Nearly 200 jobs lost after Toolplas Systems closure
Cash-flow problems toppled toolmaker in industry reliant upon heavy financing
Oldcastle-based Toolplas Systems Inc. closed its doors this week, putting about 200 employees out of work at its two Windsor plants.
The firm, founded by Nick Mamatas in 1999, also has a plant in Mexico and does production in China.
Calls and emails to Toolplas weren't returned on Friday when some workers were observed removing their personal belongings.
“It was a great business, with good employees and good machinery,” Canadian Association of Mold Makers chairman Jonathon Azzopardi said.
“It checked all the boxes, but fell victim to cash-flow problems. They had a great year of a lot of growth, but they couldn't finance their clients.
“Managing liquidity, growth and debt, which are all interconnected, are the biggest challenges in our industry,” said Azzopardi.
Toolplas had grown steadily since 1999 when Mamatas launched the company by taking over a small Windsor toolmaker.
According to a profile of the company posted on its website to honour its 20th anniversary in 2019, the firm employed 240 employees across its three factories and had annual revenues of $70 million.
Its Windsor operations accounted for about 200 of that total.
The state-of-the-art firm had also diversified its customer base from a couple of main customers in the early-2000s to over 20 recently.
Despite the closure of what Azzopardi called “one of the pillars of our city,” he said the local mould-making and tool and die sector is stable.
He said Toolplas isn't a precursor of more local closures to come.
“Some business are doing well and others are struggling a bit,” Azzopardi said.
“We're in a period of transition and that's always normal. Toolplas was heavily into the automotive sector and that's a difficult place to be profitable all the time.”
Azzopardi said the automakers have squeezed their suppliers for every dollar and their long payment terms mean the original equipment manufacturers (OEMS) generally don't pay for products until two years or longer after they're delivered. It forces suppliers to carry substantial debt for the massive development costs of new programs.
It's one of the reasons Azzopardi, who is president/ceo of Laval International, restricts his company's automotive business to about one-third of total revenues.
“We are so heavily financed in this industry,” Azzopardi said.
“I can't think of another sector in the world where you reinvest the equivalent of your building and property every couple of years to buy new equipment and expand.
“You can go out of business by not being busy enough or by being too busy. Both are equally risky.”
Mike Hicks, North America sales director with Diemould Services Canada, said Toolplas was a long-standing customer. DMS supplies parts and services to the mould and tooling industries.
“They still had a very active shop floor,” Hicks said.
“A very unfortunate situation. Hopefully, just a one-off situation.
“There will be a ripple effect as they are a large industry company with a big supplier/service base.”
Hicks said the Toolplas closure, however, isn't indicative of the state of the industry as a whole locally. He's confident Toolplas employees will be absorbed by other local companies with a current skilled trades' shortage.
“Fortunately, their workforce is skilled and the industry is in a stronger position,” said Hicks, who added he's talked to some Toolplas workers who have already found new jobs in the industry.
“Hopefully, most if not all of their staff finds new employment ASAP.”
Azzopardi said it's unlikely the company will be bought or refinanced.
Toolplas's client list will be similar to many other local companies and the employees and existing orders will scatter quickly. Azzopardi said his firm has already received calls from Toolplas clients asking if Laval can complete their jobs.
“Buying the business as an asset for the building and property isn't as appealing,” Azzopardi said. “There might be an opportunity there for someone, but not at a premium price.”