Budd Co.'s Plastics Division will scale back its sheet molding compound parts-making business by either selling or closing the Cobourg, Ontario, plant that it purchased just two years ago.
The 140,000-square-foot Cobourg facility, one of four Budd parts production plants in North America, will close April 1 unless it finds a buyer, said Paul Sichert, spokesman for the Troy, Mich.-based automotive parts supplier. The plant, which makes a variety of exterior SMC components, has about 280 employees.
Budd bought the underperforming plant in March 1995 from Tarxien Corp. of Ajax, Ontario, for $1.3 million. At the time, Tarxien officials touted the sale to Budd, a seasoned producer of SMC auto parts, as a means to secure the future of both the plant and its employees.
Three years earlier, Tarxien had threatened to close the facility, which it had owned since 1984, after finding it difficult to muster sufficient SMC business. But the plant's unionized workers agreed to take a 10 percent wage cut, and the facility stayed open, said Linda MacKenzie-Nicholas, president of Local 534 of the Communications, Energy and Paperworkers Union in Cobourg.
``We're in shock,'' MacKenzie-Nicholas said of Budd's plans, which were announced to employees Sept. 10. ``History has proven that we have a very committed work force and a strong working partnership with management. But we also understand the competitiveness of the auto parts business.''
Like Tarxien, Budd had experienced a rocky road generating enough business to make the plant profitable, Sichert said. In addition, the company needs to eliminate excess capacity across its entire SMC operations.
``There's been a lack of new business for the plant and overcapacity in the SMC industry as a whole,'' Sichert said. ``The entire industry is looking at its capacity problem and finding ways to balance it out. While it's not normal for us to purchase a facility and dispose of it two years later, it is necessary in this case.''
Budd's first priority is to sell the 49-year-old plant, Sichert said. But if no buyer is found by Dec. 31, the company will begin phasing out operations and laying off employees, after giving the union a mandatory three-month termination notice.
At least two prospective buyers already have come forward, said Sichert, who did not disclose their identities. No buyers have toured the facility yet, MacKenzie-Nicholas said.
In the SMC auto-parts business, Budd's competitors include Madison Heights, Mich.-based Cambridge Industries Inc. and Bailey Corp. of Seabrook, N.H., a division of Fraser, Mich.-based Venture Industries Corp.
Recently, Cambridge purchased the SMC operations of Cincinnati-based Eagle-Picher Industries Inc. and Akron-based Goodyear Tire & Rubber Co., as well as the Brazilian SMC facilities of Toledo, Ohio-based Owens Corning.
Budd officials did not disclose plant sales or equipment totals. However, when Tarxien sold the facility in 1995, the plant had recorded about $15 million in annual sales. Since that time, the Cobourg plant had stepped up thermoplastic injection molding in an attempt to broaden its sales base, MacKenzie-Nicholas said. The union official estimated that the facility had nine compression molding presses with a maximum clamping force of 1,850 tons and about seven injection presses ranging from 150-1,500 tons. The plant also includes an SMC compounding line and a paint primer line.
Budd also had invested several million dollars to upgrade the plant. Improvements included a new cooling system, robotic materials-handling operations and a central dust collection system, MacKenzie-Nicholas said.
Due to the lack of business, it is not possible to shift work to the plant from other facilities, Sichert said. The plant makes SMC-based spoilers, headlamp doors and cowl and closure panels. Its primary customers include General Motors Corp. and Ford Motor Co., MacKenzie-Nicholas said.
Budd Co. is a division of Thyssen AG of Duisburg, Germany. Budd, which does not break out SMC-related sales, also has SMC parts plants in North Baltimore and Carey, Ohio, and Kendallville, Ind., and makes raw materials at a plant in Van Wert, Ohio. Thyssen recorded about $1.7 billion in sales worldwide during 1996.
Yet, while Budd has been relatively quiet, the company has continued to gain new business, according to information from the Southfield, Mich.-based SMC Automotive Alliance.
Within the past year, Budd has begun molding SMC parts for the new Plymouth Prowler sports car from Chrysler Corp. and the hood on Chrysler's new Lincoln Mercury Navigator sports utility vehicles.
However, in a prepared statement, Budd Plastics Division President Rick Urso said the company's best effort to increase business at the Cobourg plant had failed.
``We paid several million dollars for the facility in Cobourg and invested additional millions for plant improvements,'' Urso said. ``But it hasn't helped stop the red ink from flowing.''
