Joshua Collins is no Jim Osterman. He’ll be the first one to tell you.
The Harvard-bred and Wall Street-trained Collins took the helm as CEO of Portland’s Blount International Inc. last month, replacing the retiring Osterman, a man who spent half a century with the company that revolutionized the manufacturing of sawchain.
Collins, 44, a five-year Blount board member, says he cannot replicate Osterman’s legacy. But he was hired for a different reason, and one that ties to his experience in the deal-making world of investment banking.
“I was put in this position by the board to grow the business,” he said.
Collins’s strategy is part organic growth and part growth-by-acquisition as he hunts for companies to complement Blount’s smaller business units.
Doing so will build on the legacy of a company that dominates its segment of the outdoor products world.
Blount International Inc.’s Portland roots date back to 1946, when Joe Cox developed a cutting chain technology after watching how timber beetle larva chewed through wood fiber. Cox’s company, Oregon Chipper Chain, evolved into the Oregon brand of sawchain, Blount’s signature product line.
Collins’ ties to the company are far more recent.
He is a Spokane, Wash., native, whose resume is draped in camouflage, ivy and the pin-striped suits of Wall Street.
After graduating from the University of Pennsylvania in 1987, he became a Marine Corps. infantryman and served in the Persian Gulf War. He later entered Harvard Business School, where he graduated with an MBA in 1995.
Collins joined the once-vaunted Lehman Bros. Inc. in 1996 where he was principal and managing partner of Lehman Bros. Merchant Banking Inc., the firm’s private equity arm.
While there, Collins took the lead in one of the private equity group’s biggest deals: the 1999 acquisition of Blount, then based in Montgomery, Ala., in a $1.35 billion deal that took the company private.
At the time, Blount operated three primary businesses: the Oregon brand sawchain and guide bar business, an ammunition production business, and an automated forestry division that made timber harvesting equipment and tractors.
“The Oregon brand business was what was attractive,” Collins said.
With Lehman Bros. in control, the company shifted strategy to focus largely on the sawchain business.
Over time the company sold off the other divisions — the ammunition business went to Minneapolis-based Alliant Techsystems in 2001 for $250 million, while Caterpillar Inc. bought the automated forestry business in 2007 for $77.3 million.
In 2002, Blount relocated from Montgomery to Portland, the home of the Oregon brand led by Osterman, who took over as CEO.
Lehman maintained a controlling stake in the company until taking it public again in 2004.
Collins remained tied to the company when he was elected to the board in 2004 to represent shareholders.
He left Lehman in January 2008 — nine months before the company filed the biggest bankruptcy in U.S. history — and co-founded Collins Wilmott & Co. LLC, a New York private equity firm.
But his aspirations weren’t necessarily tied to Wall Street.
“What I really wanted to do was be involved with running an operating company,” he said.
He takes the helm at a time when the company’s annual sales, to be released March 9, are projected to fall 16 percent to $502 million. Operating income is expected to fall 36 percent to around $56 million.
Collins believes there are signs of growth in the market, which has been battered by the housing crunch.
The company was able to hold its margins, which Collins called “incredible” in this economy, while the second half of the year marked a significant improvement over the first half.
“The question has become, how much of that positive trend is inventory restocking versus end-use sell-through,” he said. “We still don’t know.”
Perhaps a bigger question is how a company grows when it already dominates a market.
The company’s biggest competition comes from Stihl Group Inc., the $3 billion German maker of chain saws, and low-cost Chinese manufacturers.
Even so, Blount holds as much as 65 percent of the global market for sawchain and more than half of the market for chainsaw guide bars, said Mark Rupe, an analyst with Longbow Research in Independence, Ohio.
“The question is, how big can they become in a market that’s not growing much more than (gross domestic product),” Rupe said. “Their next biggest competitor is a massive German company that’s not going to be easy to take share from.”
The wild card, Rupe said, is Blount’s decision to bring in Collins, “a guy with private equity background and a growth bent.”
Acquisitions will play a key part in Collins’ strategy.
Blount isn’t going to buy another sawchain business, Collins said, but it will consider deals that supplement its smaller businesses, such as its segment that makes products like diamond-tipped chainsaws for the construction industry.
There’s also amble growth opportunities in the company’s $50 million outdoor equipment segment, which sells more than 12,000 products — like plastic gas cans and weedwhacker string — into the forestry and lawn and garden markets.
Collins estimates that business, with around a 5 percent global market share, could double to $100 million in the next three to five years.
Meanwhile, Collins said its principal market should grow between 5 percent and 7 percent annually.
To bolster that growth, the company must continue its legacy of innovating in its core sawchain segment.
Blount this year will launch what it calls the PowerSharp system, a new product line of sawchain and portable, do-it-yourself sharpeners that allow chainsaw users to quickly sharpen blades in the field.
“We’re innovating continually and know as much or more about sawchain than anybody else,” Collins said.
That expertise is largely attributable to a work force in which the average tenure is 17 years, and decades of consistent leadership.
“Really, the leadership up to this point has been a big feather in their cap in terms of placing the company in the position it’s in,” said Dan Shell, managing editor of Montgomery, Ala.-based Power Equipment Trade magazine.
“It will be real interesting to see how that plays out in the future.”
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