Milacron Inc. has made some bold moves in its 118-year-old history, but the recent news that the Cincinnati company will sell nearly all of its metal-cutting products and focus on plastics marks a huge turning point. From now on, Milacron's fortunes are married to plastics, not divided between plastics and metalworking.
Milacron officials say the moves are part of an overall strategy to focus on their strongest area. Equally important, selling off Valenite, Widia and Werko raises cash that will pay down debt — keeping Milacron financially solid during this body-slam of a manufacturing recession.
This bears watching by everyone in the plastics industry. Since Milacron makes just about everything — injection molding machines, blow molders, extruders and mold components, even structural foam molding equipment — the company stands as a bellwether for plastics, especially in North America.
Milacron is not just another machinery maker — it stands alone as the largest U.S.-owned plastics machinery manufacturer, and second worldwide only to the conglomerate Mannesmann Plastics Machinery AG, which is for sale.
The leadership position makes it important that Milacron remain a viable company that continues to develop new technology, such as its important work on all-electric machines, and help customers survive in an increasingly brutal world economy. And that's exactly what Milacron intends to do, according to Ronald Brown, Milacron's chairman, president and chief executive officer. Brown, in a June 24 Plastics News story, also confirmed his company continues to look for acquisitions and is checking out parts of MPM.
As an old-line U.S. industrial company, Milacron can appear staid. But once again, its leaders have shown they are not afraid to recast the company. As one analyst said, “This is their second change of clothes.”
Milacron was incorporated in 1884 as Cincinnati Milling Machine Co. As the name makes clear, this was a machine tool company. It stayed that way for more than 80 years, before launching a Plastics Machinery Division in 1968. Then the first blockbuster came: Milacron sold its machine tool business in 1998. We just saw the second wardrobe change, the shedding of units that make products such as carbide inserts, wear parts and tool-steel holders.
Investors were unimpressed with the recent news. Milacron's stock is languishing just above $10 on the New York Stock Exchange. But that likely has as much to do with Milacron's statements downgrading its outlook for plastics machinery through the end of this year — and overall stock market weakness caused by the accounting scandals — as it does with the decision to sell off metal products.
By focusing on its strongest business and making the balance sheet healthy, executives at Milacron leaders are doing what manufacturers do during severe recessions: taking steps to make sure the company is still around — and financially strong — to benefit when sales do pick up again.