Customers of Cambridge Industries Inc. have stepped forward to help it ease its money woes, as the automotive supplier closes in on a sale. The Madison Heights, Mich.-based, Tier 1 molder announced March 23 it has concluded a financial agreement with its banks and customers. The funds will carry Cambridge over until it completes the sale of a division or the entire company sometime in the second quarter.
The company has had several potential buyers check it out and has narrowed them down to an unspecified "short list," said John Sieg, vice president of marketing and communications for Cambridge. Some firm offers should arrive in the coming weeks, he added.
Richard Crawford, founder and chairman of Cambridge, said, "Thanks to our bank lenders and certain customers, we now have the support we need to continue working with prospective buyers to assure an effective transition in the sale of our company."
Cambridge posted $487 million in total sales in 1998, but $16 million in net losses through the first nine months of 1999. It placed itself on the market in February.
The business suffered what it called "short-term liquidity problems" this year, faced with the high cost of preparing for new contracts. While the work represented good business, Cambridge would not see an immediate return on its investments.
Customers including General Motors Corp., Ford Motor Co. and its Volvo Car Co. subsidiary, DaimlerChrysler AG, and heavy-truck makers Freightliner Corp. and Paccar Inc. all are helping out, said Sieg.
The company would not elaborate on the type of assistance it received, beyond stating that customers have agreed to "changes in payment terms" that help with liquidity, Sieg said.
"As a result, our bank lenders were comfortable supporting the company through the remainder of the sales process," Crawford said. "This means that we will be able to continue our capital expenditures while we bring the sales process to completion."
GM has helped suppliers before, said Mark Ruf, director of supply risk management for the Detroit-based automaker.
"Occasionally, some suppliers encounter financial difficulties, and we will try to work with them to the extent that we believe it is necessary and appropriate to do so," he said in a written statement.
Cambridge is a key part of GM's $250 million plan to produce plastic pickup boxes for two of its models starting later this year. Its Chevrolet Silverado will have an optional reaction injection molded pickup box available starting later this year. The Chevrolet Avalanche, due out early in 2001, will come with a standard RIM box.
The supplier has invested nearly $10 million for future projects within one three-month period, including the GM boxes, reopening a shuttered plant in Huntington, Ind., to produce the pieces.
Those preparations will continue on schedule thanks to financial help from customers.
"It will give us the time we need to complete the sales process we're going through," Sieg said. "We're very pleased. The evidence suggests that they have confidence in the steps we've taken."