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News
July 02, 2001 02:00 AM

Stadium Group exiting custom injection molding

Richard Higgs PLASTICS NEWS CORRESPONDENT
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    Stadium Group plc is pulling out of custom injection molding to develop its electronics business, which also includes plastics processing, on a global scale.

    Following a detailed review of its operations, the Hartlepool, England-based company plans to sell off more than half its business activities, primarily its molding division, which mainly serves automotive customers in the United Kingdom.

    The molding division supplies interior and exterior parts for the new BMW Mini, as well as serving Nissan Motor Co. Ltd., BMW AG's Rover unit and Ford Motor Co. The custom molder also produces components Xerox Corp., shower manufacturer Triton Ltd. and washing machine maker Dyson Appliances Ltd.

    A key factor in Stadium's decision to concentrate on its electronics business is the success of Stadium Asia, its first overseas operation. Stadium bought the Hong Kong-based company for £5.65 million ($8.8 million) from Avatar Industries Ltd. of Chatswood, Australia in April 2000.

    Stadium Asia, formerly known as Arlec Europe Investments Ltd., specialized in making mobile- phone chargers, including molded plastic casings, at its plant in Changping, in China's Guangdong province. Today the plant runs 18 locally made injection presses up to 165 tons in clamping force, according to John Pearson, managing director of Stadium's plastics division.

    The Chinese operation was hit by the global downturn in the mobile phone sector, but Stadium has broadened its base and won significant contracts from consumer products customers such as Black & Decker Corp., said Mark Paddon, small-companies analyst at Deutsche Bank in London.

    In contrast, Stadium's plastics division, with four major injection molding plants and two mold-making operations in England, has suffered from tough trading conditions in Britain, as well as from lack of economic scale and limited markets.

    Plastics division sales were down by 5 percent to £37 million ($52 million) in 2000, while its operating profit was also marginally lower at £2.5 million ($3.5 million). Stadium blamed lower sales on customers moving production to lower-cost Eastern Europe and Asia locations and the fall in profitability on lower volumes and pressure on margins in the automotive sector.

    Stadium's plastics division operations in England which run 150 injection presses, include Stadium Plastics (North East) in Hartlepool, Stadium Plastics (Midlands) in Hinckley and Stadium Plastics (South West) in Newton Abbot.

    Other operations include Quest Consumer Products Ltd. of Chingford, a blow and injection molder of infant products, and Stadium Ventilation Ltd., which makes industrial fans.

    In addition, there are two mold-making subsidiaries, Swift Mold and Tooling (North East) Ltd. of Chilton, England, and Torbay Tool and Guage Ltd. of Newton Abbott.

    Stadium owns four other businesses in England that make or sell compact disc and video storage racks, acoustic cement slabs, commercial refrigerators and other products. Combined sales for those units total about £11 million ($15 million) annually.

    All of these businesses have been earmarked for sale, although Stadium stresses disposal will occur when suitable opportunities arise.

    ``There is no rush. We are not looking for a fire sale but the best deal we can get for the shareholders, customers and employees,'' Pearson said.

    Analysts expect the disposals could net Stadium about £20 million ($28 million), enough to wipe out its £17 million ($24 million) debt and leave some cash to expand the electronics business.

    According to Paddon, the decision of the strategic review was ``inevitable,'' since a plastics business such as Stadium's ``needs above all scale.'' It was easier for Stadium to add value in electronics than to compete successfully in plastics, he said.

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