Poor sales prospects and the lack of a buyer has led Nextrom Holding SA to shut down its cast and blown film machinery operation in Italy with a loss of 67 jobs.
In a news release, the company, based in Morges, Switzerland, blamed ``the low activity and poor outlook'' in the plastic film equipment market for a ``very low'' order book at the subsidiary, Nextrom SpA. of Milan.
Nextrom Holding said it did not expect its Italian operation to make a profit within the next two years. So the parent company, which has been trying to sell off its plastic pipe and film equipment units for more than a year to focus on core fiber-optic-cable machinery, was forced to put the Italian firm in voluntary liquidation.
Nextrom also announced it will restructure and downsize its own Conex extruder business, which has been developing a novel extruding system aimed primarily at wire and cable production.
The company said it is seeking partners from among its customers to help advance development of the extruder. The company's efforts to commercialize the technology have faced delays since its launch in at the K 98 plastics show in Dusseldorf, Germany.
The single-extruder system uses a series of nested, hollow, cone-shaped rotors designed to produce multilayer pipe, film and cable sheathing.
Nextrom will dispose of Nextrom SpA. assets, including spare parts, brand names and its technology as it closes the Milan operation during the next year. The move will cost the company around 11 million Swiss francs ($6.46 million). This will be offset by income from the sale later this year of the plant building, according to Nextrom Chief Executive Officer Jouni Heinonen.
In 1997, Nextrom acquired the Italian business Dolci Extrusion SpA. because the company wanted to offer a wider range of extrusion machinery. But, Heinonen said in a telephone interview from Finland that his company was new to the film machinery business and ``bought the wrong company, to be honest.''
``We did not know that industry then ... If we knew in 1997 what we now know about the company, we would never have bought it. We had to spend a lot of time correcting the mistakes of the past,'' Heinonen said.
``We overestimated the technical level of that company. We invested millions of Swiss francs in restructuring the business in 1998 and 1999 but it was never profitable for us,'' Heinonen said.
The last straw was the state of the film machinery market, which has become very competitive. The film machinery sector has tremendous overcapacity in Europe, offering ``huge opportunities for consolidation,'' he said.
Dolci had three changes of ownership and was bankrupted twice in the 1980s and early 1990s, according to Nextrom.
Nextrom tried unsuccessfully to sell the Milan operation and even considered a management buyout, but the offer was inadequate. One potential buyer was Italian machinery company Construzioni Meccaniche Gallia, which already had joined Conex in a marketing venture, but a management change at CMG put a stop to a sale, Heinonen said.
On its successful core fiber and fiber-optic-cable side, Nextron runs four plants. One in Vantaa, Finland, supplies bundling equipment for fiber optics; another in Shanghai, China, builds fiber-optic-cable machinery. The company recently opened an optical-fiber machinery plant in Atlanta, which has 35 employees, Heinonen said.
Another plant in Concord, Ontario, that builds equipment for wire twisting is on the slate to be sold later this year, he said.
In September Nextrom sold its Ecublens, Switzerland, plant, which makes machinery for metal cable and plastic pipe manufacturing, in a management buyout. Nextrom still owns 20 percent of the new company, Maillefer Extrusion Ltd.
Last year Nextrom also spun off its Conex extruder business, comprising a development team of around a dozen. This has since been downsized to half the personnel and now is based at the University of Lausanne, Switzerland.
So far only five Conex machines have been sold, some for production and the rest for laboratory use. Nextrom was not keen to continue with the ``big assets'' of Conex depreciating on its balance sheet, so the company is restructuring the business, writing off the intangible assets including technology patents of around 3.7 million Swiss francs ($2.18 million).