Client Profile: Tri-Arrows Aluminum

Core of Core
Franc and Sourwine orient Tri-Arrows Aluminum to meet new opportunities

Sale, divestiture, acquisition, transition – call it what you will, but CEO Pat Franc, CFO David Sourwine and the rest of the team leading Tri-Arrows Aluminum see it as a fresh start. You may not recognize the name, but chances are you’ve held their product in your hand. Tri-Arrows produces metal alloy for the body, end caps and tabs the beverage industry uses to can everything from soda and beer to tea and energy drinks. It’s a sophisticated business that requires a perfect balance of teamwork and leadership - throughout the entire company - and one that has thrived because of a commitment to success.

Built to Last
In 2011, after BP Company North America sold the entity formerly known as ARCO Aluminum Inc., a consortium of five Japanese companies completed a series of transactions that resulted in the formation of Tri-Arrows Aluminum. Sourwine notes that the business went from being an under-valued asset within a high-performing company to a strategic priority, or “core of core” according to their new ownership group.

Change is never easy; however, both Franc and Sourwine point to the rapid 90-day transition as one of their early successes. Moving from a mega-corporation to a stand-alone entity was exciting, but Sourwine says the first day of doing business as Tri-Arrows was like hitting a reset button. From HR to sales to operations, the company had to reinvent itself, including its standards, policies and agreements. However, Franc says the post-merger transition hit very few rough patches and exceeded everyone’s expectations, from the ownership and employees to their customers.

Tri-Arrows’ new ownership structure represents a significant opportunity, as Franc says they have greatly benefitted from the unique perspectives brought by the five owners. With the goal of growing the business, and a Board of Directors that speaks with one voice, Tri-Arrows and their owners have formed working groups in both the United States and Japan to explore solutions for optimizing the financial, commercial and technological aspects of the company.

Externally, Tri-Arrows finds itself in the middle of a high-value supply chain competing in a limited marketplace. Supplying customers in high-volume, time-sensitive operational environments, Franc knew Tri-Arrows would need to move quickly to reassure them that quality, of both product and service, would remain unchanged following the transition. A transparent transition and regular communications quelled concerns about team members and financial security. Customers had a positive reaction to the new Japanese ownership group, appreciating that Tri-Arrows now had strategic owners involved in the industry and committed to investing in and growing the business.

Growing and Adapting
Franc and Sourwine describe the new Tri-Arrows environment as a learning culture, where everyone is a stakeholder and suppliers are just as valuable as customers. The aluminum industry, with its high capital equipment costs, is an intimate one dominated by a handful of large companies. Relying on a small number of suppliers, the leaders at Tri-Arrows understand that with a finite number of contracts available, mistakes are simply too costly, in every sense of the word.

The industry that manufactures enough rolled aluminum to produce roughly 100 billion cans per year is beginning to see erosion in the marketplace. While there are some temporary economic factors at play, the looming concern is what Franc describes as “Share of Stomach.” He recognizes that consumer eating habits are impacting the industry, particularly as more people in the U.S. turn to bottled water and consume fewer carbonated drinks.

In response to market changes, Tri-Arrows is helping to bring different product sizes and shapes to market to address emerging and growing products such as energy, coffee and tea drinks. Additionally, craft beer brewers are moving from glass bottles to aluminum cans in great numbers, recognizing that the can is more environmentally friendly and provides a 360-degree advertising platform. Some of the beer industry’s larger brewers are even adopting the aluminum bottle. Franc is positioning Tri-Arrows to be on the cutting edge of what’s next, seeing innovation as the best way to find new markets and opportunities.

Both Franc and Sourwine stress the importance of new technology and see opportunities beyond their current operation. Tri-Arrows’ new owners are still learning the company’s historic role in Logan Aluminum, Inc., an aluminum rolling mill that they jointly own with Novelis Corporation, a competitor and one of the world’s largest producers of aluminum can sheet. Tri-Arrows has a 27-year history of working with Novelis, and Franc says the relationship between the two joint venture partners is the best it has ever been. In fact, when it comes down to what is best for the plant, Franc says both owners are usually in agreement.

As a smaller enterprise, Tri-Arrows depends on the joint venture in their quest to innovate, grow and survive. Leveraging the next breakthrough the company is able to develop, and the one after that, is the clear path forward. Having the benefit of different perspectives, from both Logan and their Japanese owners, provides Tri-Arrows with a head start. Additionally, when it comes to developing new opportunities, Tri-Arrows’ owners operate a pilot plant in Japan, where Franc and his team are able to test new ideas before scaling them for possible implementation at Logan.

Adding Value
Change also brought a new perspective in the form of Dinsmore’s legal counsel. Both Franc and Sourwine say they were drawn to Dinsmore because of their unique combination of business acumen and their open and direct communication style. Sourwine comments that he never experienced a lawyer pushing back on a project, but recalls Dinsmore coming to him early in the relationship and asking, “I don’t see you getting value out of this project. What are you trying to do?” He further adds that when outside counsel is able to add business value through legal input, it moves the relationship beyond the business realm and helps build a true camaraderie. In fact, Franc said he thinks of Dinsmore as the “family doctor who also makes house calls,” in the sense that they’re always available to help spend time touring operations, getting to know how the business works and are fully invested in finding a solution.

Dinsmore brings a strong and diverse legal base, and embodies what Franc and his team are looking for – transparency, frankness, and trust. As Franc explains, finding and working with the right group of attorneys feels like they’re a part of you, and they become a valuable component of the business. Tri-Arrows has successfully transitioned through a stressful “up for sale” environment and the accompanying uncertainty to a phase defined by growth, innovation and opportunity.

Together, we have accomplished a great deal, including: 

Settling In
Dinsmore handles lease negotiations for Tri-Arrows

Dealing with the Details
Tri-Arrows enlists Dinsmore to manage strategic business issues

The Bottom Line
Dinsmore helps Tri-Arrows manage market risks

Laying the Foundation
Dinsmore helps Tri-Arrows design lasting corporate structure

The Right Way
Dinsmore guides Tri-Arrows through antitrust matters 

Protecting the Future
Tri-Arrows turns to Dinsmore for IP counsel

Above and Beyond
Dinsmore counsels Tri-Arrows on employment matters