Case #936

$20 million Plastic Injection Molder

This Midwestern plastic injection molder serviced the automotive and appliance marketplaces. The company had been hit by sales and margin decreases due to increased competitive pricing, especially from offshore competitors, and the resulting loss of some long-term customers. Additionally the owner/entrepreneur who had run the company for over 20 years wanted to retire. There was $3 million in debt and an annual operating loss of almost $2 million. Covenants on bank loans were not met, cash availability under existing collateral formulas had dropped to dangerous levels and changes were clearly required to stabilize and save the company.

Morris-Anderson & Associates was brought in to assess the situation. Our crew got to work and 1) developed a weekly detailed cash forecasting discipline to control liquidity, 2) planned and executed a corporate reorganization, which realigned management responsibilities and dramatically reduced headcount and costs, and 3) implemented revised pricing and marketing strategies to stop-and more importantly reverse-the top line and gross margin erosion.

The company became profitable again within 90 days. The secured lender regained its comfort with the security of its loan and we departed the workout phase of the engagement. Today, the business is being marketed by Morris-Anderson & Associates on a non-emergency basis. From early indications of interest, it appears that the owner-who almost lost his total investment in the company-will soon retire with a multi-million dollar payout from the sale of his business.