Does anybody need a reminder that the credit crisis is hurting our economies? Case in point: German car-industry supplier Schenk Plastic Solutions. Schenk is a small but basically healthy company that relies on Daimler for 60 percent of sales. They have a patented new product named SkinForm which was developed for premium car interiors. It's been reported that SkinForm is unique and has no real competition, since it offers superior quality at a super-low price. Mercedes wants Schenk to supply SkinForm for one million cars per year. In 2005, Schenk sold a majority interest to a private equity company named Argantis to finance their expansion plans. Surprise! Argantis is connected to IKB, a German bank which is basically bankrupt after investments in subprime U.S. real estate. So IKB pulls the plus on Argantis, which subsequently pulls the plug on Schenk. A great company with good products and healthy customers is forced to declare its insolvency. As these things go these days, the Indians come to the "rescue." Automobilwoche reports that the Ashok Minda Group, based in Uttar Pradesh, will be buying Schenk. Globalism wins, Daimler is happy and the West's industrial base is eroded a little bit more.
Find Reviews by Make:
Read all comments
Once they go bankrupt don’t they lose all their patent rights(I’m not sure this is a different country). So doesn’t that mean anyone can pick up the patent and make copies of the product.
Banks suck, good busninesses brought down because of stupid banking.
Not an IP lawyer but no you wouldn’t automatically lose patent rights just because you declared bankruptcy. If you did a chapter 7 they would probably be sold to the highest bidder, but it wouldn’t go into the public domain.
The company does not lose patent rights after bankruptcy. Patents are just another asset like a factory or inventory. In the United States they could be auctioned off if the company is liquidated, but Germany has it’s own legal system.
I remember reading that Bimota(the niche motorcycle company) lost patent rights on some of their very unique components once the company filed giving way for it’s competitors, mostly racing I think, to jump in and start using there designs.
I am going to look this stuff up to make sure I am not screwing this all up, and I think they were liquidated so it’s not the same as this situation. Plus they were in Italy if I remember correctly so German paptent rights might be completely different.
And I know this isn’t totally on point, but here is a graph of America’s industrial capacity from the federal reserve:
http://www.federalreserve.gov/releases/G17/Current/ipg1.gif
Which, if I am reading right, would indicate that the US has never had more industrial capacity than it does it today. So the whole furriners taking our industrial capacity thing isn’t really true.
These people need to get with the times. Plastics was the industry of the past. These days manufacturing and invention are dead. The current way to make money in America is to worm your way into a position where you can make decisions that are beneficial in the short term but are sure fire losers in the long term. You then use the short term success to pay yourself a hefty incentive bonus. When the whole enterprise crashes down around you, you beg for the tax payers to bail the industry out. Even if the poor working slobs are not willing to get stuck with the bill, things are still okay because you’ve already made enough to retire on.
Privatize the profits, socialize the losses. It’s Dubya’s compassionate conservatism at its finest.
“Which, if I am reading right, would indicate that the US has never had more industrial capacity than it does it today. So the whole furriners taking our industrial capacity thing isn’t really true.”
I don’t think the problem is lack of, or losing capacity. I think it’s the lack of, or losing work.
This is far fetched. When a company sells itself to another company, then they give up control. It doesn’t matter WHY the buyer is having financial problems. Besides the above example, the buyers could have screwed up a million different other ways.
Schenk Plastic Solutions could have used other methods to raise capital, such as going public, getting their own lines of credit, issuing bonds, etc.
The fact is, Schenk Plastic Solutions didn’t really exist anymore after they sold themselves to Argantis. And it is Argantis prerogative to do what they want with the company they bought, including closing it down.
Now… if Argantis bought it cheap with only the promise that they would bring more cash in later, then then shame on Schenk for letting the company go for a hand full of beans.
Is it losing work, or is it losing Union work?
Losing work is an argument you can make, but a couple of days ago, some poster was arguing that we need to protect GM & Co for national security reasons. Those are two different arguments that are often intertwined.
IMO, all this Rust Belt stuff is more the death of unions than the death of manufacturing. At least by the raw numbers.
Why wouldn’t Daimler buy them? If it’s a niche product I would think they would want to keep it for themselves and, when conditions are right, license others to manufacture it.
yankinwaoz: you are right: it was Schenk’s fault to rely on Argantis.
The irony of the situation is that Schenk thought they would be better off if they got in bed with a German private equity company, and not with a bank or some foreign investor. Globalism trumps nationality nowadays. We will see whether the Indians do a better job at supporting sustainable business models. It wouldn’t surprise me if they did.
what sort of industry? moving 1s an 0s around doesnt mill steel. When was the last time a civilian ship was built in the US?
http://www.phillyburbs.com/pb-dyn/news/103-01272008-1478130.html
Apparently the US ship building industry is having a labor shortage cause it’s so busy…
Why wouldn’t Daimler buy them? If it’s a niche product I would think they would want to keep it for themselves and, when conditions are right, license others to manufacture it.
I was going to ask the same Q. too.Perhaps Daimler blew too much money in the Chryslerbus.
If Daimler buys 60% they could corner the market and charge more for other manufacturers. At least wont let Vee Dub, Porsche, Bimmer to have the cutting edge.
Apparently the US ship building industry is having a labor shortage
Is nice to see something else is going at full tilt.
Probably this will get Gettelfinger to sign up more memberships.
I don’t think the problem is lack of, or losing capacity. I think it’s the lack of, or losing work.
Make jobs, not wealth!!
The United States has “lost” most of its agricultural jobs, too. The horrors! The farmers rioting in the streets!
Unemployment is at 5.5% during a slowdown/recession/depression.
That ain’t bad. Industrial capacity is the highest its ever been. So I’m really not buying that NAFTA is really bad for America. Bad for guys who were getting 130000 in compensation a year for a 60000 a year job… not so bad for the average joe who was footing that bill.
Privatize the profits, socialize the losses. It’s Dubya’s compassionate conservatism at its finest.
I know it’s fashionable to blame everything on Bush these days, but this sort of thing has been going on a long time, far longer than W has been in office. And you might be surprised to discover that many businessmen who do this sort of thing are Democrats – predatory business practices do not have a strict party affiliation.