Food and beverage processing is one of Ecolab Pest Elimination’s core businesses, but in determining that its fumigation capabilities — for which it has been seeing increasing customer demand — were not nationwide nor at the needed skill level, the company acquired three pest services businesses in December 2017. Ecolab is based in St. Paul, Minn.
“We felt we could be of greater benefit to our customers by making this acquisition, this partnership, work rather than trying to build our capabilities in-house,” Vice President of Operations for North America Paul Rawding told PCT. Additionally, he said, customer demand for organizations that could offer a full range of services was increasing.
Although the Ecolab Pest Elimination Division has considered other acquisitions in its 34-year history, this was the first made since the original five, which formed the division in the ’80s.
The acquisition includes Food Protection Services (FPS), operating in the Pacific Northwest, Great Lakes, Midwest and Mississippi Delta; Royal Pest Solutions, in the Mid-Atlantic region from New Jersey to South Carolina; and Research Fumigation Company, in the Gulf Coast states of Texas, Louisiana, Mississippi, Alabama and Florida.
Sales for the combined companies were $36 million in 2016. The three companies also were founding members of the Food Protection Alliance (FPA), which was dissolved following the acquisition.
While the three were independent companies, they worked very closely together, so there was a strength of partnership that already existed, Rawding said. Also important to the acquisition is that this was the right time for the three to work with a larger organization, he added. It was not just to give Ecolab customers increased services, but also to enable the three businesses to continue to grow as part of Ecolab.
“For us, it was a pretty simple process,” said John Mueller, former FPS co-owner, now Ecolab’s vice president of the specialty group. “This is an area of the pest management industry that is drowning in regulatory compliance.”
STORED PRODUCT PROTECTION. Stored product protection is a booming market, but there are a lot of challenges — especially for smaller businesses, Mueller said, adding, “Ecolab represented the ability to integrate some of those into the departments they already had and to help us navigate through those areas.”
Additionally, the growth potential represented by the solid sales strength of Ecolab over the years and its reputation in the market were “something we wanted to attach to as well,” Mueller said. “Their philosophy of how they treat people and how they value safety are very core to the original beliefs of our three companies, which functioned together very closely in the past.”
The melding of the companies with Ecolab also makes sense because, Mueller said, as a fumigator for 31 years, he has had opportunities to subcontract with Ecolab for fumigation. “So we had at least a small glimpse of what their culture was like, what their people were like — and it was always a positive experience,” he said.
Ecolab is not completely new to fumigation, but its services were primarily in the central U.S. and focused on the needs of its existing customers in food establishments, Rawding said. “We were operating to a very limited extent in only one of the six main areas of the fumigation markets.” Those six areas that the acquisitions now enable Ecolab to cover are grain, seed, milling, food processing/manufacturing, warehouse/distribution centers, and import/export, Mueller explained.
Although not open to speaking to whether other acquisitions are planned by the division, Rawding did note to PCT that these three companies provide Ecolab with the nationwide capabilities that it sought and provide additional customer offerings, particularly around grain and import/export fumigation.
TALENT RETENTION. As illustrated by Mueller’s new position in the Ecolab acquisition, the company does intend to “retain the talent that came with the deal,” Rawding said.
“Part of the discussion was that we are acquiring skills that we don’t have…How do we provide these very, very deep, highly specialized services to our customers? We do that by retaining, in principle, the people in the organizations that we acquired,” he said.
As such, Ecolab expects to continue operating under the three brand names for at least the next year. “There will be a soft reset on branding, so we don’t create any confusion for customers around who is providing their service,” he said.
With the Pest Elimination Division having grown from one business in Grand Forks, N.D., in 1984 to one that is now represented in 34 countries, Rawding sees its focus on organic growth as having been successful because, he said, “We think we have a premium highly recognized, highly regarded brand in the commercial sector; we see this as our strength.”
These new acquisitions fit well with that, he said, explaining, “The three business have very, very strong, highly regarded, recognized brands. This is why it makes sense that they will be under the Ecolab banner.
“But,” he added, “we will take our time to make sure we guide what that looks like.”
As a specialty group, the new business will be a stand-alone entity coordinated within the pest elimination division. That is, it won’t be run within the route businesses of the districts; rather Mueller, as its vice president, will work with the three district vice presidents to coordinate the business. The four vice presidents then report to Rawding, who reports to Kris Kielsa, the division’s general manager.
“This is a really, really good cultural fit,” Rawding said. “Other opportunities have come our way, and the cultural fit is always one of the first things we look at to ask, ‘Are we the right owners for that business?’”
With the three companies’ similar focus on customer service, safety records and business structure, he said, “This was one that really was an easy decision for us.”
The author is editor of QA magazine, PCT’s sister publication that covers the food safety and quality assurance markets. Email her at email@example.com.