What's in a name? Plenty, if you're an auto dynamo (in physics, a dyne) of metal-formed components and assemblies. Metaldyne designs and supplies a slew of products for engine, transmission, and driveline applications. It focuses on powertrain products, such as balance shaft modules, differential assemblies, clutch modules, and exhaust components. Other business units make vibration control (dampers, isolation pulleys), sintered (connecting rods, bearing caps), and forged parts. Customers have included OEMs Chrysler, Ford, GM, and Toyota, as well as parts suppliers Cummins, Delphi, and ArvinMeritor. Metaldyne filed for Chapter 11 bankruptcy protection in 2009, emerging via a bid for its assets by MD Investors.
Since its bankruptcy, Metaldyne has aggressively cut costs. Its efforts have included a series of plant sales and shutdowns. In spring 2010 a plant in Hamburg, Michigan, which makes tubular metal products, was sold to Hyspan Precision Products. Operations in Greensboro, North Carolina; New Castle, Indiana; Middleville, Michigan; Niles, Illinois; and Ontario, Canada, closed in 2009. The company's aluminum die-casting and valve plant in Twinsburg, Ohio, although spared, was combined with Metaldyne's Driveline & Balance Shaft Module business.
Such moves position the company to benefit from the auto industry's slow recovery, and, specifically, the momentum of key customers such as Ford. Financially sleeker, the company focuses on a smaller but more sought-after product portfolio. Its powertrain components are now made at a lower cost and, due to their longer lives, less exposed to the ups and downs of more commodity-like auto parts.
Metaldyne's continuing business is supported by some two dozen plants dotting the Americas, Europe, and Asia, as well as a joint venture in India. In developing regions, the company benefits from of lower operating costs. Moreover, its international presence paves the way to supply customers with manufacturing facilities in neighboring geographies, as well as lighten its dependence on the Detroit Three.
Prior to seeking bankruptcy, debt coupled with interest expense, and lease and pension costs, had blocked the company from downshifting operations when car sales collapsed, and automakers and suppliers responded by ratcheting back production. Metaldyne's biggest customer was Chrysler, which filed for Chapter 11 protection a month before Metaldyne's filing. Also driving its bankruptcy, the company's former parent, Asahi Tec, a Japanese maker of passenger-car and truck chassis and powertrain components, had cut off financial support.
Asahi Tec had acquired Metaldyne in 2007 in a deal valued at approximately $1.2 billion. The acquisition gave both companies better access to each other's home markets, and their combined efforts created a more competitive footprint in Europe. From 2007 to 2009 Asahi Tec had helped Metaldyne shed about $400 million in debt. As demand for vehicle parts decreased and Metaldyne buckled, Asahi Tec announced it would return to domestic operations.
Sale of the company to MD Investors -- a new company formed by lenders holding 97% of Metaldyne's debt, and led by The Carlyle Group and Solus Alternative Asset Management -- consisted of a credit bidding process, whereby creditors purchased Metaldyne by submitting the highest and best bid. The deal was followed by a $250 million loan, allowing Metaldyne to refinance certain debt and fund dividends. – less