Plastech Filed Chapter 11 After Chrysler Pulls Plug

[Truckin]

DETROIT -- Financially struggling Plastech Engineered Products Inc. this evening filed for Chapter 11 bankruptcy protection, according to founder and CEO Julie Brown.

In an e-mail sent to Automotive News this evening, Brown said the longtime plastics parts supplier filed its Chapter 11 petition, but did not provide further details.

The filing took place at about 7:30 p.m. in the Eastern District of Michigan in Detroit, according to The Wall Street Journal Web site .

Brown's company is the largest minority-owned supplier in the auto industry. North American plastics parts providers such as Plastech have been bludgeoned by higher raw materials costs and lower customer production volumes. At least two of Brown's main competitors have also gone into bankruptcy in the last few years.

Earlier today, Plastech received a huge setback when Chrysler LLC terminated its contracts with the supplier.

" We notified Plastech a month ago of this pending action," Chrysler spokesman Kevin Frazier said. " They were notified of the (contract) termination today."

Chrysler today also began moving its tooling from Plastech plants to competitors who will soon begin making plastic interior-trim parts for Chrysler vehicles such as the 300 sedan.

The loss of Chrysler business took place as Plastech attempted to win a $200-million bailout package aimed at stabilizing the suburban Detroit supplier.

Terminating contracts and moving tools is a time-consuming and expensive step for an automaker. Such moves are taken when there is concern that a supplier's financial difficulties will interrupt the flow of parts to automaker assembly lines.

Asked why Chrysler acted, Frazier says the automaker needed " to safeguard the delivery of parts to our assembly pants and ensure that we achieve the highest level of quality for our Chrysler, Jeep and Dodge customers."

One industry source put Plastech's revenue loss due to Chrysler's move at up to $200 million annually. Plastech posted sales last year of $1.4 billion.

Early last year, Brown convinced Chrysler, General Motors, Ford Motor Co. and Johnson Controls Inc. to give her company a $46 million bailout.

That bailout's benefits were eroded during the past year by declining production volume and rising raw material prices.

[Supplier50]

Doesn't look good for Plastech. Maybe they should have strived harder for customer support, and the current customer's would be more willing to work with them. I guess that is what happens when you burn your bridges and think you are bullet proof

[Truckin]

They relied upon the minority content that the Detroit 3 were pushing a few years ago. This was always a concern with minority owned suppliers....they were always on shaky financial ground.

Oh well, I don't think the Detroit 2.5 are currently pushing for minority content on vehicles. It distracts them for designing/making a good vehicle.

[Big3Dig]

Too bad for Julie Brown, tough times for her.

[Vanilla Cookies]

Good luck to you Julie. You are a strong lady and will find a way to recover.

[Kern]

Hello everyone. I have enjoyed posting here on Topix and reading some of your sometimes informative, sometimes stupid comments. I have been bashed as an old man for liking Buicks, and a redneck for liking domestics and being from West Virginia (mostly Hondata).
Well everyone, THE BLINDER'S ARE OFF! THE TRUTH WILL NOW BE REVEALED!.........
Actually, Kern is NOT my real name, I am not even sure if it is a name, I made it up. I am NOT an old man, I am 14 years old! And I have only driven cars on a parking lot, the only thing I have driven on a road was a golf cart or a bike! And really, nobody in my family owns Buick or Excursion. You know that 1986 COROLLA I used to own?? THAT WAS MY DADS!! You know that FRIEND of mine who had a Camry LE from work? THAT WAS MY DAD WHO HAD IT FROM WORK!! And you know that 2003 ACCORD EXL we had?? WE STILL HAVE IT, MY MOM DRIVES IT!!,(Although all the problems mentioned about the cars are 100% REAL)
And that new Ford Fusion my "father in law" got, THATS MY DAD WHO GOT IT AFTER HE HAD TO GIVE BACK HIS CAMRY!!(This is his 2nd Big 3, he owned a chev a long time ago, his first car!!) It was my convincing and searching that was the reason he finally got a domestic! He wanted a Passat or Blahcord, before he saw Fusion, which was way better in his opinion, SUCCESS!
It was funny to all see you make these stereotypical comments about me being old, a hick, etc. when really, I am very young and not a hick. I moved here to Savannah only 3 years ago after being born in the northwest.
Keep on posting, and ENJOY THE NEW FACE OF BUICK, WINNING THE TASTES OF YOUNG PEOPLE!!