DETROIT — Peregrine Inc., an automotive supplier spun off two years ago from General Motors Corp., is fighting to survive.
The new owner announced last week he will close two plants, sell a third and ask creditors for a moratorium on $85 million in debts. One of the plants slated for closure had made a major investment in injection molding operations last year.
Jay Alix, a corporate turnaround specialist who took over the company in April, said he had to take drastic action to stem huge operating losses.
``We are trying to avoid bankruptcy,'' he said. ``The company has serious financial problems. Its losses have been very large, and we can't continue this way.''
To slash costs, Alix plans to:
Close a Livonia, Mich., factory that makes door panels and trim. The plant employs 675, and operates at less than half of capacity. Last year the plant launched new injection molding operations, making door trim substrates, insert substrates and map pockets for GM's Chevrolet Cavalier, Pontiac Sunfire and Grand Prix.
Sell a Windsor, Ontario, plant that makes seats and door trim.
Close a Flint, Mich., plant that produces door hinges, stampings and door modules. The factory employs 734 and operates at less than 50 percent of capacity.
Continue to operate plants in Oshawa, Ontario, and in Warren and Battle Creek, Mich.
Peregrine's troubles could be a major embarrassment to GM, which spun off four parts plants to Peregrine's founders in 1996. If Peregrine fails, the UAW and Canadian Auto Workers may be reluctant to support Delphi Automotive Systems, GM's parts-making division, if it tries to sell off any more plants.
When the cost-cutting is complete, Alix expects to have a company with sales of $350 million, down from $1.2 billion in 1997. That figure made Peregrine the 30th-largest automotive supplier to North America last year, according to Automotive News, a sister publication of Plastics News.
Although the new Peregrine would employ less than half the current work force of 4,600, Alix claims fewer than 200 permanent workers will be laid off.
GM says it will pick up 800 employees, and the eventual buyer of Peregrine's seat plant in Windsor will inherit 1,100 workers.
Alix said he hopes to complete his reorganization by year-end and return Southfield, Mich.-based Peregrine to profitability in 1999.