One of North America's largest minority-owned auto parts suppliers is tottering into a financial crisis caused by its customers' production cutbacks.
During the past two weeks, Plastech Engineered Products Inc. has fired 100 employees and cut salaries 5 percent for 800 other staffers, say several sources familiar with the company. At the start of the year, Plastech employed 8,800 worldwide.
Plastech - a key supplier of plastic trim to General Motors Corp., Ford Motor Co. and Chrysler LLC - is struggling to cut costs as its biggest customers slash production.
The company did not respond to a request for comment.
According to a report in the Columbia, S.C., The State newspaper, the company announced Dec. 13 that it will close a plant in Winnsboro, S.C., by Feb. 4, putting 220 people out of work. The paper quoted Matthew DeMars, president of the company's interior parts division, as saying that work there will move to some of the company's 36 other plants.
Privately held Plastech of Dearborn, Mich., also is trying to stave off takeover efforts by three unidentified private equity firms that control more than $50 million of Plastech's total unsecured debt of about $100 million, the sources said.
The three investors are pursuing the ``loan to own'' tactic. In that type of investment, investors acquire a company's debt, then demand management control, such as seats on the company board.
The three private equity firms have warned Plastech that they will try to push it into reorganization if it violates its bank covenants.
But company Chief Executive Officer Julie Brown, a native of Vietnam, has built useful alliances with her customers - particularly Ford. Brown was a Ford product engineer before starting her own company in 1988.
With Ford's help, Plastech grew quickly through acquisitions and joint ventures and now generates annual sales of $1.2 billion.
In February, Plastech obtained a bailout from Ford, GM and Visteon Corp. About $46 million of Plastech's liabilities disappeared.
Nevertheless, in early December the credit rating agency Standard & Poor's warned that it could downgrade Plastech's debt rating.