After filing for bankruptcy in July 2009, 107-year-old propeller manufacturer Michigan Wheel Corporation emerged in September with new ownership and a new name — Michigan Wheel Marine.
One thing that didn’t change was management. The new owners, The Anderson Group of Bloomfield Hills, Mich., left the management intact and focused on growing the business.
Boating Industry recently questioned Michigan Wheel’s President and CEO Stan Heide about bankruptcy, the company today and what he predicts for the future.
What did Michigan Wheel learn from the bankruptcy process and how has it emerged a stronger company?
As with most companies that are over 100 years old, legacy costs can eat into operating cash. The governmental changes in the pension funding laws, the stock market downturn, and the recession in the marine market were all factors that contributed to the decision to voluntarily take the company into bankruptcy. The owner of the company was at retirement age and decided he did not want to continue ownership and go through another marine cycle. In the bankruptcy the majority of the legacy costs were removed allowing more capital to go into improving the company’s future performance. Michigan Wheel Marine emerged from bankruptcy a much stronger company with no debt load from the legacy costs.
Michigan Wheel Corporation (the previous company) had a very high quality rating with our customers. The brand name is very strong and something the new ownership could build on. The new owners saw the opportunity to invest in new equipment and new more efficient designs to improve and grow the company.
What is the same about the company and what is different?
The company sold an investment casting division that didn’t fit our core strategy. The monies from the sale are being used to re-capitalize the company. MWM purchased a company in England to augment our product offering in Europe and other parts of the world. MWM has expanded its reach into greater Europe and we are currently selling into the Middle East, Asia and Africa. We have added a number of engineers and sales staff both in the USA and in our European office to better meet the needs of our customers.
After the company’s bankruptcy, we heard the new owners planned to invest significant capital in the company. Are there examples of that you can share yet?
Yes, as noted, we purchased a new company, expanded our inventories, made more R&D investment in both equipment and talent. We have several capital projects underway to introduce new outboard and stern drive products to the market in the near future.
Were staffing levels affected by the bankruptcy or any consolidation that has taken place?
As part of the reorganization plan we closed the Michigan Wheel Corporation’s Hall and Stavert plant and moved key pieces of equipment and all the patterns to the Headquarters Plant in Grand Rapids, Mich. As volume declined in the industry, it was no longer necessary to have two plants make essentially the same product. Several positions were added to accommodate the increased workload.
Does the company’s focus remain on marine inboard and OEM replacement aluminum and stainless steel outboard/stern drive propellers?
Today, in the U.S. this would be true, but we are working at expanding our offering. Our European operation has expanded its range of product to sell complete ship sets, including shafts, rudders, bearings, motor mounts, strainers, folding propellers and other marine-related items.
How do you see the marine industry’s recovery progressing?
We are seeing a pick up in OEM activity from the first of the year. This is a very encouraging sign. Business is overall better then a year ago, but still has a ways to go to recover to the mid-2000’s level. Our aftermarket reports that repairs are up, but new sales are still lagging. We also have concerns on what effect the oil spill will have on our business in the Gulf regions.
Michigan Wheel was able to exit bankruptcy fairly quickly and with its management intact. Did this help ease the transition for your partners?
The new owners saw a good company being run well given the current conditions. The legacy costs were a big drain on the future so once removed the new owners had confidence in the management team to grow the company going forward.
Is there anything else about the company our readers should know?
Michigan Wheel Marine is here for the long term and looking forward to continuing to provide great service to our customers as we develop highly engineered products to meet the changing market place.