Dutch company to buy Townsend Engineering

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Des Moines-based Townsend Engineering Co., which revolutionized meat processing with its patented skinning and deboning equipment, will be sold to a Dutch company in a deal CEO and owner Ted Townsend says will keep 200 local jobs secure and allow the company to launch new product lines.

The sale of the company founded by Townsend’s father, Ray, in 1946 to Stork Food Systems for an undisclosed price is expected to become effective Jan. 1, according to the terms of an Oct. 17 letter of intent signed by Ted Townsend. The Des Moines operation will continue to be known as Townsend Engineering and Townsend will remain its chief executive. No management changes are planned.

“These jobs are as safe as I can make them,” Townsend said. “[The sale agreement] is without question the best I could ever deliver to the employees of this company and the people of this community.

“This sale is the antithesis of what we have seen, with so many Iowa businesses that have gotten sold and then left. [Townsend Engineering] will stay in Des Moines and grow the employment base. The management team stays in place. I stay here, and my future remains intimately tied to the success of this company.”

Townsend, which has annual revenues of about $80 million, will provide the core for the world’s largest food machinery manufacturer as a result of the sale. Stork Food Systems is owned by Stork NV, which has annual sales of about $2.2 billion in myriad industries ranging from engineering to aircraft maintenance. Stork Food Systems designs, produces and maintains industrial systems and product lines for the processing of meat and poultry and the production of convenience food. The group had revenues of approximately $180 million in 2004.

Townsend Engineering, which also employs 200 people at its facility in the Netherlands, has had a business relationship with Stork for several years. In 2001, Townsend and Stork Protecon-Langen integrated to form Townsend Protecon-Langen, based in Oss, Holland. That venture created a full-line supplier of equipment for the red and white meat processing industries, and Stork’s acquisition of Townsend Engineering will allow it to expand further into the red meat sector.

Townsend Engineering President Theo Bruinsma said the company’s products “form a seamless fit with the portfolio of Stork.”

“Just like Stork, Townsend is known throughout the world as providing innovative and reliable solutions to the food processing industry,” he said.

Townsend said he has had other offers to sell the company “for many decades, multiple times a month.” The sale to Stork better poises Townsend Engineering to launch “a new bit of technology that is dramatic and powerful and will revolutionize how the world manufactures sausage,” Townsend said.

“It’s substantial enough that we needed greater resources to introduce it. I could have mortgaged my house, shoes, clothes and gone into every dime of debt I could raise, and it still would not have been enough.”

However, Townsend, 57, said the primary motivation for selling was to put the company on solid financial footing “in the next inevitable level of ownership.”

“I’ve been sole owner of the firm for 10 years and a majority shareholder for 20, and there are things that happen in life that we can’t predict,” he said. “It puts employees in the future at the mercy of my good fortune. If I faced catastrophe, the sale would have been forced on a time constraint that I did not have if I got to participate in the decision.”

Townsend said he has felt a sense of obligation since he was a teenager to ensure a smooth ownership transition for the company’s employees. “The people who have become my new partners do not just buy and sell companies casually,” Townsend said. “Locally, this is the best I could do.”

Day-to-day operations at Townsend Engineering will not change substantially. The overall compensation package, including a range of generous benefits and perks for which the company has become known, will remain the same or improve, Townsend said.

“The signature benefit of which people are most aware is the occasional trip [to places such as Puerto Rico],” he said. “That will be very difficult for Stork, which employs 12,000 people internationally, to do, but other aspects of the Townsend corporate culture will stay in place. Stork understands that.”