had built his life in his native Delaware. Now, O’Connor had the opportunity to finish his career in his home state. And, as owner of the business, O’Connor could realize another dream – he could create his own family business. O’Connor’s two sons, Paul, Jr., and Eric, were already following in their father’s career footsteps, logging 17 and 5 years, respectively, building their own careers at the Delaware facility and moving from the shop floor and into management. As the Delaware facility’s owner, O’Connor could join with Paul, Jr., and Eric to shape the business into a legacy to pass to future generations.
Finally, if O’Connor could purchase the Newark enterprise, he could secure its jobs and its economic development potential here, in Delaware. Since opening the Delaware enterprise in 1993, O’Connor had built a trusted staff, many of whom had worked with him at previous employers and moved with him when he started Fabreeka’s Delaware operation. With O’Connor at the helm of the Delaware operation, the business could stay – and grow – in Delaware. Over a lifetime in the belting industry, O’Connor had built a full book of European-manufactured belting customers across the nation and around the world. As the only U.S.-based Derco distributor, O’Connor was confident that he could keep and build on that customer base, in turn, keep and grow his employee roster. With that anticipated incremental growth, O’Connor hoped to support the Delaware facility’s expansion into a full-blown manufacturing enterprise, with all of the revenue and job growth that that would entail.
But all of Paul O’Connor’s plans – along with the livelihoods of the entire Delaware facility staff – would hang in the balance until Paul O’Connor could put the financing in place to purchase the Delaware enterprise.
When Derco USA’s Delaware facility hit the market in 2010, the economy had hit rock bottom, and, with it, most small business’ commercial financing prospects. But Paul O’Connor was not “most small business people,” and his Delaware operation was not “most small businesses.” By 2010, O’Connor had an established relationship with SBA lender Wells Fargo, and Wells Principal Relationship Manager Shawn Heller understood the true value of O’Connor’s proposed purchase of Derco’s Delaware facility, beyond Wells Fargo’s own return-on-investment interest. O’Connor’s purchase of the Delaware facility would mean everything to the facility’s employees – their very livelihoods hung in the balance. And, by that measure, the purchase could mean everything to an entire recession-battered region, starved for the job creation promise of a facility like O’Connor Belting, poised to develop into a significant manufacturing facility if allowed to grow. And, when the crushing realities of the greatest economic recession since the Great Depression made putting together a financing package to make that purchase a reality seem impossible, Heller understood the power of Well Fargo’s lending partner, the SBA.
Through its flagship financing program, the 7(a) Loan Guaranty Program, SBA makes it easier for participating lenders like Wells Fargo to make small business loans, even in a strained economy. By guaranteeing the lender that SBA will repay 75-85% of the loan amount should the borrower default, SBA empowers lenders to provide qualifying entrepreneurs secure financing on reasonable terms.
So, undaunted by the challenge of a still-recovering economy, Heller recruited Wells Fargo’s SBA lending department to back the financing that O’Connor needed to purchase the Delaware production facility. Soon after Wells Fargo brought the SBA team headed by Andrew Eshleman, its Vice President of SBA Business Development, to the table, O’Connor was approved for the loan, settlement was complete, and O’Connor Belting International was born. Financing in hand, O’Connor could finally turn the page on the future – for himself, his entire cadre of employees, and for a region eager to see what tomorrow brings for this manufacturer-in-the-making.
To learn more about SBA small business assistance, like the SBA-backed financing that O’Connor Belting secured through Wells Fargo, visit http://www.sba.gov.