Peregrine Turnaround Plan Announced
7 July 1998
Peregrine Turnaround Plan Announced
SOUTHFIELD, Mich., July 7 -- Peregrine Incorporated (PI) will
close two plants, sell a third one and rebuild a streamlined $350 million
company with a net loss of only 150 jobs, according to a plan released today
by Jay Alix, chairman of Peregrine Acquisition, Inc. (PAI), which bought the
troubled automotive supplier in May.
The turnaround plan, still subject to review with lenders, unions and
others, would save Peregrine from bankruptcy by closing an unprofitable
stamping and assembly plant in Flint and an unprofitable door trim facility in
Livonia, while seeking a buyer for the profitable Windsor, Ont. seat assembly
and injection molding plant. The Flint and Livonia plants are expected to
close during the fourth quarter of 1998 and the target date for sale of the
Windsor plant is Dec. 31. The plan should result in minimal unemployment and
job loss as Peregrine has certain agreements with General Motors from when GM
sold these plants to Peregrine in 1996. Those agreements involve GM taking
back former GM employees under certain conditions.
Alix said that the plan, which he had promised in 60-90 days from the date
of his April 23 purchase, was the result of an intensive review process
conducted by both Peregrine employees and turnaround professionals from the
Jay Alix & Associates (JA&A) firm.
"This plan not only keeps the company out of bankruptcy, but maximizes
value to those suppliers who are owed money, minimizes transitional operating
losses and assures an organized process by which we can rebuild a profitable
company while minimizing the loss of jobs," said Jim Bonsall, president and
CEO of Peregrine Incorporated.
Alix and Bonsall met with employees, suppliers and union representatives
to review the plan before it was publicly announced today. They revealed new
financing commitments and asked suppliers for their continued support and
cooperation during the transition.
After the closings and sale, Peregrine will continue to operate five
facilities: a bumper fascia and stamping plant in Oshawa, Ont., a metal
forming plant in Battle Creek and three metal forming plants in Warren. In
addition, the company will retain its headquarters in Southfield. The
restructured company will employ more than 2,000 people and focus on providing
automotive components to General Motors, Ford, Chrysler, Takata, TRW and Budd.
Peregrine's five remaining facilities will be revamped and reorganized
both to increase business from current customers and to seek new automotive
customers, Bonsall said. "We will be in a position to make the necessary
investments in our remaining plants and core businesses. The turnaround focus
will now shift from a corporate-wide view to individual plant turnaround
plans," he added.
The Flint plant, with 684 employees and 150 temporary workers, would have
required enormous capital investments in dies and presses as well as
infrastructure improvements which could not be economically justified,
according to the JA&A/Peregrine review teams. Additional problems with
operating costs and power generation for the 2 million-square-foot building
proved too serious to overcome, the turnaround team reported.
The Livonia plant currently employs 531 employees and 144 temporaries, in
a 1.2 million-square-foot building. A viability analysis showed that the
plant could not effectively and profitably compete in a consolidating door
trim market due to outmoded facilities and expensive, inefficient processes.
General Motors, the plants' primary customer, is expected to re-source all
Flint and Livonia products. Former GM hourly workers now employed at those
two plants may have the opportunity to return to General Motors under terms of
a previously existing agreement.
Although the Windsor plant is profitable, the decision to sell was based
on the increased competitiveness and industry consolidation of the seat
assembly business and a desire to focus on the core businesses of painted
bumper fascia and metal stamped assemblies. Until the divestiture, Peregrine
will continue to seek additional contracts for the Windsor plant, Bonsall
said.