Bailey “frustrated” by Entropex receivership
Entropex was mired in red ink when it closed its Lougar Street plant last month.
The plastic recycler had been crippled by plummeting prices for recycled resin, soaring power costs and “challenges” developing new markets for its products.
Rob Smith, a senior vice president with London – based MNP a court appointed trustee says secured creditors, Scotia Bank and Roynat were owed $8 million when the company’s loans were called last month.
When crude prices collapsed Smith says it became a challenging business. “Falling oil prices caused virgin plastic prices to tumble making it more difficult to sell recycled plastic”.
Smith says the company had revenue of $40 to $45 million but didn’t have enough financial strength to weather changing market conditions. “They had cash flow problems and had been struggling for more than a year”.
Most of the 155 employees were terminated in mid July. Smith says about a dozen workers have been retained to get finished product out the door and to clean up the 180,000 square foot plant.
“We are trying to act quickly here to retain value,” says Smith who says there has been keen interest from competitors and companies in the plastic molding business.
“We hope to go to court shortly and be vetting potential buyers within 30 to 60 days”.
Smith says he has heard Entropex president Keith Bechard is attempting to restructure the company.
Bechard didn’t respond when First Monday attempted to contact him.
Entropex’s customers are in the automotive and consumer products business. Most of its raw material, rigid and soft plastic “came from all over Southwestern, Ontario, the City of Toronto, other municipalities and Michigan” says Smith.
Entropex transformed it into small plastic pellets, which were shipped directly to manufacturers.
Twice in the last seven years Entropex has received government funding to develop new technology to transform its business and expand its markets. The company received $6.3 million in Federal funds from Sustainable Development Technology Canada for a pilot facility to recover mixed rigid plastics such as fast food containers.
That was in 2009.
In 2011 Entropex received $4 million in provincial funding from the Innovation Demonstration Fund to develop new plastic recycling technology.
The company was heavily fined in 2010 after an employee was seriously injured. The employee was struck by compacted plastic from a baling machine. At the time Justice Jamie Shortt found the baler was not guarded, not maintained in good condition and that maintenance was performed on the baler while it was in motion.
The company was fined $410,000.00 plus a 25% victim surcharge for violations of the Occupational Health and Safety Act.
Sarnia MPP Bob Bailey says he is “frustrated” by what’s happening in Ontario’s manufacturing sector. “Entropex is just another example of the private sector struggling to be innovative and do business in a Province that is one of the most expensive places in North America. Even with government assistance manufacturers remain uncompetitive.”
“It’s frustrating, very frustrating”.