In two unrelated but strategic moves, auto supplier Cambridge Industries Inc. is negotiating to buy injection molder Huron Plastics Group Inc. and has decided to mothball a Huntington, Ind., molding plant purchased in July.
Cambridge, based in Madison Heights, Mich., signed a letter of intent Aug. 26 to buy the issued and outstanding shares of Huron and the assets of its Tadim Inc. business entity for $60 million, according to a Dec. 2 Securities and Exchange Commission filing by Cambridge.
Cambridge also would pay $15 million to certain shareholders of the St. Clair, Mich.-based processor to cover noncompete covenants and employment and consulting agreements, the filing stated.
Huron would add roughly $80 million in injection molding sales to Cambridge's yearly molding business, mostly in automotive parts. But top officials at both auto suppliers cautioned that a definitive deal had not been signed and significant conditions still must be met.
Further, Huron President Arthur Goodsel said the letter of intent to buy his firm had expired Nov. 15 and that talks had cooled since then.
``At this point, we've signed nothing and have made no obligations or commitments,'' Goodsel said. ``[Negotiations] are not completely dead, but Cambridge hasn't met the objectives and appears to be stepping away from it.''
While Cambridge President Kevin Alder confirmed that the deal had not been consummated, he stressed the purchase was still on the table. Neither Alder nor other Cambridge sources acknowledged that the letter of intent's deadline had passed. Nor was that fact included in the SEC filing.
The company prospectus was filed with SEC two days before a Cambridge board meeting Dec. 4 to discuss business strategies, Alder said. The filing was needed, in part, because in July privately held Cambridge issued $100 million in senior subordinated notes to institutional investors to fund two plastics purchases.
Cambridge paid $75.5 million in July to buy the plastic molding divisions of both Cincinnati-based Eagle-Picher Industries Inc. and Akron, Ohio-based Goodyear Tire & Rubber Co. The divisions, which together generated more than $160 million in sales last year, primarily process sheet molding compound.
Cambridge plans to shut down one of four Indiana plants it picked up as part of the Eagle-Picher purchase five months ago. Alder said the 174,000-square-foot plant in Huntington could close as soon as Jan. 31 or as late as early spring, affecting 210 nonunion jobs. Cambridge will attempt to relocate the displaced workers to other facilities.
The Huntington site was running at less than 50 percent capacity and last year provided just $14 million in sales—not enough to support itself, according to Alder. Cambridge considered loading new business into the facility to keep it open, but decided to add that business at plants nearer to customers' assembly facilities, he said. Though it will relocate Huntington's 24 presses and a paint line to other sites, Alder said the plant still could reopen in the future.
``We'll take another look at the plant on a longer-term basis as we grow,'' he said.
The plant compression moldds SMC exterior body panels for heavy-truck customers like Volvo North America Corp. and General Motors Corp. While about two-thirds of Cambridge's sales are in such thermoset-based products, the firm would like to expand its operations in thermoplastics molding, Alder said. Huron, which injection molds thermoplastic auto components, would fit that strategy. Cambridge did roughly $95 million in injection molding sales for 1996, placing it 49th among North America's top molders, according to Plastics News' ranking of those firms.
``We'd like to see growth across the board in both thermoplastics and thermosets,'' Alder said. ``[Our niche] is as a plastics molding company that has the flexibility to work with either composites or thermoplastics, depending on our customers' needs.''
Alder said Cambridge's board would decide whether to proceed on buying Huron. That decision was not known at press time.
Huron's 107 injection presses mold products that include interior trim, body panels and underhood components from such materials as nylon, acetal, polyester and polypropylene, according to information from East Lansing, Mich.-based research group Elm International Inc. The molder has two plants apiece in St. Clair and Port Huron, Mich., and facilities in Croswell, Mich., and Harlingen, Texas.
Goodsel said that, barring a Cambridge deal, the privately held company is not being offered for sale.
Meanwhile, Cambridge plans to spend more than $20 million next year to upgrade as many as eight of its facilities and possibly build new plants closer to its customers, Alder said. Specific plans are yet to be determined.
Cambridge has continued on a sharp growth curve. The company expects to record more than $500 million in sales this year, up from about $400 million in 1996. New contracts should bring next year's sales to close to $750 million, Alder said.