PEREGRINE PREENING `UGLY' EX-DEL PHI PLANT

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Peregrine Inc. is launching new plastics injection molding operations this month at its Livonia, Mich., door assembly plant, hoping to spur a once-troubled facility to profitability.

Throughout 1997, the plant gradually will install nine retooled injection presses coming from General Motors Corp. The first machine was to begin operating early this month.

The presses will mold door trim substrates, insert substrates and map pockets from general-purpose and high-heat ABS resins. The substrates will be used for the rear door panels on GM's Chevrolet Cavalier, front and rear panels on the Pontiac Sunfire and insert panels for the Grand Prix.

The plant makes about 850,000 total doors per year for the three models, said Mitra O'Malley, principal of ITB Group Ltd., an automotive research company in Novi, Mich.

O'Malley estimated annual plant sales, including the molding work, at about $15 million. The presses are capable of molding a combined 3 million panels per year.

Peregrine officials estimate that the molding work will cut $5 million annually in costs to outsource the substrates and map pockets to other suppliers. In addition, another $5 million will be eliminated yearly in inventory and storage costs, said J.J. Reynolds, the plant's chief engineer.

The Livonia plant is one of four facilities purchased in December by Southfield, Mich.-based Peregrine from Delphi Interior & Lighting Systems, a GM subsidiary in Warren, Mich., for an undisclosed amount.

The other Peregrine plants are located in Flint, Mich., and Oshawa and Windsor, Ontario.

The Livonia plant's investment in new equipment was not disclosed. However, Peregrine announced that it plans to make $20 million in capital improvements this year at the four plants.

Before the sale, Delphi had referred to those plants and 10 others as ``the 14 uglies'' because they had underperformed and lacked capacity. Delphi officials chose not to comment on the plants.

Peregrine has set a goal to turn the plants around rapidly. Chairman Edward Gulda said in March that he wants to use the plants as a springboard to launch a $4 billion company. Peregrine officials estimated combined sales at the four plants to be $1 billion in 1996.

At the Livonia plant, the situation was bleak when Peregrine, a newly formed company, took control, plant manager Elizabeth Griffith said in an April 29 interview.

``We walked into a situation where employees harbored a certain amount of animosity for years,'' Griffith said. ``It was at the point where they didn't trust whatever we said or did. Our job was to change that and climb a high competitive wall, so to speak — and do it yesterday.''

The plant is banking on plastic molding to help spur its reversal of fortune. The work adds value to the plant, and could lead to contracts with other carmakers, Griffith said. Currently, Peregrine does virtually all of its work for GM.

Moreover, the molding work might trigger the introduction of other products and processes in the next two years, said Griffith, who served as general manager of Manchester Plastics Inc. in Troy, Mich., before coming to Peregrine in January. The plant may add instrument panels to its product mix, as well as low-pressure and gas-assist injection molding.

As much as 355,000 square feet of unused space is available at the sprawling, 1.25 million-square-foot facility.

The 49-year-old plant has a history of problems dating back to 1986, when GM shifted its seat cover assembly from the facility. Since then, the plant has eliminated more than 3,400 jobs. Currently, it employs 962.

The plant had fallen into disrepair. The roof was in such shambles that it actually snowed inside the facility in January. Parts were being cannibalized from machines to fix the plant's neglected heating and air-conditioning system, Reynolds said.

Meanwhile, the facility suffered what Griffith emphasized were ``horrendous losses,'' although she declined to reveal actual figures.

Delphi reported in recent financial statements that it took a $153 million loss on the sale.

The plant's excess capacity led United Auto Workers Local 174 to send a letter to plant management in January 1996. The Livonia-based local, which represents the plant's 706 hourly workers, demanded that GM shift more business to the plant or they would strike in five days, according to Peregrine.

Local union officials were unavailable to comment.

To mollify the union, Delphi agreed to bring in the nine injection presses, Griffith said.

The machines had been mothballed at a former Inland Fisher Guide plant in Syracuse, N.Y., that closed in 1992. Shipment of the machines did not begin until late last year.

Peregrine is retooling the machines, the oldest of which is 22 years old, Reynolds said. The work includes replacing key parts and refitting the machines with electronic control systems. The machines were placed on cement slabs in a 280,000-square-foot addition built in the 1960s.

They include two Cincinnati Milacron machines, each with a clamping force of 1,500 tons; four 1,000-ton Milacron presses; and three 1,265-ton Husky injection presses.

The machines, which are automated with robotic parts handlers, are capable of processing 165-225 ounces per shot of plastic.

The equipment provides the plant with the capability to process 2 million pounds of plastic annually, Reynolds said. However, the machines will not operate at capacity until the plant receives additional contracts, he added.

Molding is just one element of the plant's operations. The facility also has 12 vacuum forming lines, including eight lines that involve a ``pour behind'' process developed by the plant to shoot urethane into the partly opened mold.

In other cases, a PVC skin bonded with urethane foam is vacuum formed over the molded substrate to create a completed door panel.

The plant also makes door panels by using a glass-reinforced urethane process that includes a layer of fiberglass.

That process, used to make panels for the Pontiac Bonneville and other models, does not require the use of injection molded substrates.

In other Peregrine news, the company has organized its die design and fabrication functions into a strategic business unit called Die Manufacturing Operations.

The operation, based at the Oshawa bumper systems plant, initially will focus on metal stampings.

However, the company may produce plastic molds and do prototyping at the plant.

It has set no timeline to begin making plastic molds, officials said.