Rapid Technologies Inc. is taking over automotive injection molder Premier Plastics Technologies Inc. Williams Controls Industries Inc. announced last week it has agreed to sell the majority of the subsidiary to its competitor. Though the deal is not scheduled to close until the end of the month, Rapid already has assumed responsibility for operations, said Manu Bhatia, chief executive officer of Auburn Hills, Mich.-based Rapid.
Terms were not disclosed.
Rapid and its part-owner, 3DM of Madison Heights, Mich., will own a majority of Premier Plastics. Williams will retain a small portion of the company, according to Thomas Itin, Williams' chairman and chief executive officer.
Reasons for the divestiture of Premier are fivefold.
The Sterling Heights, Mich.-based injection molder of exterior lighting for the automotive industry encountered problems earlier this year when tooling for a new contract was not delivered.
"To this day, we still never got them," Itin said in a May 17 telephone interview.
That project would have boosted Premier from being a $15 million company up to $25 million, he said.
"At $20 [million] to $25 million, we believe it's profitable, but at $14 [million] or $15 million, it's not," Itin added.
Several other problems that mounted during the past year affected Premier's operating earnings.
"We had tools that were causing excess scrap rates," Itin said.
To top it off, sales margins dropped, research and development costs increased and the company hired more administrators to oversee automotive start-up costs, he said.
Selling nearly all of Premier's assets to Rapid seemed like the best alternative, Itin said.
Rapid and 3DM will give Premier better buying power and new technology, he said.
Though there is much to be decided once the deal is finalized, one of the major changes that may occur is the use of Rapid's new blow molding technology, which Bhatia called "mind boggling." The patented process, scheduled to be introduced and implemented throughout 3DM and Rapid soon, will shorten cycle times and decrease overall costs, he said.
The process can make a single part from four or five materials, allowing the firm to consolidate parts and save on assembly costs, Bhatia said.
Expansion and additional end markets also will be considered once the deal is complete, Bhatia said.
"[Expansion] depends on what kind of business we can secure, but it is a possibility," he added.
Williams reported $61.4 million in fiscal 1999 sales.
Williams also reported a loss of $9.5 million, "primarily attributable to operating losses at Premier" of $4.4 million. Premier's losses included $1.7 million for costs associated with terminated contracts and the closing of its tooling operation in September.
