Automotive vinyl specialist SAI Holdings Ltd. has filed for Chapter 11 protection from creditors in U.S. Bankruptcy Court in Toledo, Ohio, with plans to close its Sandusky, Ohio, facility and sell its remaining assets.
The Nov. 6 filing comes as the company has encountered a variety of stumbling blocks, including decreasing sales for its customers, rising raw material costs, design decisions that have called for less PVC use and high employment costs.
That combination has resulted in ``extreme liquidity pressures'' for SAI, said Chairman John Givens in an affidavit filed with the court.
Butner, N.C.-based SAI posted a total of $127 million in sales in 2005, but with a loss of more than $2 million. Its Sandusky facility accounted for nearly $1.7 million of that loss.
``Uncompetitively high wage and benefit costs, as well as high legacy costs at [SAI's] Sandusky plant have made it impossible in today's environment to generate a positive cash flow at the operation,'' Givens said.
SAI produces cast PVC and extruded thermoplastic polyolefin films used as the skin on instrument panels, door panels and other interior parts. It also makes vinyl skins used by commercial truck and school bus makers.
While the company has battled the same pressures as other suppliers - with declining sales and rising material costs - it also has faced a squeeze from new trends in auto interior design.
Carmakers looking to trim the costs of making their products have eliminated PVC and TPO skins in favor of painted or molded-in-color hard substrates on most low-cost and midprice cars. That has meant an even bigger hit on SAI than the auto supply base in general, Givens said.
As a result, its overall sales dropped from $133.4 million in 2003 to an estimated $117 million for 2006.
In 2005, the company set new wages and benefits at its Sandusky plant in an attempt to keep it open, but losses have continued there.
SAI already has informed Ohio officials and the 189 employees at its Sandusky Ltd. subsidiary that it plans to close the site as quickly as possible. Work from Sandusky will be moved to Butner, where two SAI plants operate under the Athol Manufacturing Corp. name. The company will revamp operations there and sell it. It is in talks with customer Lear Corp. of Southfield, Mich., to reach a sales agreement that will allow production to continue uninterrupted.
SAI also has a sales office in Farmington Hills, Mich., and a warehouse in High Point N.C.