MOUNT GILEAD, OHIO — HPM Corp. is late paying its bills, according to five suppliers that have sued the machinery manufacturer and two other vendors.
Several suppliers have placed HPM on c.o.d. status — shipping parts only after they receive payment.
William Flickinger, a minority owner who is trying to put together a package to buy HPM from Parviz Nazarian, said HPM is the victim of "a very strained banking relationship."
"That's one of the reasons why I believe that having new ownership and new financial sources will, I think, provide the company a better source of funding than what it currently has," Flickinger said.
Nazarian, a Los Angeles businessman who is part of an investment company that owns 90 percent of HPM, did not return telephone calls seeking comment. In the past, he has declined to talk about HPM to the press.
HPM builds injection molding machines, sheet extrusion equipment and die-casting machines. Claiming annual sales of $100 million, HPM is the second-largest U.S.-owned plastics machinery company, behind Milacron Inc.
Flickinger, HPM's president and chief operating officer, responded to questions about HPM's financial condition during an April 3 interview at the company.
Does a strained banking relationship mean HPM can't borrow money?
"No. We are being funded with money today, but it is not, in my opinion, sufficient to allow us to run the business like we would like to see it run, to grow the business like we would like to grow it," he said.
Is there a money crunch at HPM?
"What I would say is that, certainly, cash flow is tighter in the company today than is necessary. And it does cause some difficulty in running the company."
However, Flickinger contends that HPM is not alone, that most companies now have to monitor cash flow very carefully because U.S. manufacturing has slumped.
An official at one supplier to plastics equipment makers said that HPM is late paying its bill, but he agreed with Flickinger.
"In general, there's a slowdown in domestic machinery sales, and everybody's watching their expenditures. People are adjusting their expenditures and the size of their organizations for the market conditions," said the source, who spoke on the condition he would not be named.
But Gunther Hoyt, at barrel-supplier Xaloy Inc., was blunt. He said Xaloy lost a lot of money when HPM's sister factory in Germany, HPM Hemscheidt GmbH, closed down.
"We're dealing with a couple of wheeler-dealers from L.A. They have allowed Hemscheidt to go into bankruptcy, and they have hamstrung HPM in the U.S.," said Hoyt, vice president of sales and marketing at Xaloy in Pulaski, Va.
"Xaloy's been extraordinarily patient with a nonperforming customer," he added.
Hoyt stressed he has no problems with Flickinger, whom he called "still an absolute gem of a man" who has "behaved remarkably well during this."
Flickinger defended Nazarian, who travels regularly to Mount Gilead to help run HPM.
"He cares very much about the company. Over this past year and a half, he devoted a significant amount of time in coming to HPM, coming to Ohio, staying in a Super 8 hotel in Marion. You know, we're talking about a very wealthy person.
"But I think he had a concern for HPM. He wanted to help it be very competitive in the industry," Flickinger said. "And he took a significant amount of time, that I'm sure he could've spent in other businesses making a lot more money than he did here, to help us out. And I appreciate what he did for us."
So far this year, five suppliers have sued HPM in Morrow County Common Pleas Court, demanding a total of $473,658. Flickinger declined to comment on the cases, which were filed in January and February:
J.H. Bennett & Co. Inc. of Novi, Mich., is seeking $196,684 it claims HPM owes for hydraulic hoses and connectors. In court documents, HPM denies that it owes the money.
Atlas Fluid Components Inc. of Cuyahoga Falls, Ohio, demands payment for valves and parts worth $141,383.
Shoemaker Industrial Solutions of Columbus, Ohio, wants $83,238 for work to assemble and engineer drive controls for HPM machines. HPM denies it owes the money.
KDE Sales and Service Inc. of Hebron, Ky., wants $34,354 for services not specified in the suit. HPM countersued for $25,000 in damages, charging that KDE breached its contract by sending HPM poor-quality cylinders, injection kits and nozzle shut-off assemblies that developed leaks. KDE disagrees, saying the products were fine.
Charles Ritter Co. of Mansfield, Ohio, is seeking $17,999 for unspecified products and services. The company declined to spell out what it provided to HPM.
On top of that, in March, Usinor Industeel of Puteaux, France, sued HPM in U.S. District Court in Cleveland. Usinor demands $221,600 in payment for three rolled-steel platens for an HPM die-casting machine. Flickinger has called that dispute a misunderstanding over the delivery and payment schedule.
Flickinger said that under ownership of Nazarian and his son-in-law, Neil Kadisha, HPM's product line is improved. Flickinger said HPM continues to sell "a very good machine."
"HPM has excellent products and, in one form or another, they're always going to be around," he said.