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Ultrapure Systems Groups Buys Out Parent Company CBI
BY MARIALBA MARTINEZ
July 5, 2001
A local investment group spearheaded by UltraPure Systems Inc.s general manager finalized a stock buy-out from parent company Chicago Bridge & Iron (CBI) last week, maintaining the 125-employee workforce that produces high purity process systems for the biopharmaceutical product manufacturing and delivery system industries in Puerto Rico.
Eighteen months ago, CBI invested $3 million to establish UltraPure Systems in Puerto Rico. They hired civil engineer Cesar A. Roca as general manager, bought a manufacturing facility in Vega Baja; hired qualified management and supervisors, purchased equipment, and trained production personnel.
"During the first 18 months of operation, UltraPure Systems registered $20.4 million in sales. Prior to the acquisition, the company was expected to exceed its first year sales by 25%. Right now, we are entering the buy-out with a work backlog of more than $6 million and a prospect list of about $20 million," said Cesar Roca, president of UltraPure Systems.
In 1999, CBI approached Roca, at the time working for its only industry competitor on the island, to establish UltraPure Systems as a subsidiary. CBI, with headquarters in the Netherlands, specializes in hydrocarbon-related businesses such as petroleum refining & storage, natural gas processing, liquefied natural gas storage terminal, and chemical & petrochemical processing & storage; power generation; combustion technology; and water storage & wastewater treatment.
But Puerto Rico looked like a good investment site to establish a biopharmaceutical manufacturing plant for high purity process systems because of its large number of targeted clients. CBI also established UltraPure Systems plants in Singapore and the U.S. (Texas & North Carolina), but those were geared towards the semi-conductor industry. When the semi-conductor industry took an unexpected dive in 1999 and the hydrocarbon industry expanded dramatically, CBI consulted with Roca about a possible management buy-out.
"CBI called me on May 31 and explained how the biopharmaceutical business, though extremely productive for Puerto Rico, was a too small a segment to maintain the semi-conductor business losses. They asked me for a preliminary proposal in seven days, which I presented at UltraPure Systems Dallas headquarters on June 11. One week later, CBIs board of director approved the sale and made a formal announcement," said Roca.
While the effective date of the sale was May 31, Roca still had to look for financing and renegotiate incentives with the Puerto Rico Industrial Development Co. (Pridco). In its commitment to save every job that is possible in Puerto Rico, the agency agreed to fast-paced renegotiation, granting UltraPure Systems tax exemption, job creation tax credits, and training incentives.
"One of the key jobs in our industry is held by welding craftsmen. When UltraPure Systems began, almost $600,000 was invested in startup training and we continue to spend about $100,000 per year to train local welders. This is one of the basic differences between the competition and us. We believe we can produce top-of-the-line employees locally, who will help us expand in the near future," said Roca.
Most training goes towards orbital welding, a computerized fusion process, in which a clamp holds tubes to be welded and form a closed chamber for inert gases to pass through. The welding arc rotatesor orbitsaround the weld. UltraPure Systems uses stainless steel tubes in various widths and length, accommodating their skills to the clients needs.
Integrity Piping Solutions (IPS) is a third-party consultant hired by Abbott Pharmaceutical to monitor compliance with all procedures, documentation, and inspection of all systems manufactured and installed by UltraPure Systems. It has spent a year overseeing and qualifying the work. Based in Las Vegas, Nevada, IPS Operations Vice President Joseph A. Tatarewitz said that UltraPure Systems is as up to date as any facility he has ever supervised.
"In 15 years working exclusively within the high purity process systems industry, I can compare UltraPure Systems craftsmen with the best I have seen. They are very professional and although communication was a concern at the beginning, we havent incurred in any problems.
"This projects rejection rate has been extremely low, maybe three welds out of 900, when the average for a job is 5%. So far we are ahead of schedule and expect to finish by the end of this year," said Tatarewitz.
Roca is looking forward to continuing projects and beginning new ones for pharmaceutical companies such as Pharmacia, Lederle, OMJ Pharmaceutical, IPR Pharmaceutical, Eli Lilly, Pfizer, Bristol-Myers Squibb, GlaxoSmithKline, Novartis, ICM Pharmaceutical, and Amgen.
"Our future target market is obviously anyone we havent worked with before, and there arent many companies left. But what we are really preparing for is to become a manufacturing plant for custom engineered process skids for the biopharmaceutical industry.
No local company has been able to offer process skids manufactured in Puerto Rico and the island is one of the top producers of pharmaceuticals. We want to put UltraPure Systems and Puerto Rico on the global map as a manufacturer of quality process skidsto put the "Made in Puerto Rico by UltraPure Systems" seal on process skids installed not only on the island, but anywhere in the world," said Roca.
This Caribbean Business article appears courtesy of Casiano Communications.