Blue Water Automotive Systems will close two auto parts injection molding plants in Michigan and one in Ohio as part of a corporate realignment.
Production at plants in Lexington and St. Clair, Mich., and Wauseon, Ohio, will wrap up by the end of July, officials with Marysville, Mich.-based Blue Water said. Production from those plants will be transferred to Blue Water's six remaining U.S. sites.
The closings could eliminate as many as 230 jobs - about 17 percent of Blue Water's total workforce - although some of those positions will transfer to other Blue Water plants.
``To remain competitive in today's global environment, it was imperative that we examine every facet of our business to find ways to become more efficient,'' Blue Water Chief Executive Officer Michael Lord said in a Nov. 29 news release. Lord joined the firm in October, replacing former CEO Al DeVore, and is serving as CEO on an interim basis.
``We have developed robust, detailed plans to ensure the flawless transition of production and the continuation of high-quality and dependable service that our customers have come to expect,'' Lord added.
All of the tooling from the plants that will close will be moved to other plants, but less than half of those plants' injection presses will make the move, officials said.
``You can say that you have the capacity and wait for the market to turn,'' Lord said in a Nov. 30 phone interview. ``But in the state of the current market, we have to get our cost structure in line. Waiting and hoping is not a good way to run a business.''
Blue Water also is looking to diversify its business and do more work with foreign-based ``transplant'' automakers such as Toyota and Honda. Lord estimated that 95 percent of Blue Water's current sales are tied in to Detroit's Big Three.
The Wauseon plant was acquired in May as part of Blue Water's purchase of the interior trim business of Injectronics Inc., an injection molder based in Clinton, Mass. That deal included two other plants and increased Blue Water's annual sales by $60 million.
Most of Blue Water's $200 million annual sales comes from injection molding. Blue Water makes parts used in airflow management, interior trim and value-added assemblies.
The announcement of the closings comes only 13 months after New York financial group KPS Special Situations Fund LP bought Blue Water from Swiss investor Sarna Polymer Holding Inc., which had operated the business as Sarnamotive Blue Water since 2000.
Since buying the firm, KPS made the Injectronics deal and invested $7.2 million in a 40,000-square-foot expansion of Blue Water's Marysville plant. That expansion created 15 new jobs.
Lord added that although the decision to close three plants was a difficult one, the review process ``was positive in the sense that it makes you look at how you do things.
``At the end of the day, we're keeping 1,100 good-paying jobs in North America,'' he said.
The closings ``reflect that if you make an investment in the automotive market, you need to know what's going on with customers and what specific platforms the company is involved in,'' said Bill Ridenour, president of Polymer Transactions Inc., a mergers and acquisitions firm based in Newbury, Ohio.
Ridenour said he was a bit surprised by KPS' purchase of Blue Water last year, since some private equity clients he's working with are specifically asking to avoid firms with strong ties to the Big Three.
``It's possible that KPS factored in possible shutdowns into their purchase price for Blue Water,'' he said. ``But automotive participation with the Big Three is a turnoff right now.''