Gloucester Engineering Co. Inc. has laid off an unspecified number of manufacturing employees and has frozen orders from suppliers, citing the tough economy, which has squeezed cash flow at the film equipment firm.
Contacted Jan. 28, Chairman John Sharood would not say how many people are getting laid off. “Because we haven't finished communicating with people, I can't comment on that. But the impact has been mainly on the shop floor because of reduced workload,” he said. Sharood also declined to say how many people now are working at the company in Gloucester, Mass.
But he vehemently denied a report in the Gloucester Times newspaper that Gloucester Engineering “has suspended work” and shut down.
“We are not shutting down. We've had a layoff but we did not shut down,” he told Plastics News. “We're shipping, serving and installing every day, including today. We've never stopped.”
Plant workers are represented by the International Association of Machinists union. Officials of IAM Local 2654 in Gloucester could not be reached for comment.
The Gloucester Times said the headquarters plant employs 200; Sharood said that was the figure last year, but the plant does not employ that many now.
Meanwhile, suppliers got an e-mailed letter from President and CEO Carl Johnson dated Jan. 20, telling them not to ship goods and services unless they are first contacted by Gloucester Engineering. Johnson said the company “is in the midst of a business cycle which has put a strain on our cash flow.”
“All existing open orders are currently on hold and will not be accepted, received or considered Gloucester property unless notification has been provided to the supplier and the [purchase orders] reopened,” the letter said.
Sharood said the purpose of the e-mailed letter was to align deliveries by suppliers to the slowdown in film machinery production. He said Gloucester Engineering has a new supply chain manager who wants to tighten up the process.
“We've received a significant amount of material ahead of requirements. It was important not to do that,” Sharood said.
One supplier, who spoke on condition he would not be identified, said some of Gloucester Engineering's debt to his company goes back six months.
Sharood said other machinery makers are under pressure, especially in the blown and cast film sectors, where production lines can cost several million dollars.
“I'm not going to respond specifically to anonymous quotes from anonymous suppliers, but payments in the entire industry have been stretched out, and we're not the only manufacturer that's been affected,” he said.
Asked if Gloucester Engineering is financially stable, Sharood said: “We're solvent, but we're under stress, like all the other film and sheet equipment [manufacturers].”
Sharood and Dick Murphy, partners in private equity firm Mousam Ventures LLC in Kennebunk, Maine, bought the machinery maker from German industrial conglomerate SMS GmbH in 2007.
Copyright 2010 Crain Communications Inc. All Rights Reserved.