Orlando, Fla. — Between them, George Muhoray and Kurt Kolesha have been to 18 NPE shows. They were at NPE2024 representing Customers Commercial Finance LLC, a Portsmouth, N.H.-based equipment financing and leasing firm with expertise in plastics and packaging.
CCF is a subsidiary of Customers Bank, a $22 billion super-regional bank; Muhoray and Kolesha were part of the team that founded the equipment financing unit in 2015. Plastics has been and remains a key market for the unit.
They talked with Plastics News about the state of the industry and the advantages of working with a lender that has knowledge of plastics.
Q: You have a long history in plastics, but there are a lot of first-time attendees at this year's NPE. How long have you been doing equipment financing, and how did you get into it?
Kolesha: I've been in the equipment finance market since 1994, as my first job out of college. Wow, that's already 30 years. I started as a tax accountant for a bank leasing company but quickly realized I need to be in front of prospective clients.
Muhoray: I have been financing equipment for 37 years, starting at Signal Capital and working as a sales trainee on the Van Dorn vendor finance program. Those were the days.
Q: You know a lot about the financial condition of U.S. plastics companies and how it has changed over the years. What grade do you give the industry now, and what's your outlook?
Kolesha: I give the industry a B+ because companies did a good job weathering supply chain issues; they have been responsible financial managers and continue to focus on productivity via automation and other efficiencies.
Outlook-wise, the foreseeable future can be considered questionable given the nearing election and interest rate environment.
Muhoray: I don't disagree with Kurt; I see the financial condition of companies being "Satisfactory." Balance sheets don't appear too leveraged, the sources of revenue are well diversified, and many companies pay cash for equipment.
That being said, consistent labor is still a huge challenge, and costs just keep rising — insurance, interest expense, taxes, etc. I remain positive and optimistic; there are just too many smart and quality people in this industry.
Q: What's the financing climate like right now for plastics processors? With high interest rates and some banks under pressure from regulators, are customers having a hard time?
Kolesha: Generally, processors are not having a hard time. Certainly, if their main relationship is with a suffering bank that can't deliver or makes onerous demands, then yes; but plastic processing is held in positive regard by banks, unlike certain aspects of commercial real estate.
Muhoray: It's a super-curious climate. Processors should not be experiencing too much, if any, pain in accessing bank capital. The question is are processors accessing the right kind of capital?
I've always promoted the notion that processors should diversify their debt sources just as they diversify their other raw material needs. Isolated failures in the banking industry have created knee-jerk reactions from regulators and skittish banks making diversification even more important.
Q: Do you work mostly with machinery OEMs or directly with buyers?
Kolesha: We built the CCF portfolio through a healthy mix of machinery OEM originated business and direct, end-user buyers. It's a positive, vicious circle as an OEM introduces clients when in the buying phase, while working directly with a client, they unveil new OEM relationships and opportunities.
Muhoray: At CCF, deep immersion in plastics means we see both the machinery OEMs and end-user processors as clients. Our capital certainly helps an end-user invest in their own company by buying equipment but helping an OEM sell a machine because of our financing is always a goal.
Q: What are the advantages of using a firm like yours rather than your traditional bank?
Muhoray: The main advantage for a processor buying equipment with a CCF loan/lease or a new machinery OEM referring CCF to a client is to work with a team of plastics industry and equipment centric specialists, not generalists.
Our group has financed plastics and packaging equipment for 30-plus years. We know the difference between a blow molder and blown film. We comprehend the impact of fluctuating resin prices and understand the impact rising resin prices can have on a firm's profitability. We are a Plastics Industry Association member and the only bank exhibitor at NPE.
All of this means the processor will get an attractive and tailored loan or lease, rapidly decisioned with simple documentation.
Q: How about new equipment vs. used equipment? What are processors and converters buying right now?
Kolesha: It's quite interesting as we see clients buying quite a bit of both. Most new machinery orders can still have incredibly long lead times — multiple months to a year — making quality used machines in great demand. But then again, there is nothing quite like a new machine. At CCF, we have always financed both as the machines have always managed to hold value regardless of market.
Q: What do you like about NPE?
Kolesha: Accumulating knowledge, relationship-building and the genuine ability to transact or lay the foundation to transact.
Muhoray: I love that "old school" still has great value, and post-COVID, maybe even more value. Meeting people face to face; getting to know them and their companies; identifying needs; devising solutions while not hiding behind monitors and technology.