February 13, 2008

The Plastech Story Gets More Fishy

This whole Plastech thing has people wondering what the whole thing is about.

A bankruptcy judge Tuesday allowed distressed supplier Plastech Engineered Products Inc. to sell $17.1 million worth of inventory at four plants to Johnson Controls Inc

It's not plants Plastech wants to sell, it's just inventory plastech has on hand.

Plastech needs to secure financing quickly. Company officials expressed concern about making payroll this week, which compelled Shefferly to move swiftly in approving the sale of inventory to Johnson Controls. Typically such a sale would require a 20-day notice.

The inventory is completed components, work in progress and raw materials from four North American plants which Johnson Controls operates for Plastech. Those components are for Johnson Control assemblies. (emphasis mine)

I don't understand why Plastech would need permission to sell it's own stock to it's customer (Johnson Controls). Would someone know why? Does it have something to do with the bankruptcy?

If I was working for Plastech I would be scared about not getting paid and would run out right away and cash that paycheck.

Plastech is working with the courts to secure money from it's customers so they have money to run until their court hearing on Feb 27th. Of course they made it clear that Chrysler isn't one of the customers helping with the financing, and I don't blame them.

Chrysler still hasn't been allowed to claim their tools, but are going before the courts today about it.

This whole mess is Plastech's fault. If they are bad enough finacially that they might not beable to meet payroll then they were in a finacial crisis long before Chrysler decided to pull their tools. That kind of financial problems have been a long time in coming and Plastech knew this.

Sounds to me like Plastech thought they could just blackmail the auto makers into giving them money to keep them afloat.

Hopefully we will find out more tomorrow, after the court hearing today.

Posted by Quality Weenie at February 13, 2008 09:29 AM | TrackBack

I work at one of the Plastech plants. We are all worried that we won't get paid. It is not our fault that Chrysler backed out of the contract. Our costs went up, so we had to raise our prices. Isn't that what a business usually does? I believe one reason we are not financially sound is because we have four (yes, four) corporate offices! And, who occupies those offices? High-paid executives that do nothing but attend meetings every day while the rest of us spend our days making the parts that pay their paychecks.

Posted by: Lisa at February 13, 2008 07:45 PM