Uniroyal Technology Corp. has exited its financially troubled automotive vinyl products business by selling the operation's technology and some assets to main competitor Canadian General-Tower Ltd.
Uniroyal, based in Sarasota, Fla., had announced in December that it would shed its automotive vinyl coatings business conducted at its Stoughton, Wis., and Port Clinton, Ohio, plants.
A letter of intent was signed Nov. 18 to sell equipment and technology at the Port Clinton facility to Cambridge, Ontario-based Canadian General-Tower. The sale, terms of which were not disclosed, is scheduled to be completed by August, said Martin Gutfreund, Uniroyal's vice president of administration.
In May, Uniroyal also sold the vinyl forming technology at its Stoughton plant to Canadian General-Tower. Although terms were not revealed, a recent Securities and Exchange commission filing said the company could earn as much as $3.2 million from the Stoughton technology sale.
Uniroyal plans to keep the Stoughton plant open and add manufacturing capacity there for its Naugahyde-brand vinyl products. The 240,000-square-foot Port Clinton plant, which employs 141, is scheduled to close in August, Gutfreund said.
Canadian General-Tower is one of a small handful of major producers making coated vinyl sheet products for automotive interiors. The vinyl skins are used mainly as a protective and aesthetic covering for door panels, seats and instrument panels.
The company expects to record about $146 million in 1997 sales, according to previous Plastics News articles. Its auto interior product line is made at both its Cambridge plant and a Toledo, Ohio, facility operated by its Textileather Corp. subsidiary.
It was not known whether the Uniroyal business would be shifted to Toledo-based Textileather or the Cambridge plant. A Canadian General-Tower spokesman was traveling and unavailable last week, and a call to a company top official was not returned.
At Uniroyal, the automotive segment had severely drained profits from its coated fabrics division, which also makes Royalite and Naugahyde vinyl coatings. The auto operations suffered an operating loss of about $7.6 million in fiscal 1996 and a loss of close to $17 million for the 1994-1996 fiscal years, according to SEC filings.
Consequently, Uniroyal established $12.5 million in loss reserves in fiscal 1996 to excise its automotive business.
``Reaching critical mass for our [automotive operations] would have taken a major amount of capital,'' Gutfreund said. ``In our best judgment, it was not a good use of our assets, especially with the volatility in the automotive industry. It was a better idea to find a partner to properly transfer the business to so we could honor commitments to our customers.''
The Port Clinton plant primarily makes interior vinyl skins for Honda Motor Co. Ltd., while the Stoughton plant mainly makes vinyl door panel and seat coverings for General Motors Corp. vehicles.
Specialized forming material, mixers and other proprietary equipment at the Port Clinton plant will gradually be shifted to Canadian General-Tower, Gutfreund said.
The firm plans to retain equipment at the Stoughton facility and shift production to Naugahyde vinyl, which is used extensively in commercial seating, restaurant and personal watercraft markets. The plant's technology to make automotive vinyl sheets has been shifted to Canadian General-Tower, Gutfreund said.
The sale should substantially improve earnings prospects for Uniroyal, said equity analyst Joseph Phillips of Freeman Securities Co. Inc. in Jersey City, N.J. That side of the business was chronically unprofitable, he said.
``The automotive industry is explicitly targeted by the company as its weakest link,'' he said. ``We're encouraged by the news, and we'll see how it plays out. The profitability of the [coated fabrics] segment has been obscured for a long time by the problems with the automotive area.''
In other news, the firm plans to spend more than $6 million over the next year to renovate its Stamford, Conn., plant, Gutfreund said. The operation makes cast-cell acrylic products for the aerospace industry and other high-performance applications.
In August, the company purchased the super-abrasion-resistant acrylics coating business of ICI Acrylics Inc.'s Lucite sheet division. The operation, based in Willow Bank, Del., primarily makes bulletproof and scratch-free plastic for security glazing markets.
Uniroyal will shift technology from the ICI plant to its Stamford facility while it undergoes the multimillion-dollar renovation.
Uniroyal expects to record about $206 million in sales for its current fiscal year, which ends in September. Of that total, about $58 million comes from its coated fabrics division.
The company ranked 42nd on Plastics News' list of film and sheet manufacturers with $115.1 million in North American film and sheet sales for 1996.