Plastech bankruptcy hits local tool shop
Canadian PlasticsCanadian Plastics
Much has been said about the bankruptcy of plastic auto parts manufacturer Plastech Engineered Products Inc., and t...
Much has been said about the bankruptcy of plastic auto parts manufacturer Plastech Engineered Products Inc., and the impact the insolvency has had on Chrysler LLC. Last week, the OEM tried unsuccessfully to move its tooling out of Plastech’s shuttered facilities.
However, behind the scenes, the bankruptcy is also having a major impact on the small- and mid-sized companies who served the bankrupt parts supplier.
Oldcastle, Ont.-based J&J Tool & Mold Ltd. manufactured injection molds for the company. According to bankruptcy documents, the small tool shop is owed more than US$1 million.
According to company vice president Mike Altenhof, the shop had been receiving some payments, but they ceased last November.
“We’ve had to scrounge the last several months to try and find additional customers to replace that work,” he said in an interview with Canadian Plastics. “For a small company, it’s been terrible … we’re in a cash crunch right now.”
When Plastech filed for bankruptcy earlier this month, it did so with US$488 million in debt. Although J&J is considered an “unsecured” creditor, Altenhof notes that the company had liens on some of the tools it manufactured for the parts maker. As a result, he is somewhat optimistic that J&J will be able to recoup a percentage of its losses.
In order to stay afloat, J&J is bidding on new work in the automotive sector. Altenhof also said that they have been able to use offshore alliances with a couple of low-cost tool shops to provide a competitive edge.
Still, Altenhof said it has been a trying time for the company. Plastech was one of the shop’s top three customers, and the overall economic backdrop has not been conducive for mold and tool shops.
“It’s already difficult with the exchange rate where it is…that advantage has basically evaporated,” he explained.