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October 11, 2004 02:00 AM

Toy maker Hedstrom folds, 800 jobs lost

Bill Bregar
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    Illinois-based toy maker Hedstrom Corp. has discontinued operations, shutting down six plants - including a rotational molding operation in Ashland, Ohio, and a swing-set factory in Bedford, Pa., that does blow molding.

    Hedstrom said it could file for Chapter 11 bankruptcy for the second time in four years.

    Meanwhile, local managers at the Ashland plant are interested in buying the rotomolding operation, said Martin Irvine, Ashland economic development director.

    ``They've been in discussions with several different investment groups. Over the last week or so they have made offers to buy the company and been turned down,'' he said.

    Jim Braeunig, vice president and general manager, who is based at the Ashland rotomolding plant, did not return a telephone call for this story.

    Irvine said government agencies are exploring ways to help the management group, and to help laid-off employees get assistance with medical coverage and other needs.

    Companywide, Hedstrom makes a range of children's products, including tubular metal swing sets, trampolines, play balls, sleeping bags and those big balls kids sit on to bounce around the yard.

    In the plastics industry, Hedstrom is a major U.S. rotomolder. Its $40 million in rotomolding sales tied it for the No. 7 spot on Plastics News' ranking of North American companies this year. Hedstrom employs 100 people in rotomolding, running 22 machines, most of them in Ashland. The Bedford plant also had a small rotomolding operation.

    Hedstrom reported $250 million in corporate sales last year. The firm is privately held.

    Hedstrom discontinued operations Oct. 6 and laid off more than 800 employees. Workers in Ashland had no warning, according to local news reports.

    The company issued a statement from its headquarters in Arlington Heights, Ill., saying it was planning a Chapter 11 bankruptcy filing.

    In the statement, Hedstrom Chief Executive Officer B.B. Tuley said the company could not obtain additional funding to keep operating while it pursues a turnaround strategy. The company cited several reasons for the shutdown, including higher raw material and energy costs, and a drop in sales this summer, which led to tighter lending requirements, according to the Associated Press.

    Hedstrom was founded in 1915 to make bicycles. It became a major supplier of play balls, which were rotomolded in Ashland. The company also molded plastic rocking horses, an iconic toy.

    When Hedstrom filed for Chapter 11 protection in 2000, it blamed poor sales at its Amav subsidiary, which makes children's games such as pool tables and air-hockey sets.

    Hedstrom bought Amav in 1997 when it bought its parent company. The deal doubled Hedstrom's size, but Amav fell into debt and Hedstrom closed the operation.

    At the time, Hedstrom fought back from bankruptcy. In Ashland, community leaders and employees held an open house in 2001 to celebrate Hedstrom's winning the Vendor of the Year award from Toys ``R'' Us. The factory showed off a five-axis router and other new equipment.

    Hedstrom was back in the news in 2002, when the company began to outsource ball molding to China - a move officials said was necessary for survival. The balls are molded, inflated to check for defects, then deflated and shipped to several facilities near retailers, where they are inflated again.

    Despite the China outsourcing, Hedstrom invested money in the Ashland plant and focused on custom molding.

    ``This has been the only one of the three divisions at Hedstrom that's made money over recent years,'' said Irvine, the economic development director.

    Companywide, toys are still the major market for Hedstrom.

    That's a tough business, according to Peter Mooney, an analyst who studies rotomolding and other plastic processes. Mooney said resin prices, fierce competition from Asian imports and retailers that want small, high-profit toys have squeezed toy makers.

    Society has changed, too.

    ``Today, kids are inside at the computer or at video games. So the whole idea of appealing to kids today is different than in the past,'' said Mooney, who runs Plastics Custom Research Services in Advance, N.C.

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