Injection molder Victor Plastics Inc. has filed for Chapter 11 bankruptcy protection and plans to close all three of its plants unless a buyer can be found.
The North Liberty, Iowa-based firm has ``worked strenuously to avoid bankruptcy,'' Chief Executive Officer Mike Tryon said in a Jan. 15 news release. ``However, due to industry outsourcing to overseas competitors, intense market competition, loss of key customers and increasing costs of raw materials, we were unable to operate profitably.''
Tryon said employees will be laid off gradually as production slows. Production is expected to continue in a limited capacity through the first week of May.
``We understand how tough this is on our employees, their families and our customers,'' he said. ``We have a plan in place to ensure an orderly wind-down.''
Victor employs 420 at plants in North Liberty; Victor, Iowa; and Flora, Miss. The firm's sales fell from almost $100 million in 2006 to about $70 million in 2007. Industry sources estimate that more than half of Victor's sales came from the appliance market, which has been hit by consolidation and offshore business migration in recent years.
Victor filed for protection in U.S. Bankruptcy Court in Minneapolis, where its parent firm, Spell Capital LLC, is based.
A buyer for the 200-employee Victor Plastics plant in Victor could emerge. Officials with the Victor Community Development Association will meet with an interested party Jan. 17.
``We're working hard to find a buyer, and we've got at least one bona fide prospect,'' said Leonard Seda, a Victor resident who works with the development association.
Spell Capital Chief Operating Officer Dobson West said he was unaware of a local buyer, but added that Spell has been contacted by at least five entities interested in buying all or a portion of Victor since the bankruptcy was announced Jan. 15. Spell hadn't been shopping Victor around, and the bankruptcy filing was necessary ``to buy some time'' because of the firm's liquidity issues, West said in a Jan. 17 phone interview.
``Finding a buyer would be advantageous to all parties,'' he said. ``It would yield a higher valuation and save jobs. We don't know how serious these buyers are, but we're going to talk with all of them.''
Seda said that after meeting with the party interested in the plant in Victor, he plans to meet with Morris-Anderson & Associates Ltd., a Chicago firm handling Victor Plastics' liquidation or sale.
Seda is a retired veterinarian who was an original investor in Victor Plastics when it was founded by James Kubu in 1983. Seda declined to provide details about the possible buyer, but said if the plant closes, it will ``affect a huge number of people'' in the town of Victor, which has a population of less than 1,000.
In a Jan. 15 court filing, Victor Plastics listed debts between $10 million and $50 million. The firm also reported a loss of about $3 million in the first 11 months of 2007.
Victor's largest unsecured creditors - according to the filing - include color concentrates maker Clariant Corp. (debt of $132,000) and resin distributors Polysource Inc. ($103,000), Adell Plastics Inc. ($97,000) and Channel Prime Alliance ($93,000). Victor also listed assets and liabilities each equaling $44.6 million.
Two creditors, Iowa Mold & Engineering Co. and Iowa Fluid Power, filed an objection with the court Jan. 17, asking that Victor's case be transferred to Iowa, since that is where most of its business was conducted and where the largest number of its creditors are located.
Victor had been in a growth mode as recently as late 2006, when it acquired Kincses Tool & Molding Corp. of Flora. But a major downturn in the appliance market quickly took its toll.
``Appliance has been a very tough industry,'' Spell Capital's West said. ``There's been a lot of business lost out of the country, and that's been combined with some resin price increases that haven't been passed through.''
In July, Victor closed a 200-employee plant in Kalona, Iowa, when its contract with a Whirlpool Corp. plant in nearby Amana expired. The end of the Whirlpool deal also hurt the plant in Flora, which had made parts for a Whirlpool plant in Oxford, Miss. The former Victor plant in Kalona since has been sold to injection molder Engineered Plastic Components Inc. of Grinnell, Iowa.
Spell Capital bought Victor from the Kubu family in 2004. James Kubu had operated the firm until his death in 2002.
Victor Plastics' 180,000-square-foot plant in Victor operates 27 injection presses with clamping forces of 60-3,000 tons. The 135,000-square-foot North Liberty headquarters site opened in 1995 and operates 41 presses of 30-1,450 tons.
In Flora, Victor has a 40,000-square-foot plant operating 26 presses of 55-720 tons.
Hard times at appliance-focused molders have intensified since industry giant Whirlpool bought rival Maytag Corp. in 2006. Dallas-based injection molder Moll Industries Inc. ended a 50-year history with Whirlpool in late 2006, when the firm would not meet Whirlpool's pricing demands. The move resulted in the closing of three Moll plants and loss of more than 400 jobs.
In early 2007, injection molder Clarion Technologies Inc. of Caledonia, Mich., announced it would close a 130-employee plant in Ames, Iowa, that had served Maytag.
