Pounded In First Quarter Clarion Remains Optimistic
HOLLAND — Clarion Technologies Inc. hopes new business it has booked for later this year will help its corporate earnings get on track.
Stung by the U.S. economic downturn, the Holland-based maker of plastic components for the automotive, heavy truck and consumer products industries posted a $5.7 million loss for the first quarter. That compares with a $486,000 loss the two-year-old company recorded in the same period in 2000.
The first-quarter loss is a direct reflection of the current economic and business conditions, Chief Executive Officer Bill Beckman said.
“This is definitely not where we wanted to be,” Beckman said.
To position the highly-leveraged company to weather the downturn, Beckman, Chairman Craig Wierda and recently hired Chief Operating Officer Tom Wallace each recently loaned $1 million of their own money to the company in exchange for warrants, Beckman said. Clarion also has restructured debt and is consolidating two manufacturing facilities in Greenville into one, a move that could result in the elimination of as many as 100 jobs.
The $5.7 million quarterly loss includes a $1.5 million one-time charge on the consolidation of the Greenville plants.
The slowing U.S. economy began taking its toll on Clarion’s business late last year and then “hit bottom and held” during the first quarter, Beckman said. New business booked for the third and fourth quarters, the amount of which Beckman could not identify, should help the company recover, he said.
“From the business model and strategy standpoint, I feel very, very comfortable that it is very good and working,” Beckman said. “Otherwise I wouldn’t have invested more money.”
Clarion Technologies, formed in 1999 by several past executives of the former Prince Corp., has six manufacturing facilities in Greenville, South Haven and Ohio and South Carolina, plus a research and design center in Jenison.
Clarion has grown through acquiring smaller plastics companies in a highly fragmented industry. The goal is to create a large industry player with a broad range of manufacturing capabilities.
The company posted sales of $28.8 million in the first quarter, a 15.2 percent increase from the $25 million of a year ago that was driven by the acquisition of Drake Products Corp. in Greenville, as well as new business in the heavy trucks sector.
Clarion Technologies last year posted sales of $117.4 million, while recording a yearly loss of $9.5 million. The company a year ago outlined goals of reaching $300 million in sales by the end of 2001, and $500 million by the end of 2002, with 80 percent of the growth coming from acquisitions.
While further acquisitions remain part of the business strategy, Clarion for now is focusing on its operational issues, Beckman said.