Scottsburg Plastics Inc. is closing its doors and liquidating its assets. Nearly 50 people will lose their jobs.
Chalk it up to the same old reasons U.S. manufacturers - particularly in automotive - have been struggling: resin pricing, health-care costs and cutthroat competition.
The Scottsburg, Ind.-based custom injection molder of window regulator parts and speaker components was hit hard by the volatility of polypropylene pricing in the aftermath of the Gulf Coast hurricanes and also had to turn away work because of inadequate resin supply.
And then it got worse.
The company lost a $2 million account to a Mexican processor. It wasn't the nail in the coffin. It was one of many.
Scottsburg President Joe Wolf said there have been a number of jobs lost to low-cost competition during the past few years, one of the reasons Scottsburg, founded in 1981, invested heavily in automation to reduce labor costs and increase efficiency.
In 1998, Scottsburg built a second manufacturing facility, in Tennessee, to serve one of its larger clients. It proved all for naught as the customer eventually took the work Scottsburg was doing to another manufacturer.
According to Wolf, Scottsburg also lost a $750,000 account to Japan and the plug was pulled a year early on a $1.3 million job. About 83 percent of Scottsburg Plastics' business is from the automotive sector, he said.
``Small companies are very susceptible to being whipsawed by the larger Tier 1s in the business,'' said Jim Gillette, director of supplier analysis for Farmington Hills, Mich.-based CSM Worldwide Inc. Small firms face pricing pressure from both customers and suppliers, effectively pinching them in the middle, he said.
``The only way for a company like that to make money is to have a highly specialized product - one that has some technological content or design content,'' Gillette said. ``The product has to have some specialty attributes that would put you head and shoulders above the competition.''
For Wolf, an ill-fated expansion effectively signed Scottsburg's death sentence.
``There's a business adage: Grow or die,'' Wolf said. ``Sometimes that means grow and die.''
When both the Indiana and Tennessee plants were operational, Scottsburg had 135 employees.
Scottsburg's liquidation includes the sale of 18 injection molding machines and the 54,600-square-foot plant in southeast Indiana. The property also has a 6,300-square-foot warehouse.
Both plants - in Indiana and Tennessee - are under contract with interested buyers, Wolf said. Scottsburg will vacate the facility no later than March 31, he said.
