Swedish auto supplier Plastal Holding AB has filed for bankruptcy, citing a severe liquidity crisis due to problems in both the auto industry and distressed financial markets.
The filing at the district court in Molndal, Sweden, affects the parent company, but CEO Roar Isaksen said in a news release today that it is unavoidable that Plastals operations in other countries will follow its lead.
We have turned over every possible stone in our attempt to avoid this situation, but today our last efforts failed, he said.
Plastals majority shareholder, Nordic Capital Fund V, put more cash in the company in January, but the size of the auto industrys decline -- a 40 percent manufacturing drop just in the first two months of 2009 -- was too big to maintain.
Plastal, based in Kungalv, Sweden, has 6,000 employees and 30 production facilities in 10 countries in Europe and China. It posted sales of 1.3 billion euros ($1.63 billion) in 2008. It makes plastic bumper fascia, interior and exterior auto parts, including door panels for the Smart mini car, made in Hambach, France. It purchased German competitor Dynamit Nobel Kunststoff GmbH in 2005, more than doubling its size.
The court will appoint bankruptcy trustees for each Plastal group, the company noted in its news release. Deliveries to its Swedish plants have been suspended, but parts will be shipped to customers, if customers can assume freight costs.
The drop in demand has been both unexpectedly sudden and large towards the end of last year, and continued in the beginning of this year, said Chairman Curt Germundsson, in a written statement. The consequences have been more severe than anyone could have predicted. The current market conditions continue to be extremely uncertain and it has therefore not been possible to find a sufficient long term solution for Plastal.
Plastal likely will not be the last European supplier forced into bankruptcy. While the European auto industry is in marginally better condition than the North American industry because of its wider range of automakers, it still is seeing large cutbacks.
It is a global industry, and [suppliers] are affected by everything that happens, said Antonio Ferreira, manager, European supply chain and technology forecasts for global consulting group CSM Worldwide.
While traditional carmakers in Italy, France or Germany may be financially stable, General Motors and Ford Motor Co. also have a huge presence in Europe, and European suppliers to those companies are as tightly linked to its fate as North American suppliers.
Even this morning, I was talking to a supplier and he was watching the news minute-by-minute trying to figure out whats going to happen to GM, Ferreira said. Everyone is saying the same thing, Its a storm, and were trying to be proactive as we can and ride it out for as long as we can.
Some specialty plastics suppliers with technology or parts that are in demand, but the bulk of the companies are firms like Plastal, and are in a very competitive field with little profit even when times are good, he said. Those businesses are taking the biggest hits.
This is probably one of the most competitive markets that Im aware of, and even without the downturn there had to be some consolidation, he said.
Plastal ranks No. 87 on the Automotive News list of the top 100 global suppliers with estimated worldwide sales to automakers of $1.90 billion in 2007.