Injection molder Triple S Plastics Inc. is moving most production at a 2-year-old plant in Fort Worth, Texas, to another Texas facility.
The Portage, Mich.-based company is adjusting to capacity decreases in the telecommunications market, Chairman Daniel Canavan said in a May 3 telephone interview. Production will be restored at the Fort Worth plant if sales rebound, the company said.
The publicly held company said in March it would review its Texas operations after a planned merger fell through with molder Eimo Oyj of Lahti, Finland.
"We just have too much capacity now," Canavan said. "This gives us a chance to make our [Georgetown, Texas] plant as full as possible and as near to capacity utilization as it can be."
The Georgetown plant — housed in two buildings with a total of about 85,000 square feet — will produce many of the telecommunications and electronics parts that were made in Fort Worth.
The 60,000-square-foot Fort Worth plant, opened in mid-1999, will maintain one injection press and a small engineering and sales staff, Canavan said. About seven presses will move immediately from the facility. Some are going to Georgetown and others are shifting to a plant in Manaus, Brazil, that Triple S operates as part of a joint venture.
Triple S, traded on Nasdaq, also announced preliminary sales for fiscal 2001, which ended March 31. The company recorded about $155 million in sales, up from $95 million in 2000. Profit also is expected to rise compared with the previous year, Canavan said.
The improved results come even as the company takes a one-time tax charge of about $1.4 million during the fourth quarter of 2000. The charge comes from costs associated with the terminated merger agreement with Eimo.
Formal results will be released the week of May 7, Canavan said.
However, the company said March 1 that it expects sales to weaken in fiscal 2002 and 2003. The telecommunications industry, the molder's largest area of business, has seen a transition, with many companies moving production outside the United States or shifting it to electronics assemblers.
Nurmijarvi, Finland-based Nokia Oyj had announced it would lay off 1,500 employees in Fort Worth and move its Texas-based cell-phone production to Mexico or South Korea. Nokia accounts for more than 60 percent of Triple S business, according to Securities and Exchange Commission filings.
Triple S will respond to the shifting tides of telecommunications by continuing to move globally and going after new customers, especially contract manufacturers, Canavan said.
The company is considering a manufacturing operation in the Far East, Canavan said. He would not provide details.
"With all the uncertainty in the market, we don't know what's going to happen," he said. "But we plan to react to customer needs. The world is changing so fast, but there are lots of opportunities for us."
The company's stock closed May 3 at $5.75 a share, well below the $33.88 high for the 52-week period. The positive earnings results next week could help bolster its stock, Canavan said.
And while the deal with Eimo is off, the company still would like to work with the Finnish molder, Canavan said. First, a lawsuit must be settled.
Eimo is seeking damages from Triple S plus a termination fee of $6.4 million from the failed merger. Triple S said the suit is without merit and has filed a motion to dismiss the case. An Eimo official said May 1 that a lawsuit is quite normal after a merger deal ends, to sort out costs involved in setting up an acquisition.
A deal with Eimo might have worked if not for the fluctuating telecommunications market, Canavan said.
"That was a big part of it," he said. "The market just changed too much for us to make the merger work."