Husky Injection Molding Systems Ltd. announced June 10 it will center all large-tonnage injection press production in Luxembourg and close its manufacturing operation in Pittsfield, Mass.
About 135 Husky employees work at Husky's Pittsfield operation, which assembles presses with clamping forces of 1,000 tons and larger. For the past four years, Husky has leased 53,000 square feet of space at GE Plastics' massive Polymer Processing Development Center. Before that, Husky had assembled large presses at a smaller-scale site at Epco's Fremont, Ohio, plant since 1991.
Husky will begin phasing out operations Oct. 1 and finish by the end of the year.
While the decision means Husky no longer will manufacture large injection presses in North America, Husky said it will establish a dedicated North American Large Tonnage Group at its new, 100,000-square-foot technical center in Novi, Mich. The company is finishing an 8,800-ton press there now to demonstrate the molding of large automotive parts, an important market for large molding machines.
``Our large-tonnage group will be in Detroit; we're not assembling in Detroit,'' said Michael Urquhart, vice president of marketing for the machinery company in Bolton, Ontario.
Husky said it does not know yet how many Pittsfield employees will be laid off. Some will be transferred to Detroit and other locations, Urquhart said.
Husky held an initial public stock offering in Canada in November. This year, the company has issued several statements warning investors that financial performance will be lower than expected. The latest came in Husky's report for the third quarter of 1999, which ended April 30. Husky said sales for all of fiscal 1999 will be about 5-10 percent lower than in 1998, when year-end sales totaled US$762 million. Profit also will be lower than the previously expected range of 20-30 U.S. cents per share.
In the third-quarter report, issued June 1, Husky blamed a slowdown in plastics machinery sales on the economies in Europe and the Asia-Pacific region, and costs from opening production facilities. The company also cited costs of moving hot-runner production from Bolton to a major new operation in Milton, Vt., which opened last fall.
Urquhart stressed that closing Pittsfield and creating the Detroit center is a long-term decision, and is not based on short-term results. In North America, he said, Husky is enjoying double-digit sales gains.
``This is a growth year for us,'' he said.
Canadian stock analysts who cover Husky could not be reached for comment immediately after the June 10 announcement. Husky's stock closed June 10 at C$7.60 (US$5.16) per share, down from a high of C$16.40 (US$10.82) in January. Most of that drop occurred in February, after the firm first warned investors that its earnings would not meeting analysts' expectations.
Husky said it will take a one-time charge of about US$2.5 million in the fourth quarter to phase out the Pittsfield operation.
Moving the production to Luxembourg makes sense, said Urquhart and Helmut Hock, general manager of large-tonnage machines at the Dudelange, Luxembourg, factory.
Husky has been building large-tonnage injection molding machines in Dudelange since 1985. European suppliers already provide the large castings for Husky's big machines. Hock said the machines are designed in Luxembourg. For example, engineers there designed the Reflex platen for Husky's two-platen machines, called the E-series. E-series machines come in clamping forces of 1,000-8,800 tons.
``Engineering responsibility for the large-tonnage machine resides in Luxembourg and has always been here,'' Hock said. ``We're going to be concentrating our large-tonnage manufacturing in Europe, for the global market.''
Urquhart said: ``A lot of the components are sourced out of Europe already. This gives us a single focus in engineering and more volume efficiencies in assembly and purchasing.''
Urquhart said the Detroit big-press center will be a full-service operation, including training, demonstrations and mold tests, engineering support and field sales. A 250-ton crane can handle big machines and molds.
The Detroit facility is scheduled to open in August.
Husky assembles the really large machines — those of more than 4,000 tons — at customers' plants. For machines of 3,000-4,000 tons, the company gives the customer the option of assembly at Husky or in the customer's plant.
Husky's lease for the Pittsfield space ran to 2003. GE spokesman Robert Hess had no information on what will happen to the lease.
Hess also said GE Plastics has not decided yet if it will rent the space to another company.
``We had a great relationship with them. It's ideally suited for what Husky was doing,'' Hess said.
Husky said demand for PET preform equipment has declined in Europe, Asia and Latin America. North American PET orders are up significantly this year, but not enough to offset weakness in the other markets, the company said in the third-quarter report.