When it emerged in April from Chapter 11 bankruptcy protection, custom injection molder Champion Plastics Inc. had learned a valuable lesson: Never put all your eggs in one basket.
``We're already banging on doors trying to get new business,'' Champion Chief Financial Officer Jack McLaren said in a May 2 telephone interview. ``We never again want to be in a position where we're tied to one customer.''
The company, based in Kettering, Ohio, once was a direct supplier to Newell Rubbermaid Inc., molding kitchen utensils and storage totes. Then, in April 2000, Champion received a call from Rubbermaid officials saying the business would be pulled.
``They were outsourcing 30-40 percent of that work,'' McLaren said. ``As a result of Newell buying Rubbermaid, they decided to reduce some product items that that had a less-profitable margin.''
About 80 percent of Champion's business, accounting for about $10 million annually in sales, was tied up with Rubbermaid, McLaren said. Five days after the phone call, Rubbermaid yanked the work and started making the products itself.
A Rubbermaid spokeswoman was unavailable for comment. But Champion blames itself for becoming too closely connected to one end user.
``You can't recover that kind of volume quickly,'' McLaren said. ``Over the next year and a half, we did what we could.''
More than a year after losing the business, on June 4, 2001, Champion filed for protection under Chapter 11 of the U.S. Bankruptcy Code in Cincinnati. President Ernie Riley and other top executives started looking for new customers and a reorganization plan to put the business back on track.
Meanwhile, the firm dropped from a high of about 180 workers to about 100. The plant had been running around-the-clock, seven days a week, with eight injection presses devoted solely to making the storage totes. Now, the company was struggling to keep open five days, McLaren said.
Some business has returned to Champion. In December, the company launched a two-year contract with Dorel Industries Inc. of Westmount, Quebec, a producer of juvenile products such as car seats, diaper pails and high chairs. Under terms of the contract, Champion will mold and assemble those products sold under such names as Cosco and Safety 1st.
The contract is worth $6 million to $7 million annually, McLaren said.
While in bankruptcy, the company submitted a reorganization plan that included eliminating more than $650,000 in costs, McLaren said. It renegotiated its leases, shaved several management positions and cut employee health insurance. After about a year of growth the company hopes to reinstate worker health care, McLaren said.
The company emerged April 4 with a mission to double its size within five years, McLaren said. With its lease expiring in September, Champion is looking for a new facility in the Dayton, Ohio, area with about 100,000 square feet of space.
The company now works from a 54,000-square-foot plant, running near capacity with about 160 workers, McLaren said. The Dorel contract accounts for the entire production at the plant.
But Champion knows it needs to expand its customer base quickly to remain healthy in the long term, McLaren said. A new sales manager is looking for custom-molding opportunities, he said.
``We've given our sales guy free rein to go out and look at what's available,'' he said. ``Our only restriction is that we want controlled growth this time. We've learned to become more cautious.''
