Modern Plastics Corp., founded in 1937, is closing down a victim, company officials said, of the many hardships facing the U.S. plastics industry.
Executives said Modern Plastics got walloped by high costs for resin, utilities, transportation and health care, the inability to pass along price increases, financial turmoil at customers and loss of work to China and Mexico.
Hard times are nothing new for the company in Benton Harbor, Mich. Modern Plastics has struggled, hiring a turnaround consultant, securing tax breaks and government loans, and slashing costs. Two years ago, it merged a sister injection molding company into its Benton Harbor plant.
``We've had issues for years and years, but we've always been able to get through it, to work with our vendors and customers and find a way through them,'' said Robert Orlaske, executive vice president.
But ``external funding'' was cut off July 11, a Friday, according to a company news release. The following Monday, Modern Plastics executives broke the news to more than 150 current and laid-off employees.
``It was very somber,'' Orlaske said. ``A lot of people have cared about this plant for many, many years. We have employees that have worked here for 20, 30, 40 years.''
Modern Plastics, founded during the Great Depression by Walter Miller and still owned by the Miller family, did injection and compression molding, adding extrusion blow molding in the late 1950s. Walter's son, Victor Miller, later took over as president. Victor died in April.
The Benton Harbor plant will shut down. Orlaske said the firm is negotiating to sell a blow molding operation in Coloma, Mich.
Modern will employ a small staff during the next few months to close out inventory, help customers secure other suppliers, auction its equipment and sell the buildings.
A bank that Orlaske declined to identify will fund salaries of employees kept on to complete the liquidation, but will not assume any outstanding debt, including health care and taxes.
When it shut down, Modern had about 100 active workers, including 70 in Benton Harbor and 30 in Coloma. Just a year ago, the firm employed more than 300 and was looking to hire more.
But last fall, the firm lost nearly half its work when medical products maker Hill-Rom Co. Inc. of Batesville, Ind., pulled its business. Modern had blow molded parts for Hill-Rom hospital beds footboards, headboards and side panels.
A Hill-Rom spokeswoman, Lauren Green-Caldwell, confirmed the company moved the work in October to an industrial blow molder in northeastern Ohio that she would not identify. Modern Plastics claimed it also lost the Hill-Rom business to China and Mexico, but Green-Caldwell said that is not correct.
``We regularly assess our business needs, which includes assessments of suppliers. At that time, we felt that Modern Plastics could no longer meet our needs in that area,'' she said.
Modern managed to survive that body blow. By reducing overhead and a significant number of layoffs, the molder managed to eke out a small profit at the end of 2007. But a series of crushing blows came this year, with the bankruptcy of one customer, the shutdown of another and a third seeking a big price reduction.
First, in late January, Argue Automotive Accessories LLC, based in Clearwater, Fla., filed for Chapter 11 reorganization. Modern Plastics was molding spoilers for Toyota cars and shipping them to Argue Automotive for final painting at a plant in Elkhart, Ind.
In court documents, Modern is listed as Argue's largest unsecured creditor, at $315,145. Orlaske said the total actually is about $409,000 because Modern had to pre-buy resin specifically for the Toyota spoiler job.
Modern Plastics also was molding flower pots for Excellent Plastics Inc. in Mantua, Ohio, when the company abruptly shut down in June, Orlaske said. That stuck Modern with a bill for about $120,000. Excellent Plastics could not be reached for comment.
``You go from a $20 million company down to a $6 million company within a matter of nine months, you make some major adjustments,'' Orlaske said.
Modern holds a special place in the history of the U.S. plastics molding industry. One of Modern's early products was a compression molded washing machine agitator for its Benton Harbor neighbor, Whirlpool Corp.
Orlaske said globalization, plus the inability of molders to pass along higher resin costs to customers, are the most important challenges facing the U.S. plastics industry today. ``We found it was not to our advantage to continue molding for customers that would not take price increases,'' Orlaske said. ``And we have a lot of them.''