Acsys Technologies Inc. is wrapping up its business, less than two years after the firm formed.
The company, with the full formal name of Automotive Component Systems of Michigan Inc., announced Aug. 22 it will shut down its sole manufacturing base in Oshawa, Ontario. The rest of Acsys, headquartered in Southfield, Mich., will close along with the factory.
``Despite extensive efforts to turn around the Acsys operations and meet the growing competitive needs of its customers, the overall financial situation remains difficult,'' Acsys Chairman and majority owner B.N. Bahadur said in a news release.
``We have concluded that, given the current outlook, it is in the best interest of our shareholders and customers to begin an orderly wind-down of the operations.''
Acsys employs 1,250, most of them at the Oshawa manufacturing complex, which produces both steel bumper beams and injection molded bumper fascia. The shutdown will take place during the next 12-18 months to allow a smooth exit for employees, suppliers and the company's main customer, General Motors Corp.
Acsys purchased the plant from Peregrine Oshawa Inc. in September 2001, intending to develop it into a complete front- and rear-end module supplier. Acsys became the third owner of the plant in five years.
GM had owned the 90-year-old plant until 1996 when it sold it and other holdings in Windsor, Ontario, and the Michigan cities of Livonia, Flint, Warren and Battle Creek to create Peregrine Inc. Turnaround specialist Jay Alix bought Peregrine in 1998.
Other holdings were sold or closed through the next few years until Bahadur and his team purchased Peregrine Oshawa for an undisclosed amount.
The new Acsys did have success - booking $385 million in new business for front and rear fascia subsystems within its first six months of operation. It also upgraded the facility and its equipment, with three new injection molding presses and a $20 million paint line installed in the past year.
``They were getting new technology and new efficiencies,'' said Gerald Fedchun, president of the Toronto-based Automotive Parts Manufacturers' Association. ``I thought they might make it.''
But the site came with heavy operating costs linked to its age, and a Canadian Auto Workers workforce whose contract tied their pay to former parent GM.
``The older companies that have an older workforce have higher pension costs,'' Fedchun said. ``They also had a legacy contract there that was terribly expensive compared to the other suppliers.''
Union members will retain seniority and the opportunity to transfer to other jobs through CAW, while GM has promised to try to source ``as much work as possible, on a competitive basis'' to union-represented suppliers.
The bulk of the work probably will remain with Ontario businesses. Full bumper systems - with both steel and fascia - are difficult to transport long distances, Fedchun noted. That should open new opportunities for other exterior specialists such as Decoma International Inc. of Concord, Ontario, and Flex-N-Gate Corp., an Urbana, Ill.-based metal specialist that purchased fascia molder Ventra Group Inc. of Oakville, Ontario, in 2001.
``The reality is, all those parts are going to be made and be made locally,'' Fedchun said. ``It's not that the business is lost [to the region], it's just being moved.''