LDM Technologies Inc. has spun off its recently purchased but underperforming blow molding operations into a new joint venture company with a minority business partner.
LDM and Detroit-area businessman Lawrence Crawford have created DBM Technologies LLC. Crawford, former majority owner of now-defunct blow molder Saginaw Plastic Molding Inc. in Saginaw, Mich., controls 51 percent of the venture, while LDM, an automotive supplier based in Auburn Hills, Mich., owns the other 49 percent.
The company, formed Dec. 31, plans to launch a new, 150,000-square-foot plant in Owensboro, Ky., that will open by early 2000, said DBM Chief Operating Officer Wayne Duda. The company's flagship plant will have 27 single- and double-shuttle blow molding machines and employ about 300.
When the plant opens, DBM will operate five blow molding facilities in Michigan, Kentucky and Tennessee. The DBM plants recorded combined sales of about $56.5 million last year, according to a recent Securities and Exchange Commission filing by LDM, a privately held company with public debt offerings.
The supplier paid $8.4 million to sell the facilities to the joint venture, according to a Feb. 10 filing. LDM also will contribute a subordinated, $1.8 million loan and a $1 million credit line to DBM.
According to a Dec. 29 SEC filing, LDM also is negotiating to sell its Como Plastics Corp. division. LDM bought the non-automotive injection molder, based in Columbus, Ind., from GI Industries of Indiana Inc. in 1993.
LDM officials were unavailable on deadline Feb. 19 to confirm the SEC report or discuss the blow molding spinoff. Crawford also was unavailable.
The blow molding plants were once owned by Kenco Plastics Inc. of Farmington Hills, Mich. LDM bought Kenco for $27.1 million in cash in September 1997.
But LDM discovered that the plants had not performed as the company originally anticipated, according to the SEC filing. The supplier took an asset impairment charge of $10.5 million during the fourth quarter of fiscal year 1998, which ended Sept. 27.
The spinoff could bring new business to those plants, Duda said. Automakers increasingly are seeking work with minority-owned companies, both to reach new consumers and to help those companies succeed.
The spinoff creates one of the auto industry's largest minority-owned blow molders in North America, said DBM commercial director Chris Williams.
The DBM venture targets plastic air-distribution, air-induction and interior systems. Parts produced include heating and air-conditioning ducts, fluid reservoirs and console bins, Williams said.
``Our focus will be strictly automotive,'' Williams said. ``Kenco had performed some non-automotive work, but we see some distinct product areas in automotive where blow molding has more advantages than injection molding.''
In Owensboro, DBM plans to close two existing facilities once owned by Kenco when it opens the new plant.
DBM will lease the new Owensboro site and invest close to $3 million in new equipment, Duda said. The firm plans to shift 24 blow molding machines from the two existing plants and buy three more Sterling double-shuttle machines from Davis-Standard Corp.
The equipment will give the joint venture a total of 81 blow molding machines at five plants, Duda said. DBM also has two plants in Owosso, Mich., and single plants in Gallatin, Tenn., and Corunna, Mich.
The new Kentucky plant, DBM's largest facility, will primarily serve Toyota Motor Manufacturing North America Inc., Duda said. The company will supply parts for a new pickup truck and sport utility vehicle to be launched at Toyota's Princeton, Ind., plant and its Avalon car built in Georgetown, Ky.
DBM will move its headquarters in mid-March from LDM's headquarters to new offices in Pontiac, Mich., Duda said.