For nearly a year, Blackhawk Automotive Plastics Inc. tried to restructure its debts as its suppliers demanded more cash upfront and customers delayed production.
But when General Motors Corp. had a two-day strike, and Chrysler LLC shut down one of its assembly plants for two weeks, the injection molder was left with no options. It entered Chapter 11 protection with the U.S. Bankruptcy Court in Youngstown, Ohio, on Oct. 22 to give itself time to restructure its debts or find a new owner.
``Basically everything has just been cascading,'' said Cliff Croley, chief executive officer of Salem, Ohio-based Blackhawk in an Oct. 25 telephone interview. ``As you try to accommodate some guys who want faster payment, you have to push back some other guy who also wants faster payment.''
Twice in the past six months - in July and September - Blackhawk made tentative deals to provide it with refinanced capital structure and give itself financial breathing room. Both times the company could not finalize the pacts.
``Every time I teed up a bank deal, there was a strike or something else in the industry,'' Croley said. ``And then there was the prime mortgage issue, which didn't help.''
And once Chrysler had an unscheduled two-week shutdown at its assembly plant in Belvidere, Ill. - a key customer for Blackhawk's parts - the company had no choice, he said.
Croley expects Blackhawk to make a quick exit from Chapter 11. The company, which molds interior and exterior parts in Salem and Mason, Ohio, has continued delivering parts even as it labored under financial difficulties. The company employs 1,574, at the two manufacturing sites and an engineering and sales office in Troy, Mich. It posted $136 million in 2006 sales.
The injection molder has gone through changes before.
Blackhawk, which has made more than 400 million louvered air vents for the auto industry, operated as part of Worthington Industries Inc. until 1999, when private equity buyer Tier E Automotive Group Inc. bought the firm.
Blackhawk grew through the first part of this decade, opening a plant in Mississauga, Ontario, and helping with Detroit-based GM's first experiments in nanocomposite plastics.
But in 2005, as the auto industry struggled, Blackhawk sold the Mississauga plant to customer Johnson Controls Inc. of Glendale, Wis. Then in 2006, Blackhawk closed its molding facility in Upper Sandusky, Ohio.
By November 2006, some of its key suppliers started demanding cash in advance before they would deliver materials, Croley noted in an affidavit filed with the court. Previously the company typically paid for goods 30-45 days after delivery.
In January, Blackhawk hired turnaround consultants including Conway McKenzie & Dunleavy, with an office in Birmingham, Mich., to help it look at restructuring options.
Pittsfield, Mass.-based Sabic Innovative Plastics tops its list of largest unsecured creditors - it is owed more than $1.9 million.