Bankrupt auto supplier Collins & Aikman Corp. is reshaping its operations in a plan that will likely break up North America's largest injection molder.
The company, which has been operating under Chapter 11 protection under the U.S. Bankruptcy Court in Detroit since May 2005, issued its latest reorganization plan Dec. 22. The plan confirms the company's intention to sell off its holdings, but officials noted that executives expect to split up the operations that turned out an estimated $1.5 billion in molded parts in 2005.
``To maximize the assets for the creditors, what we've had to do is find logical ways of breaking down the holdings,'' said David Youngman, vice president of communications, in a Dec. 27 telephone interview. ``That may be [splitting them up] by product or by customer or by geographic region.''
The company's parts probably are worth more than the firm as a whole, he said. A prospective buyer may want only plants that make air ducts or turn out floor consoles. Another buyer may be interested in a site in the southern United States or one that makes parts for a specific customer - and those buyers are not willing to turn in a bid for every facility.
``We are in the process of [talking] with bidders for portions of the injection molded side of the business,'' Youngman said. ``There are many interested parties - both strategic and financial.''
Southfield, Mich.-based Collins & Aikman already has shed its automotive fabric business and identified a lead bidder for its carpet and acoustics operations, though it has not disclosed that bidder's name.
Breaking up the injection molding - which covers more than a dozen plants and an estimated 560 presses - means the sale process for those facilities will take longer than the carpet business, which is being sold as a complete unit. In the meantime, customers have agreed to support C&A financially to ensure a steady delivery of parts.
Collins & Aikman also will allow customers to move production to other facilities if they believe that shift is required. A bumper fascia customer from C&A's Americus, Ga., facility already has opted to relocate one of its lines.
Youngman said the firm will have to adjust the workforce at Americus to make up for the loss of production, and still is in talks with employees there to determine how many of the 330 people will be laid off.
The decision to break up the holdings may mean that some facilities may not be desired by any buyers, leading to a closure, but Youngman said it is too early to predict which sites will shut down.
One buyer still could purchase multiple parts of the company and pick up the majority of C&A, Youngman noted. At this point, though, it would appear that the sheer size and capacity will not live on as a single business.
The breakup of C&A will mean an end to an entity that has been ranked as the largest injection molder in North America for more than a decade. The facilities that now make up Collins & Aikman previously were part of industry leader Textron Automotive Co. Inc. and were purchased by C&A in 2001.
And Collins & Aikman is not the only large firm in transition.
Delphi Corp., North America's largest auto supplier, also is in Chapter 11 and is seeking a buyer for its interiors operations - which include some of its $1.3 billion worth of injection molding in North America.
Lear Corp., with $1.1 billion worth of injection molding in North America in 2005, recently reached an agreement with financier Wilbur Ross to roll its facilities into a joint venture called International Automotive Components Group, and Ross has expressed a desire for parts of C&A in the past.
``There's a lot of movement in the sector,'' Youngman said.