COLONIAL OPTIMISTIC AFTER FILING CHAPTER 11

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Colonial Plastics Manufacturing Co., a fixture of the Florida PVC pipe market for 35 years, recently filed for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code.

But that doesn't mean the Tampa company is giving up its fight to maintain market share in the competitive pipe business.

``We may be Chapter 11, but we're not history,'' Walter Fultz, president and co-owner of Colonial said.

Fultz said his firm is turning a profit again and has filed a reorganization plan with the court.

Fultz and other regional competitors chalked up Colonial's troubles to a tough market crowded with some tough players.

``The Florida pipe market is one of the most competitive in the country,'' W.C. Wier, president of Accord Industries/Universal 100 Division of Winter Park, Fla., said in a telephone interview.

Prime drivers of that competition are Taiwanese-owned pipe makers J-M Manufacturing Co. Inc. and North American Pipe Co. Both have plants in the region and, competitors say, benefit from vertical integration with PVC resin producers Formosa Plastics Corp. and Westlake Polymers Corp., both of Houston.

``The Taiwanese really creamed [Colonial],'' said Stafford McCartney, general manager of River City Plastics Inc.

Fultz and others said that in 1995, J-M was selling PVC pipe below the price of resin charged by Formosa Plastics, its own sister company. That is the year Colonial ran into trouble.

``It wasn't competition, it was insanity. When you lose money above the line, even before expenses, it gets discouraging.''

But industry sources point out structural advantages the bigger companies hold over smaller, less-capitalized competitors.

J-M and North American were able to build inventory of pipe products when resin prices were low, said one competiting pipe company executive, who did not want to be identified. When PVC prices rose, the larger companies were able to sell off their stockpiles at lower prices than competitors who were selling pipe right off the extrusion lines.

Vertical integration does not have all the benefits competitors say it has because resin and pipe businesses are run separately, the source said. He said J-M and North American buy significant amounts of resin from sources outside their corporate families.

Since 1995, prices have been more stable, Fultz said, adding the margin between PVC price and the finished pipe product is back in the positive range again.

``All we need now is a little more volume,'' he said.

Colonial tied for 59th place with estimated sales of $25 million in Plastics News' 1996 ranking of North American pipe, profile and tubing extruders. But court documents show the actual 1995 sales figure was $12.2 million. Those records also show 1996 sales dropped to $9.55 million.

Colonial filed for reorganization Jan. 6 in U.S. Bankruptcy Court in Tampa. Resin makers Shintech of Houston and Formosa Plastics top its list of unsecured creditors with $1.58 million and about $757,000, respectively, owed to them by Colonial as of Jan. 31. The amount owed to Formosa is being disputed, according to court documents.Colonial lists total debts of $7.34 million and assets of $3.06 million, court records said.