Richard Crawford admits he started Cambridge Industries Inc. by buying "three-legged, one-eyed-dog" companies that nobody wanted. Before he purchased them, some of the companies lost millions of dollars annually. Crawford built his reputation doing corporate turnarounds. In the process, he created a company that is too big to fail. Crawford put that concept to the ultimate test Feb. 14, when he announced that Cambridge needed a cash infusion to stay afloat, and that he was seeking buyers for part or all of the company.
Ford Motor Co. and General Motors Corp. quickly came to Cambridge's aid, because they had too much at stake to let Cambridge collapse. According to our sister publication Automotive News, at least one of the automakers stepped in to give Cambridge short-term "limited financial and management assistance" to deal with its liquidity problems.
Without Cambridge, the auto industry would be hard pressed to find a quick source for many parts made of sheet molding compound. More important, the success of GM's and Ford's experiments in commercial production of plastic pickup truck boxes also depends on Cambridge.
According to Cambridge, its financial strain was the result of the sheer quantity of new work from GM and Ford. Cambridge needed to spend heavily to prepare for production. But the return on the investment wasn't immediate, and Cambridge owners — Crawford and Bain Capital Inc. — decided not to ante up.
The timing of Cambridge's gambit is interesting. Plastic truck boxes could be the breakthrough application that SMC suppliers have waited a decade to experience. In fact, many grew tired of waiting, which is why Cambridge was able to acquire such a big chunk of the SMC market.
There's still one major question to which no one knows the answer: Will consumers accept plastic instead of steel in pickups? If plastic beds are durable and the trucks are sold at a competitive price, we're betting the public will snatch them up.
And if the price of gasoline stays in the stratosphere, trucks making use of plastics will have a huge competitive advantage, because their lighter weight means better fuel economy.
Crawford's three-legged, one-eyed dogs may turn out to be purebred greyhounds after all. But that will depend on finding a new owner with cash, and a little more patience.