A unit of Danish industrial-equipment manufacturer FLSmidth & Co. A/S has bought the materials-handling business and name of RAHCO International Inc., a longtime Spokane concern, in a transaction the buyer says likely will lead to employment growth here.


The acquisition, which was completed early this month and was valued by FLSmidth at $19.5 million, included RAHCOs assets related to the engineering and sale of big conveyors, stackers, and other equipment used in the mining industry, as well as canal construction equipment and potash and salt harvesters. It also included a RAHCO sales unit in Chile. The operation will continue to be based in Spokane and now is doing business under the name FLSmidth RAHCO Inc., says Darrell White, its president and CEO.


Longtime RAHCO owner Richard Hanson, meanwhile, has retained RAHCOs fabrication operation, located along east Magnesium Road in North Spokane, as well as its business lines that manufacture and sell heavy-duty forklifts and road graders and side-hill harvesting technologies for agricultural combines. Hanson says those operations will go forward under the name The Factory Company International Inc.


Both parties say The Factory likely will be a key contract manufacturer for FLSmidth RAHCO.


At the time of the sale, RAHCO International employed about 185 people. Of those, about 75 have moved over to FLSmidth RAHCO, and the other 110 now work for The Factory.


FLSmidth RAHCO is part of a group of companies under the umbrella of a Bethlehem, Pa.-based unit of FLSmidth called FFE Minerals. FLSmidth, which is based in Copenhagen, Denmark, is a 125-year-old, publicly traded conglomerate that focuses on manufacturing industrial equipment primarily for the cement and minerals industries. It employs about 5,850 people and expects 2007 sales of roughly $3 billion.


White says FLSmidth RAHCO expects within the next six months to move from the former RAHCO complex on Magnesium to an office setting elsewhere in the Spokane area, since its operations now will focus on engineering and sales. He says the company will look for office space thats large enough to accommodate about 100 employees, because he expects the operation to grow.


We have a lot of work right now, and were looking for people, he says. We foresee, being now part of a broader, global operation, that well see some trickle down of business from the parent organization.


He adds, They have high expectations for growth, and they expect RAHCO to help fuel that growth.


FLSmidth said in its announcement of the acquisition that it expects the Spokane unit to do more than $20 million in sales this year.


White, who previously served as vice president for business development at RAHCO, says the Danish company is committed to keeping the operation in Spokane. They like to sprinkle their operations around the world, he says.


Both White and Hanson say the marriage between the two companies is a good one. They were not competitors, and FFE Minerals saw RAHCO as having the expertise it needed to be able to sell complete materials-handling systems to its mining customers. While FFE Minerals is well known for making equipment to crush and process materials, RAHCO is known for making equipment that can move those materials to and from such equipment.


Also, says White, FFE Minerals is more of a traditional manufacturer that makes and sells established lines of equipment, while RAHCO has been known for designing sometimes unique equipment from scratch to meet a customers needs. We bring that outside the box thinking, which has been our hallmark, he says of the Spokane operation.


Says Hanson of FFE and FLSmidth, Their business is going to benefit because theyll be able to offer technology they couldnt before, and RAHCO will benefit because they have far more presence in the world market.


Hanson says he had for some time engaged a business broker to look for possible buyers for RAHCO because he believed the company would be difficult to sell, given its untraditional product lines, but says in this case, FLSmidth called him with the idea of making the acquisition.


He says he also was considering selling the business to two other possible buyers, but chose FLSmidth because the Danish company wanted to keep the operation in Spokane and keep its management and engineering team in place.


It looked like it would be the smoothest and most seamless transition for our employees, he says.


The Factory


Hanson says the sale of RAHCOs materials-handling segment will allow him to reduce the hours he spends in the office, because he says running a fabrication plant takes far less ingenuity and creativity than developing new equipment for customers. Still, he expects The Factory to be a going enterprise that should consistently employ more than 100 people here.


Though he calls it a steel-fabrication business, The Factorys capabilities will go well beyond cutting and welding steel, Hanson says. The company will continue to employ people who can build electrical, hydraulic, and other systems, and will be able to put together a complete machine, he says.


From now on, though, most of what The Factory will make will carry the name of its customers.


We expect to do a lot of work for FLSmidth, as well as work for others that need a factory, Hanson says, adding that heavy-equipment makers increasingly are looking to contract manufacturers for some or all of their production.


The Factory also will have engineers who can develop or modify products for customers not in markets RAHCO traditionally had served.


The Factory currently is building natural gas and oil drilling rigs for a Canadian company that is using the rigs in Texas, Hanson says, declining to name the customer. RAHCO had begun doing that work about 18 months ago, and Hanson retained that business after the recent asset sale.


He says RAHCO got into oil-rig construction, which it hadnt done in the past, when business was a little slow and we were fishing for work. He heard about demand for new oil rigs and a lack of factory capacity to produce them, and pitched the Canadian company on RAHCO doing the work.


RAHCO shipped its second such rig in February, and The Factory has orders for five more. Each rig takes six to nine months to build and requires 18 long-haul trucks for delivery. Hanson estimates such rigs sell for roughly $4 million.


He says he hopes to broaden further The Factorys scope and customer base, perhaps doing more in the construction, marine, and energy industries.


The company will continue to make and sell the heavy-duty fork trucks RAHCO introduced last year, which are targeted for use at such places as seaports, steelyards, and concrete plants.


It also will continue building specialty road graders, and will make and install the self-leveling components necessary to enable agricultural combines to harvest grain efficiently on steep side hills. Hansons father, Raymond Hanson, invented the self-leveling device in the 1940s, while working on the family farm in the Palouse, and founded R.A. Hanson Co., the predecessor to RAHCO International, in 1946.


Richard Hanson bought the company from his father in 1995, after having led it for a year. Over the years, the company has done everything from hiding MX missiles underground for the Pentagon, to building big aqueducts in California, to developing remote-controlled vehicles to haul radiation-contaminated debris.


FLSmidth RAHCO


Its the big, mining-site conveyors and stackers, however, that have accounted for much of RAHCOs business in recent years, and thats the expertise FLSmidth wanted when its FFE Minerals arm bought RAHCOs materials-handling business, says White.


In its most recent annual report, FLSmidth, which is best known for its concrete plants and related equipment, said that it intends for its minerals division to provide a greater share of the companys overall earnings in the future. In addition to buying the RAHCO assets, FFE Minerals also recently bought a minerals-equipment company in Germany called KOCH Transporttechnik GmbH, and already owned another such German company called MVT Materials Handling GmbH.


White says MVT has experience with stacking materials at seaports and with loading ships, while KOCH is known for whats known as pipe conveyors, in which a belt is in the form of a pipe, so the materials are fully enclosed while being moved. We each bring something to the party, he says.


He says the Spokane operation now will work closely with those sister companies and other FFE Minerals operations in marketing efforts that will enable the group to offer complete mining-site systems.


FLSmidth RAHCO currently has contracts with a host of customers around the world, including in Latin America, the Middle East, Australia, and Canada. Most of its contracts prohibit the company from identifying the customers name or details about the work, White says. The equipment, though, is similar to what RAHCO has built in the past, including 2,300-foot-long conveyor systems that can move up to 10,000 metric tons of material an hour, and equipment that can harvest potash from lake beds for use in fertilizers.


White says the global reach of FLSmidth should help the Spokane operation reach further into markets in which it has had spotty success, including China.


Separating from the RAHCO International family, though, will be difficult, he says. Though the two companies will work closely together in the future, there are longtime co-workers who now work for different companies, and that will be hard for a while, he says.


He adds, We owe everything to Richard. This company is still here because he believed in its employees.


Contact Paul Read at (509) 344-1262 or via e-mail at paulr@spokanejournal.com.