CHURUBUSCO, Ind. (May 29, 2009)—BRC Rubber & Plastics Inc. has bought certain assets of Imco Inc., which will help offset some of the revenues BRC will lose because of the economic woes of customers Chrysler and General Motors.
Churubusco-based BRC acquired the business base and equipment from Imco for an undisclosed sum, according to Michael Meyer, BRC executive vice president. The deal, closed April 17, didn't include Imco's 50,000-sq.-ft. facility or the land it is on in Huntington, Ind.
Both BRC and Imco are located in northeast Indiana and do roughly 80-85 percent of their business in automotive. “Imco contacted us because they could not continue in business any long- er,” Meyer said.
Imco was founded in 1947 as the Indiana Molding Co., with 13 employees and eight presses. Published reports quoted Imco CEO Ray Meyers as saying the impact of the recession on the automotive industry left the molder unable to make its debt payments.
Some of the work from Imco will be transferred to each of BRC's four Indiana molding plants, in Ligonier, Bluff-ton and Hartford City along with Churubusco. BRC took a six-month lease on Imco's factory in Huntington so it could conduct an orderly transition of the equipment into the BRC factories, but Meyer said the move should be completed well before then.
About 80 people continue to work at the Imco facility but that number will drop as work is moved to the BRC units. Meyer said his firm originally had intended to recall about 65 BRC workers as the transfer takes place, but that plan was in place prior to Chrysler filing for Chapter 11 bankruptcy protection and GM announcing it would close its assembly plants for up to 11 weeks.
The revenue gained from Imco had been expected to support those callbacks, but now will likely just offset lost sales from Chrysler and GM. “In this economy, the best-laid plans of mice and men continue to change almost on a daily basis,” he said, adding that BRC callbacks will be dependent on business levels.
Like most automotive parts suppliers, BRC itself has seen a drop in its revenues. At the end of 2007, Meyer said the firm employed about 580, but about one-third of those are currently laid off.
BRC will consider some of Imco's staff for long-term employment, but a lot depends on industry conditions. “They have a lot of good people,” he said. “The problem is as the economy continues to unfold, you just don't know, especially with people on layoff from BRC.”
Worst he's seen
Meyer will celebrate his 29th anniversary in the automotive industry on June 2, and this is like no other downturn the BRC executive has experienced. “These certainly are unprecedented times, but we have to deal with it.”
Besides the layoffs, salaried staff has taken a temporary 10-percent pay cut and the firm is “watching every single penny we spend,” he said.
BRC also entered the period without any debt other than trade payables. “We are able to weather the storm because we have no bank debt,” Meyer said. “We have ratcheted down our spending and will survive despite lower sales.”
The Churubusco-based firm also will continue to look for opportunities, such as it did with Imco. “Having that business will at least keep us stable to where we were,” he said, noting that Imco had automotive business outside of GM and Chrysler.
Ford, in fact, has encouraged its suppliers to consider acquisitions to get critical mass, he said, something that BRC has been doing for some time. And as the automotive industry restructures, the inevitable shrinking of capacity will see more need for consolidation among suppliers.
In the end, though, Meyer said there will still be a market for vehicles. “There will be a need, and someone has to fill that need,” he said.