Hobson Mould Works Inc. has laid off most of its workers as it seeks a solution to its cash shortage.
The Shell Rock, Iowa, firm is negotiating with its bank and creditors and is entertaining offers from prospective buyers, President and Chief Executive Officer Gerald Hobson said in a Dec. 20 telephone interview.
"We're not the only ones in this shape," Hobson said. "Toolmakers are the last ones to get paid."
Hobson blamed the auto industry for much of his firm's financial troubles. Mold builders often have to wait 180 days to get paid by automotive firms, but banks typically demand loan payments within 90 days. Hobson Mould's chief bank is Firstar in Milwaukee.
Hobson lamented the recent treatment of mold makers as commodity providers after a long tradition of being respected as craftsmen. He cited Internet bidding as an example of how the industry has devolved. Bidding for mold jobs to an anonymous buyer on a price basis alone is a new and unwelcome business practice, he indicated.
Hobson Mould laid off about 100 employees Dec. 18 and is continuing operations with about 40 workers. It is trying to restructure its bank debt and is talking to several companies that might be interested in buying part or all of the company. The company wants to explore its options before considering protection under Chapter 11 of the U.S. Bankruptcy Code.
Hobson said he was uncertain about how long negotiations could take.
Hobson and other tool builders recently complained about desperate measures they are taking to capture business in the auto industry. Lower tool prices and rebates are being offered as mold shops try to stay busy during the downturn of the motor vehicle industry.
He predicted that a number of mold makers will sink in the slump, but "the ones that survive will have great business."
Hobson Moulds has been an employee-owned company since late 1996 when workers bought the firm from Essef Corp. of Chardon, Ohio. Employees pooled together about $1.6 million of their own money and arranged $4.5 million in financing to keep the firm afloat.