Stürtz Maschinenbau GmbH files Declaration of Insolvency; Business as Usual at Sturtz Machinery in U.S.

January 9th, 2013 by DWM Magazine

Stürtz Maschinenbau filed a Declaration of Insolvency with the German courts in December, due to “sharp drop-offs in worldwide business, order cancellations and the generally poor climate in the fenestration machinery industry.” Officials state, however, that day-to-day operations continue as usual, adding that “this move was made to provide temporary protection of the company’s cash to support day-to-day operations and employee obligations while outside investments are finalized.”

Current Conditions

As a result of the declaration, the company is in negotiations with interested investors but nothing has been finalized as of this date, according to a press release issued by Sturtz. The declaration filed provides for a court appointed overseer to ensure that the company remains on track during the investment negotiations and provide certainty to the employees that all obligations to them will be met, according to the company. Stürtz Maschinenbau currently employs 175 people at its German headquarters. Company officials say that current cash on-hand is sufficient to meet all payrolls through the beginning of 2013 while negotiations with investors can be finalized, which is expected by the end of January.

Ellis Dillen, vice president and chief operating officer of Stürtz Machinery Inc. (SMI) in Twinsburg, Ohio, issued the following statement to DWM, while pointing out SMI is a separate entity, its day-to day operations are unaffected.

“Several factors have led to this current situation: the slow recovery of the building sector in the U.S., worldwide overcapacity of fenestration plants and a vast amount of used machinery that has come back into the market from plant closures and consolidations. This has put the new equipment manufacturer in a very tough situation,” says Ellis. “Karl-Heinz Stürtz, the managing director of Stürtz Maschinenbau GmbH and president and CEO of Stürtz Machinery Inc., is confident that with the plans in place now and further moves to be made in early 2013 Stürtz Maschinenbau GmbH will emerge from the insolvency in a timely manner with a new outlook for the company and focus on the market.”

“We have equipment inventory in-house in Twinsburg and our pipeline of new equipment remains consistent under the overseer in Germany,” adds Ellis. “We are smaller and more agile than our German parent, with very controlled fixed costs and limited overhead allowing us to hold our own and push through. Although 2012 was not the year we had hoped for, we have finished the year within budget and will post a profit for 2012. Due to the glut of used machinery, much of our work has been on the retooling side which made our new machinery purchased less than we had hoped, adding to the difficulties at GmbH.”

Legal Details

The court has engaged Jens Lieser, a lawyer from Koblenz as the preliminary insolvency administrator. “During insolvency proceedings the preliminary insolvency administrator and the management board plan to free Willi Stürtz Maschinenbau GmbH from debts, improve and sustain liquidity and reestablish competitiveness for the specialists for the manufacture of machinery for uPVC window production,” says a statement released by Lieser.

He reiterates that business operations and production at the headquarters in Neustadt/Wied-Rott as well as in the subsidiaries in the U.S., France and Rumania will not be affected. The company’s international sales partners in the Netherlands, Russia, Slovakia, Poland and Canada also will continue operations.

“Following a positive first half-year 2012, incoming orders declined considerably,” says the statement from Lieser. “Since November there has been an upward trend and customers have shown a great interest in the continued existence of the company.”

Applications for insolvency payments from the employment agency in Neuwied also have been filed.

 “I believe this company of long-standing tradition has good chances of being able to continue business. Stürtz Maschinenbau has years of experience and know-how in the automated uPVC window production field as well as skilled employees and strong world-wide marketing,” says Lieser. It is essential to secure the survival of the company and maintain as many jobs as possible in this structurally weak area.”

Moving Forward in the U.S.

DWM spoke exclusively to Dillen this morning for more information and to gain reaction from its U.S. customers.

“Absolutely, our customers are concerned as nearly all of our customers are long term extremely loyal relationships,” says Dillen. “They appreciate the level of product quality and aftermarket support they get from a true supplier and partner that SMI is to their business, while at the same time they are also understanding of the current market conditions–some of them have been in this very situation themselves in the past. I fully expect their continued support to that end.”

SMI has focused on product development in 2012 and will continue this in 2013, though the company had backed off from new product introductions in the past several years.

“We go into the New Year with a continued commitment to new product development and are in the midst of launching our latest extension of the Stürtz fabrication and cutting center product line with our new LP-DM90 high-speed feeder saws,” he says.

With many machines on the market close to 20 years old or older, Dillen says there are opportunities for manufacturers to upgrade their equipment and that’s where new purchases will come from, as opposed to manufacturers bringing on increased capacity.

“A lot of the older equipment out there is on the cutting side so with some of the new systems that can do so much companies can justify the investment,” says Dillen. “They were just delivered in December and ready for the market. We also have good ideas for other products to bring to industry trade shows this year. We know the market needs new and fresh ideas and that has been our philosophy.”

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