The new owners of the former Shawnee Plastics LLC operation plan to upgrade the custom injection molding business to make it more competitive.
An investor group bought the Kuttawa, Ky., operation Feb. 21 and plans to spend $300,000-$500,000 to upgrade or replace injection presses and painting and decorating equipment, said its new president, Michael Sullivan.
Shawnee supplied high-quality moldings such as logos for auto companies, but it suffered from lack of investment and weak sales efforts, said Sullivan, who heads the renamed operation, Diversified Decorative Plastics LLC. Shawnee's sales dropped 50 percent in four years to its recent annual level of about $8 million, he said in a telephone interview.
Dale Wendel, former Shawnee president and co-owner, said Shawnee had been saddled with debt since he and partner Harry Preucil bought the firm in 1996. A string of bad luck worsened its financial problems.
Sullivan said he came on board in July when Shawnee's major lender, CIT Group, was about to foreclose on a $2.5 million note. Sullivan helped arrange a short-term $284,000 loan from CIT and an undisclosed Shawnee customer to keep the firm afloat.
Meanwhile, the Chicago office of investment banker Hindin/ Owen/Engelke Inc. sought a buyer for Shawnee. When none was found, the investment banker assembled a group of private investors, including Sullivan and Hindin/Owen/Engelke principals, to buy certain assets of Shawnee.
Sullivan did not reveal terms of the purchase made at a public foreclosure sale.
Sullivan said the new firm will continue in its core business of emblem molding and decorating at its 20-press, 63,000-square-foot plant. Automotive is its main market; it also sells parts to the plumbing, golf cart and other industries. Sullivan said Diversifed Decorative will expand its emblem and logo technology into new markets.
The new owners expect to make the Kuttawa business profitable by cutting costs, expanding its sales force and upgrading with state and local assistance. Sullivan predicts sales will jump this year as previous Shawnee customers return to the revitalized business. Diversified Decorative employs about 150 and expects to boost that eventually.
The company will continue to use Zimmerman & Sons of Troy, Mich., as its sales representative to the auto sector.
Sullivan said Shawnee continued running its presses, ranging as large as 500 tons, while the firm's future was being decided. He joined the operation a few months after leaving his previous position as director of manufacturing for auto parts molder and supplier Delmet Corp. of Nashville, Tenn.