Mulay Plastics Inc. is relocating its headquarters to San Diego, selling plants in Arkansas and Mississippi and projecting a 35 percent reduction in sales this year.
The major restructuring aims to restore the injection molder's profitability and improve cash flow, said James Newman, president since December.
``We have a very deliberate plan,'' Newman said in an Aug. 1 telephone interview.
He plans to stabilize the business during the next year and position Mulay for renewed growth and a few acquisitions.
``We [will] need to carefully choose other market niches and continue the specialization concept,'' Newman said.
Turnaround financial consultant Crossroads LLC of Irvine, Calif., helped Mulay develop a plan to restore profitability, refinance to strengthen the balance sheet, redeploy assets into areas of strength, lower its break-even point and decentralize management responsibilities.
Mulay plans to move its headquarters from Carol Stream, Ill., in November and cut the corporate staff to seven from 27. San Diego is closer to its operations in Tijuana, Mexico, which opened in 1996, and in Ciudad Ju rez, a 1998 start-up, Newman said.
Mulay sold its Forrest City, Ark., plant July 11 to Sanyo Manufacturing Corp. and has an agreement to sell its Holly Springs, Miss., plant to Terry Byrd by the end of September. If not sold, that plant will close Nov. 16. Byrd managed the Holly Springs facility for many years before overseeing all Mulay manufacturing as executive director of corporate operations.
The firm acquired the Holly Springs site in 1978 and the Forrest City location - adjacent to a Sanyo plant for large TV sets - in 1995. Sanyo hired Mulay's employees and continues the Forrest City operations.
During the past year, Sanyo established molding at its Tijuana assembly plant and, as of May, stopped purchasing housings for small-screen TVs from Mulay's Tijuana molding plant, Newman said.
Mulay had expanded the Holly Springs facility, but principal customer Sharp Manufacturing Co. moved its assembly plant from Memphis, Tenn., last winter and took away 60 percent of Mulay's Holly Springs' volume, Newman said.
Newman projects sales of $62 million for the year ending Sept. 30 vs. $93 million for the previous fiscal year. Newman said the restructuring actions and softening economy account for the shortfall.
During October, usually the firm's busiest month, Mulay employed 1,240 last year. The projection for this October is 615.
Mulay has delegated additional duties to a general manager in each plant. Antonio Font in Tijuana, and Charles Troxell in Ciudad Ju rez have profit-and-loss responsibility and lead teams overseeing sales, manufacturing, engineering, materials, human resources, quality and financial control.
TV cabinets account for about 90 percent of Mulay's sales now vs. 77 percent in 1998. Mulay is doing fewer computer housings and telecommunications enclosures.
Sam Mulay founded the business in 1969, molding plastic cabinets for TV manufacturers in the Chicago area. The business was based in Addison, Ill., until early 2000.
Mulay Plastics followed TV and other consumer electronics makers to the Southeast and then to northern Mexico, but the resulting investment costs caused deterioration in the company's financial performance during the past year and a half. Lower demand since January has compounded the problem.
Leadership changes have occurred.
Douglas Mulay, the founder's son, remains a director, adviser and part owner, although he stepped down from his long-time position as chief executive officer in late April. Newman, who started as chief operating officer, succeeded Mulay as CEO.
In another change, Jack Shedd left his position as Mulay executive vice president for marketing and sales in June. He is now executive vice president with Commercial Plastics Co. in Mundelein, Ill.
Mulay is owned by private equity capital firm Dubin Clark & Co. Inc. of Greenwich Conn., Cigna Mezzanine Partners LP of Hartford, Conn., and the Mulay family.