Petrucci's views on the credit crunch

Well known mold maker BA Die Mold Inc. in Aurora, Ill., is featured today in a New York Times story on how the credit crunch is impact small manufacturers.

The story, headlined "Small businesses feeling the chill," quotes BA Die Mold CEO Alan Petrucci starting in the second graph. He says his bank recently offered him a loan, and even though business is good right now, he won't borrow money to expand, only to upgrade.

"We are bracing for the downturn that is coming," Petrucci told the Times. "It is coming; there is no question about that."

Petrucci's take on the credit crunch is that banks have shed risky borrowers, but still are actively seeking business from creditworthy businesses, like BA Die.

With $2 million in annual revenue, almost no debt and enough orders to keep busy through January, Petrucci's lenders are coming to him, he says.

The rate they offer has risen to 7 percent, a percentage point more than in mid-September, but the lenders are persuasive. Petrucci says he will soon borrow $200,000 to replace an aging computer-controlled lathe and to acquire the latest in electrical cutting gear.

"We are not going to increase capacity; we are buying this equipment only because we want to do things better," Petrucci asserted. "We are gambling that this financial disaster is going to have a controlled solution, and hopefully it won't impact us too greatly."

The story goes on to briefly tell the story of how BA Die weathered the downturn that slammed U.S. toolmakers in 2001, when about 70 small shops in the Chicago area went out of business. Our reporter Rhoda Miel covered BA Die's comeback story last year, so if you want more detail check out our story.

I wonder, are other toolmakers and processors in agreement with Petrucci's take on the credit crunch? Is anyone having trouble getting credit to expand, make acquisitions, or just survive?

We had two credit crunch stories in this week's issue ("Economic woes a blow to struggling sectors," and "Tight credit squeezes machinery sales." We wi'll continue to follow (and editorialize) on this important problem.