From boom to bust: Family-owned manufacturer was flush just two years ago

Hey there, time traveller!
This article was published 20/11/2015 (3788 days ago), so information in it may no longer be current.

In the span of two years, a longtime Winnipeg manufacturing firm has gone from having more work than it could handle to being declared bankrupt.

Hunter Wire Products Ltd. and three other operating divisions within the Hunter Group — JR Metal Specialty, Cole Wire and Iron Works and National Pet Cages — were declared bankrupt Oct. 27 following an unsuccessful bid to restructure their operations.

The boom-to-bust saga is a sad and bewildering end for Hunter Wire Products, a family-owned company that had been in business for seven decades and produced a wide variety of metal and steel-wire products, including farm-equipment parts, store fixtures and display racks, fan and auger guards and wrought-iron railings.

“(This year) was our 70th anniversary,” Hunter Wire president and CEO Rick Koss said during a recent interview. “So our 70th anniversary present is we’re out of business.”

Koss said at its peak two years ago, Hunter Wire and the three sister companies it acquired in 2011 were generating $7 million a year in revenue and had about 55 employees. Their customers included well-know local, national and international companies such as MacDon Industries, John Deere, Motor Coach Industries and Comark Inc., the former owner of the Ricki’s, Bootlegger and Cleo’s retail chains.

“We were… just exploding,” Koss said. “We couldn’t keep up… and we were just bursting at the seams.”

To streamline operations and increase efficiencies, they consolidated four separate manufacturing operations under one roof at 170 Furniture Park. Shortly after that things started going bad, although Koss said the timing was coincidental.

He blames the companies’ demise on a series of events he says were largely beyond their control. They included a dramatic downturn in demand for agriculture equipment, which meant its biggest customer — farm-equipment manufacturer MacDon — began ordering fewer components.

Its second-biggest customer — Comark — was also struggling, and had slashed its orders by about two-thirds by the time it was placed into receivership. That was another $1.5 million in yearly sales down the drain.

Also adding to the companies’ woes was what Koss says was the botched installation of a new paint line in its new manufacturing plant, which drove up operating costs and is now the subject of a civil suit. To top things off, they also got about $800,000 less than expected from the sale of their former manufacturing plants.

The biggest blow, he said, was when MacDon informed them it wouldn’t be buying any more parts.

“They came in here about a month ago and said, ‘We’re concerned about you guys,’ in spite of the fact we had never missed a deadline or been late on a single order or had any issues with supply,” he said. “And that was kind of the final straw. We just couldn’t recover from that.”

So they abandoned their attempt to restructure the companies’ operations and let them slip into bankruptcy.

“We really didn’t have any other options. There was no (recovery) plan in place, no funding, and no possibility of getting funding.”

Koss said he’s not blaming MacDon or anyone else for the Hunter Group’s demise.

“We had too much overhead that we had taken on when we were crazy busy, and then our No. 1 and No. 2 customers were gone, and there was just no way to replace that in any kind of short order,” he said. “You fight and you fight, but eventually things just happen, and you can’t go on. And that’s kind of where we found ourselves.”

Studies have show a high percentage of family-owned businesses fail in the second generation, often because of unresolved succession issues. Although Koss is a second-generation owner of Hunter Wire — he bought it following the death of his father-in-law — he said succession issues weren’t the problem. His son and son-in-law, who both worked for the company, were set to take over when he retired.

Koss, 59, said he’s not sure what he’ll do now. He worries about what will happen to his son, his son-in-law, and the other approximately 30 employees, many who have been with the companies for years. The metal-working industry has been through some tough times in recent years, and he fears jobs might be hard to find.

Ron Koslowsky, vice-president of the Manitoba division of the Canadian Manufacturers and Exporters (CME), said while things were “bumpy” for the last couple of years, prospects are looking up now that the U.S. economy is strengthening.

“The word I get back from companies is that… they see, on average, a positive outlook for the future. Not dramatically (more positive), but incrementally so.”

Koslowsky said those improving conditions should create employment opportunities for many of the Hunter Group employees.

“I’m not worried that there are going to be a bunch of people on the street and unable to find work,” he said.

murray.mcneill@freepress.mb.ca