Newly structured Trend Technologies LLC plans to establish a plant in China by July and may add tooling capacity in Singapore.
``It is important for us to have a global footprint that matches up with the requirements of our customers,'' Earl Payton, chairman and chief executive officer, said in an interview at Trend headquarters in Chino.
In transitioning from bankruptcy, the new limited liability company emerged Jan. 15 with ``a clean balance sheet, hardly any payables [and a] credit line available,'' he said.
The electronics enclosures maker has committed to create a molding, stamping and assembly facility of about 150,000 square feet in Wuxi, China, about 100 miles west of Shanghai. Payton hopes to obtain necessary approvals during February and begin construction in March. Trend wants to supply markets inside and outside China.
Equipment for the Wuxi site - Trend's first foray into China - will come from a now-idle plant in Round Rock, Texas, being vacated by Feb. 28. Trend is sending all Round Rock capabilities and ``a couple hundred million dollars of capacity to China,'' he said.
Assets leaving Round Rock include 17 injection molding machines with 100-1,000 tons of clamping force and at least four metal-stamping presses of 300-600 tons. Trend in China will use progressive dies rather than the country's traditional hand-transfer process for metal stamping.
Major customer Dell Computer Corp. pulled all its business from Trend because of Trend's financial situation and Dell's preference for lower-cost manufacturing sites, Payton said. Dell work at Trend plants ``tapered down during , and we finished everything in December.'' Round Rock-based Dell had accounted for about 40 percent of Trend's 2001 sales of $523.9 million.
Payton said Trend had 2002 sales of about $400 million.
Trend is running at 35-45 percent capacity, compared with about 60 percent one year ago, Payton said.
``We have to refill the plants,'' he added.
Trend supplies server enclosures to Compaq Computer Corp., which became part of Hewlett-Packard Co. on May 3. ``Some of the more complex [server] platforms will not be moving to China,'' Payton said.
Payton would not forecast 2003 sales, but said, ``I see improvement quarter over quarter through this year.'' He characterized Trend's past two years as ``very tough'' and noted, ``We are starting to win some business.''
Payton has named three regional vice presidents. Splitting North America are Jeffrey Stump for western plants in Chino, San Jose and Hayward, Calif., and Longmont, Colo.; and Brian Dickstein for the east-central division, covering the Elk Grove Village, Ill., facility and two sites in Guadalajara, Mexico. George Korson's international region includes operations in Mullingar, Ireland; Johor Bahru, Malaysia, Singapore and China. In another personnel move, Glen Shrigley was named vice president of global molding.
Payton took management control of Trend in February 2002. He consolidated two San Jose locations, shut down an entire leased complex where he saw overhead as unsustainable, and moved corporate headquarters to Chino. Payton unpeeled management layers at the Tool-Tech mold-building operation and a product development facility.
``Basically, it was set up like a separate company,'' he said. ``I had never agreed with separating the molding in San Jose from the toolmaking in San Jose.'' What he termed ``this wonderful talent pool'' is now concentrated at one San Jose location and gaining ``much better support for the molding operation.''
In July, Trend retained Los Angeles consulting firm Crossroads LLC to assess the company's prospects. Crossroads presented its evaluation Sept. 30 to interested parties including fund operator Doughty Hanson & Co. Ltd. of London and lenders' agent Deutsche Bank Trust Co. Americas of New York, and Payton used Crossroads' findings to make an Oct. 2 offer for the assets.
``After some negotiations, the banks realized their best option was to enter into an agreement with me where I would be the stalking horse,'' he said.
Trend Technologies Inc. and related entities filed Nov. 7 for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code. The Payton-led management team bid $61 million for most Trend assets and assumed $8 million in debt.
Investors and debt holders experienced major financial losses but agreed to the reorganization ``based on what was going on with the economy,'' he said.
Payton opted to sever the Hungary operations in Kunszentm rton and Budapest. ``The capital structure and setup of the Hungarian plant was ... not acceptable,'' he said. ``The banks were really the owners of that real estate. I offered not to take on those liabilities.''
Turnaround firm Solutions Financial & Co. Advisor LLC of Budapest assumed control of the 102,000-square-foot plant in Kunszentm rton and the tool shop in Budapest from the banks. Solutions Financial consolidated management of those operations under a previously acquired firm, Codenova Manufacturing & Services Ltd., which makes plastic products and molds.
Trend's facility in Dublin, Ireland, was closed in December. The Dell transition cut Dublin sales 75 percent, he said.
Trend employs about 1,640, down from 4,041 as of Oct. 11, 2001, and 4,869 on Jan. 1, 2001.
Trend competes largely with the enclosure manufacturing units of Hon Hai Precision Industry Co. Ltd. of Taipei, Taiwan; Flextronics International Ltd. of Singapore; APW Ltd. of Waukesha, Wis.; Solectron Corp. subsidiary Shinei International of Singapore; and, for molding work, Nypro Inc. of Clinton, Mass.
Payton sees a bright future. ``I think Trend will be a billion-dollar company [in five years] based on industry need for what we do. There are not that many independent enclosure makers left of any size.''