Turnaround Sputters as Maker of Engine Parts Files for Bankruptcy

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Turnaround Sputters as Maker of Engine Parts Files for Bankruptcy

By LAURENCE DARMIENTO

Staff Reporter

Engine parts supplier Industrial Parts Depot Inc. has filed for Chapter 11 bankruptcy protection, another old-line manufacturing company struggling to survive in a highly competitive international economy.

The 49-year-old Torrance firm thrived for decades as a manufacturer of after-market parts for Caterpillar Inc. engines. But an expansion in the late 1990s, coinciding with a wave of inexpensive, foreign-made parts from competitors, led to its downfall, company officials said. They said there are plans to reorganize and continue in operation.

In the filing, Industrial Parts Depot listed $19.9 million in debts and $17.4 million in assets. The company has already downsized, shedding two-thirds of its work force. As part of its planned reorganization, it plans to abandon its longstanding practice of manufacturing parts solely in its Torrance plant.

“You have to move with the times,” said Guy Marge, who was brought in as chief executive in December 2002 to attempt a turnaround.

Instead, the company has joined its competitors in outsourcing nearly all of its manufacturing, with much of the work going to foundries and machine shops in China or India.

Parts made there are cheaper than what it costs Industrial Parts to manufacture them, even after shipping and a profit margin for the overseas factory is considered, Marge said.

The company, which at one point had more than 400 workers, now has a staff of 130 and when the re-organization is completed in the coming months that number could be under 100, he said.

The company at its height had revenue of about $55 million annually. The reorganized company expects about $18 million.

Some of the scaling back stems from a decision to focus solely on the Caterpillar line and get out of the business of supplying after-market parts for engines made by Navistar International Corp., Deere & Co. and others.

The company will still design its own aftermarket parts. But with local production gone, what will be left will be quality control, distribution, administrative workers and the like.

Glenn Shaw, the company’s distribution manager, has worked at Industrial Parts for 22 years. He said the new way of doing business means that the remaining workers are all assigned to multiple jobs in a bid to be more efficient.

“The people that are still here are probably more needed because there is now more work to do,” Shaw said. “Five years ago I had a lot of people who didn’t even know how to use a computer, now a lot of things are done with e-mail and the Internet.”

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