A composites company known for making wind turbine blades and bus bodies has laid off more than 100 workers at two locations after a customer abruptly filed for bankruptcy.
TPI Composites Inc. indicated that electric bus maker Proterra Inc.'s filing for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code includes plans to reject a supply agreement with the firm.
As a result of the filing, TPI has been forced to stop making composite bus bodies and lay off about 50 workers at a plant in Warren, R.I., and another approximately 65 workers at a facility in Juarez, Mexico.
TPI was making the bus bodies for Proterra at both locations, explained Jerry Lavine, president of the company's transportation business line.
"We didn't see it coming," Lavine said. "We've been working with Proterra for five years. We've been working for Proterra for a long time, and we did not foresee this coming."
Proterra represents less than 2 percent of TPI's business, but Proterra's move still costs TPI jobs. Lavine described TPI as primarily "a wind company" but the company has been working to expand the automotive business in recent years.
"Even in automotive, we've been working for the past couple years to grow our customer base, diversify what we do," he said. "It's not going stop or going to change our strategy. It is a significant portion of the automotive business what we had, but it's not the only business."
TPI currently has about 85 bus bodies in Rhode Island that have been made but not shipped to Proterra. They will now go into storage awaiting resolution of the bankruptcy court filing.
What happens to those bus bodies is anyone's guess.
"We're going to see. We don't know," Lavine said. "We're optimistic that there will be a use for them or somebody else will come in and want those bodies. Right now, we have no definite plans. We're just waiting to see what happens with Proterra."
"We have a fairly large facility with a large outdoor yard where we store the bus bodies. And they are in a secured yard that can handle them and not impact our day to day operations," he said.
Filing for protection under Chapter 11 bankruptcy court protection gives Proterra time to potentially reorganize operations and emerge as an operating business once again. This differs from Chapter 7 protection, which requires liquidation of assets.
Chapter 11 bankruptcy court protection allows Proterra to shed unsecured debt but gives secured debt holders a seat at the table in discussions as the court determines the best course of action for the company.
TPI, an unsecured creditor, expects to incur credit losses and impairment charges of approximately $20 million to $23 million for the current fiscal quarter ending Sept. 30. The company also estimates restructuring costs of $1 million to $2 million, including severance costs for impacted workers.
TPI is not closing either site in Warren or Juarez as the company makes other products at each location.
School bus body production in Juarez involved about 130 workers, but TPI was able to find other work for about half of those employees, Lavine said.
Scottsdale, Ariz.-based TPI has made more than 84,000 wind turbine blades since its founding in 2001. This includes a total of 661 sets, each including three blades, manufactured during the last fiscal quarter ended June 30, the company recently reported.