California's ongoing power crisis has helped darken the doorway of injection molder Co-Mack Technology Inc.
The company, well-known in plastics circles for building awareness of coinjection molding technology, closed down in early March and is selling off its equipment, said President and Chief Executive Officer Joseph McRoskey.
A potent mixture of soft business conditions, faltering customer orders and the high cost of electrical energy helped bring down the 12-year-old firm, McRoskey said.
The Vista, Calif.-based company saw its monthly electric bill more than triple starting last summer, from about $25,000 a month to upward of $80,000.
"When I look back on it, it was a `perfect storm' situation," McRoskey said in an April 27 telephone interview. "A number of adverse events took place at the same time. And it didn't help that we had rolling blackouts and had occasion to shut everything down when we didn't have power."
The San Diego area, where Co-Mack was based, was hit by climbing energy costs earlier than most of California. Many parts of the Golden State now are starting to feel the impact, said Frank Capolupo, director of the Western Regional Office of the Washington-based Society of the Plastics Industry Inc. However, it still is too soon to know how the electricity crunch will affect molders, he said.
"Stay tuned," Capolupo said. "We don't yet know what impact this will have."
But for Co-Mack, the impact already has been felt. The firm has closed its leased manufacturing plant and is selling its 28 molding machines, ranging in clamping force from 40-1,200 tons. All of the firm's 120 employees were laid off by early March.
A few years earlier, Co-Mack had been a high flyer among California molders. In 1994, Inc. magazine named the molder No. 81 among the 100 fastest-growing private companies in North America.
Started by McRoskey in 1989, the company quickly hit the $10 million sales mark by preaching the fairly new gospel of coinjection molding. About 40 percent of the company's sales came from that technology, comprising conventional injection molding and structural foam molding.
McRoskey also shared his expertise with others, speaking about multimaterial molding at various industry events. The technology involves encapsulating a core material with a separate skin.
The firm took home at least nine first-place awards from SPI's annual Structural Plastics Division new-parts competition.
To finance capital equipment, founder McRoskey brought in partners both from outside and inside the company. Last year, Co-Mack recorded $11.5 million in sales.
But the company began to see many of its customers — primarily in the medical, business equipment and furniture markets — either downsize, go bankrupt or move production to Asia, McRoskey said.
The firm had purchased seven new presses last year. But the financial picture turned south quickly once utility bills climbed.
"This was a sudden surprise," McRoskey said. "Last year, we were still in a growth mode, and our customers were very optimistic about the projects that we had supplied equipment for."
A cash-flow problem led the company to begin selling injection presses and support equipment to pay creditors. The decision was made in February to close.
Thirteen presses remain at the shuttered facility to be sold, McRoskey said. Meanwhile, McRoskey considers his options.
If it were not for the soaring energy costs, induced partly by the financial troubles of several deregulated California utility companies, Co-Mack might still be in business, McRoskey said. But the added electricity expense broke the company's back.
"I can't believe the mail I get," McRoskey said. "A lot of people recommended that we move to another state, where the energy costs are low and electricity is plentiful."
Unfortunately for Co-Mack, the company no longer has that option.
