Some key thoughts about the past, future for auto suppliers

Just a couple of months after I started as a reporter for Plastics News, one of the first companies I wrote about was Key Plastics LLC, an injection molding auto supplier that entered Chapter 11 bankruptcy in March 2000.

Key"s route through the court system taught me a lot about all the twists and turns that can take place in the bankruptcy system — in this case, unexpected last-minute bidders that delayed the sale and its eventual purchase by Carlyle Management Group.

And since then, I wrote about its acquisition of other companies (including airbag suppplier Breed Technologies to create Key Safety Systems), its selling off parts of its holdings (including Key Safety Systems, which is now part of China-based Joyson Safety Systems) and, in 2016, its acquisition by what was then called Mecaplast and is now Novares Group SA.

In a way, I"ve felt a special tie to those molding facilities that kept on turning out parts during the past 20 years, even as their corporate parent went through a range of changes.

As part of Novares, they became an element in a global company with leadership that took big moves to establish a presence wherever the auto industry was, while also investing in startups that would allow it to be a part of a changing auto industry embracing electric and autonomous vehicles.

In 2019, Novares purchased Miniature Precision Components Inc. in Walworth, Wis., a supplier of injection and blow molded under-the-hood parts to increase its presence in vehicle powertrains.

In September, CEO Pierre Boulet told Plastics News during a visit to a Michigan molding plant that the company was on its way toward targeted sales of 2 billion euros ($2.2 billion) in 2020.

"There will be investments that fail, that"s for sure, so we try to be cautious in the money we put in. … If you don"t take risks, you don"t get benefits," he said.

But, of course, no amount of planning or caution could have seen the impact of the coronavirus outbreak.

Novares, with a technical center and two production sites in Wuhan, China, was among the first companies forced to deal with a rapidly changing business atmosphere.

"In Wuhan, roads are blocked, factories are closed and the whole of China is affected," Boulet said in emailed responses to Plastics News in early February.

Now Novares finds itself under court protection from creditors as it seeks a sale or restructuring through the French bankruptcy process.

Novares is not the first auto supplier forced into bankruptcy due to COVID-19, and it certainly won"t be the last.

Boulet hopes that by June, Novares can restart most of its European production, which accounts for about 46 percent of its revenue. Five of its Chinese plants have already restarted, while shareholders have advanced cash for Novares to relaunch production at some European sites.

What happens to this company — and any company — during a continuing global panedemic will be hard to predict. But for the sake of all those workers at those molding plants who have already been through decades worth of ownership changes, I hope it transitions smoothly to whatever shape it will take next.

Rhoda Miel is a Detroit-based Plastics News assistant managing editor and author of the daily Kickstart blog. Follow her on Twitter @PNRhodaMiel.

source:https://www.plasticsnews.com/viewpoint/some-key-thoughts-about-past-future-auto-suppliers

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