Imagine that you took a 45 percent pay cut for the past three years, then had to pay off your house and car by a certain date.
Milacron Inc. is determined to conquer that type of steep challenge. This week's story on Page 7 by senior staff reporter Bill Bregar explains the dilemma facing the Cincinnati-based machinery company. Bonds and a revolving loan are coming due in March. Another big bill will hit a year later when euro-bonds come due.
Under normal circumstances - a healthy plastics machinery market - it would be much easier to refinance that debt. But the machinery market has been downright ugly for three years straight.
Stock analysts say the company probably will sell its metal-cutting fluids business to help pay the debt. That seems likely. Just last year, Milacron sold off three units that make metalworking products such as carbide inserts and tool-steel holders, and used the money to pay down its debt.
Milacron certainly has shown the ability to change. Originally a machine-tool maker, the firm expanded into plastics equipment in 1968. Thirty years later, the company sold its machine tools business to concentrate on plastics. That was 1998, in the middle of the boom period for plastics machinery. Then the bottom fell out in late 2000 - the equivalent of that 45 percent pay cut.
Milacron stands apart as the largest U.S.-owned plastics machinery manufacturer, and as an energetic promoter of important newer technologies such as the all-electric injection press and coinjection molding. The health of this 119-year-old industrial company is important to U.S. manufacturing.
The United States has lost more than 2 million manufacturing jobs in the past three years. The Bush administration, focused on terrorism and Iraq, has paid little attention. Now that seems to be changing. On Labor Day, Bush announced he will name a ``manufacturing czar.''
``Must be an election coming up,'' a skeptic would say. True, but equally important are fresh concerns from economists that continued job losses could halt the nascent recovery. Most of the layoffs are in manufacturing. Lots of those jobs are not coming back. Now that manufacturing is center stage, maybe the Bush administration will launch a major study of China's impact on the broader U.S. economy.
On a brighter note, the overall picture for U.S. factories seems to be improving. Manufacturing expanded in July and August, according to the Institute for Supply Management in Tempe, Ariz.
Milacron is traded on the New York Stock Exchange, so its woes are out in the open. Problems of other machinery makers may be easier to hide, but they all face the same pressures as 2003 winds down. When will machine buying pick up? It already has, but at such a modest level - and after such a staggering decline - that it barely feels like a recovery. The reasons are well-known, including competition from abroad and a capacity utilization figure for plastics processors that has refused to budge all year.
Milacron is a global player, running plants in Germany and India. Company leaders have started to look at manufacturing in China. Still, the United States remains Milacron's most important market, generating about half the firm's sales, and the big question mark stamped on the U.S. plastics industry remains a problem for Milacron and the other machinery companies.