After two years, custom molder Shaw Plastics Corp. has emerged from bankruptcy with a financial game plan in hand. ``We've been given a complete release,'' said Stanford H. Shaw Sr., owner and president of the Middlesex, N.J., company, which filed for Chapter 11 in December 1993.
In late November, a bankruptcy court judge in Newark, N.J., approved Shaw Plastics' reorganization plan to pay back creditors, Shaw said in a recent telephone interview. Meanwhile that debt has been pared from $3.1 million to $1.15 million, mainly because Shaw has secured a buyer for its former Berkeley Heights, N.J., headquarters plant, which during the 1940s housed asbestos shingle manufacturing. Shaw bought the plant in 1968.
The molder literally has been digging itself out of the inherited debt, since the surrounding property served as a dumping ground for asbestos at a time when the material was considered ``good fill,'' Shaw said. A state environmental law stuck Shaw Plastics with cleanup costs, which involved digging up the contaminated dirt and carting it off to an approved disposal site, he said.
The firm has spent about $500,000 toward the cleanup, but the undisclosed buyer is finishing the job, which likely will cost another $500,000, said Shaw. He said once the area is ``squeaky clean,'' it will be converted to a low-cost housing site.
``That's a big albatross off our back,'' he said.
Though business has dropped from $6 million in 1993, to $4.8 million this year, Shaw is optimistic about future growth. Those sales come mainly from custom molding of engineered plastics for the electronic, aircraft, automotive and medical markets; a proprietary line of wire spools makes up a minor 10 percent, he said.
Soon after filing Chapter 11, Shaw brought in consultant Fred Sutro to help restore Shaw Plastics to profitability. After a nine-month stint as president, Sutro turned the company over to Stanford Shaw, whose grandfather founded it in 1892 as an insulation manufacturer.
Today, the company does injection molding on 18 presses in Middlesex, its headquarters since 1986; and compression and transfer molding, on 20 machines, in Stroudsburg, Pa.
Sutro said the firm had to shrink its costs by cutting its Stroudsburg operations in half and laying off 25 workers. He said Shaw sold the Stroudsburg plant, and now leases space there for thermoset molding.
``We couldn't get any new business as long as we were in bankruptcy,'' he said. But, he said the firm's major accounts, including AT&T, stayed faithful.