Two of Canada's automotive parts companies are for sale and in receivership.
Tiercon Industries Inc., an injection molder and painter in Stoney Creek, Ontario, about 60 miles southwest of Toronto, went into receivership April 15. KPMG Inc. of Toronto is trying to sell Tiercon after previous efforts by PricewaterhouseCoopers failed. Zeifman Partners Inc. of Toronto is the receiver.
Plastic and metal painting business Fincore Industries Inc. in Toronto also is for sale, by BDO Dunwoody Ltd., its Toronto-based receiver. BDO is accepting offers for Fincore until May 31.
Allan Rutman, a partner with Zeifman, said Tiercon has not been lining up enough business to carry it for the next few years, making it unattractive to its private investors.
Tiercon has four facilities totaling about 600,000 square feet. Its biggest facilities are in Stoney Creek - a 300,000-square-foot injection molding plant and a 162,000-square-foot plastics painting operation. It also has a bumper molding operation within customer A.G. Simpson Co. Ltd.'s plant in Oshawa, Ontario, and a latch and interior trim painting unit in Vassar, Mich.
Tiercon is running injection presses with clamping forces of 125-3,300 tons. Overall, it employs more than 700.
One of Tiercon's major customers is General Motors Corp., which is so keen on Tiercon continuing as a supplier that it signed on as an applicant on Tiercon's court order for receivership. Major lenders listed in the order are Royal Bank of Canada, National Bank of Canada, Bank of Nova Scotia and Comerica Bank.
Fincore is a Tier 2 automotive supplier with automated painting using electrodeposition, powder coating and liquid-base-coat and clear-coat systems. The business, established in 1992, recently invested several million dollars to upgrade its production capabilities. Parts it paints in its 105,000-square-foot facility include bumpers, body side moldings, applied hardware and wheels.
Fincore has been in receivership since mid-September. Its problems began in 2000 when a plant fire interrupted business, according to an affidavit filed by owner Sheldon Gross. Subsequent bankruptcies of two major, undisclosed customers added to operating losses.
Just as the business began turning the corner - experiencing its best month ever in March 2004, when sales reached C$1.8 million (US$1.4 million) - workers struck Fincore's plant. The labor dispute was settled May 31, but by then customers had found alternate suppliers and most did not return. The parts industry also entered a slump. Since then, Fincore has been operating with a skeleton crew.
Fincore listed assets at about C$645,000 (US$516,000) on Aug. 21. Its liabilities, including bank debt and loans provided by Gross, his wife and another company they own, were C$11.9 million (US$9.5 million).
The firm had 238 employees before the strike by the United Steelworkers of America Local 9492. It projected a sales target of C$25 million (US$20 million) for the year ending Oct. 31, 2005, before its difficulties compounded.
Tiercon and Fincore, both reliant on markets for painted plastics, have felt the sting of general business conditions, rather than a technological shift, said Jay Waddell, an expert in paint replacement.
Paint-replacement systems, such as injection molding a part into a thermoformed skin, have not penetrated far enough into the market to cause painting companies to lose sales, Waddell said in a telephone interview from Mount Pleasant, S.C., where he is managing partner for Plastic Concepts & Innovations LLC.
Waddell said he believes paint-replacement methods will begin to be adopted in two to five years.