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More than half of AirBoss’s sales are now generated by products in its defence group, which include personal protective equipment.narvikk/iStockPhoto / Getty Images

It’s hard for investors not to get mega-excited by megacap stocks that grow into global behemoths based on a conceptually simple product or idea: Apple (iPhones), Amazon (online retail dominance), Tesla (electric cars) and, while it prospered, BlackBerry (the keyboard-equipped cellphone).

Below that are mid-tier success stories that expand in bumpier ways, sometimes in response to fundamental shifts in society company founders couldn’t have foreseen. AirBoss is a prime example. Engineer and entrepreneur Gren Schoch (he’s still chairman and CEO) co-founded the company in 1989 with a partner, intending to produce an airless tire for forklifts and other industrial uses. Hence the AirBoss name. But early on, they bought a million-square-foot rubber compounding plant on 16 acres in downtown Kitchener, Ont. “It was very underutilized,” says AirBoss president Chris Bitsakakis, who joined in 2017. “They got hundreds of millions of pounds of rubber going through here.” AirBoss is now the second-largest custom rubber compounder in North America.

Growth has come from a mix of organic expansion and acquisitions. AirBoss now has 10 factories in Canada and the eastern United States, and three major product categories. Its rubber solutions division produces more than 500 million pounds of custom compounded material a year. The engineered products division grew out of a maker of anti-vibration rubber and bonded rubber-to-metal parts in Detroit that AirBoss bought in 2015.

But more than half of AirBoss’s sales are now generated by its defence group, and most of those sales are in the U.S. They include personal protective equipment such as gloves, gowns and powered air-purifying respirators (PAPRs) for health care. Much of the rest are military, including blast-pressure monitors and specialized boots, gloves and gas masks that protect soldiers from chemical and biological attacks, as well as radiation. Sales soared early in the COVID-19 pandemic after Washington ask AirBoss for help, and Bitsakakis says there’s been a flood of inquiries about military equipment because of hostilities in Ukraine.

The higher sales will likely last as the U.S. and other countries build up stockpiles in case of emergency. “We’re now able to take away this sort of fragmented thing where you have to knock on every hospital door,” he says.

Schoch remains the biggest shareholder in AirBoss, at 18%, and Bitsakakis and other executives have single-digit stakes. He says short-term share price swings frequently puzzle them, but compared with multiples paid for competing companies, “even when it hit $42, we still think it was undervalued.”

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