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O.C. Plastics Maker Closes Doors After Repeated Struggles

Manufacturing: Urethane Technologies, formed in 1985, never had a profitable year. As many as 40 lose their jobs.

March 07, 1997|JOHN O'DELL | TIMES STAFF WRITER

ORANGE — Urethane Technologies Inc., a small, publicly traded plastics maker that has been struggling for more than a year, was closed this week after the collapse of a recent effort to find a new financial backer.

The closure cost as many as 40 people their jobs.

The company, which has not had a profitable year since it was formed in 1985, indicated two weeks ago when the financing effort fell through that its survival was in question. Officials have said that the company was hit hard in recent months by stiff competition and rapidly increasing prices of raw materials.

Urethane Technologies officials declined to comment Thursday.

They sent word through a former employee who still was working in the company's front office that they were barred from discussing the closure--or even confirming it--until their lawyers approve a written statement.

However, two workers at the company's offices said Thursday that Urethane Technologies had ceased operations and laid off its production workers and most other staff.

A uniformed security guard patrolled the mostly empty parking lot at midafternoon. Inside, several businessmen huddled in the tiny front office area of the company's combined plant and headquarters in an older industrial area of Orange.

Stacks of 55-gallon drums were neatly arranged around the periphery of the weary concrete building, but there were no forklifts trundling through the storage area and no workers on hand preparing the drums for shipment.

Urethane Technologies developed and sold proprietary polyurethane systems for a variety of uses, ranging from construction components and automobile parts to athletic-shoe soles and wheels for in-line skates.

Company officials were upbeat in 1993 when Urethane Technologies began making a solid urethane bicycle tire that could not go flat. Early last year, the company announced that it had acquired a North Carolina chemical maker for $2 million cash in a shrewd move to gain a captive source of raw materials and help keep a lid on costs.

But by the middle of the year, Urethane Technologies told investors that the cost of its new chemical plant, combined with rising raw material costs and a slump in the market for its construction products, created a loss of nearly $600,000 for the first quarter.

In August, the company said it had lost a total of $726,000 in the first half of the year and that it had laid off 10 employees in an effort to cut operating costs.

Several efforts to form business alliances or to merge with other urethane makers fell apart during the year. In November, its finances growing more precarious, Urethane Technologies closed its Santa Ana headquarters, laid off several more employees and consolidated operations at its plant in Orange.

Industry sources suggested Thursday that Urethane Technologies might have exacerbated its problems by paying more attention to its earlier expansion drive than to efforts to market its products.

The end came after a last-ditch effort to find a financial backer failed late last month. Just three days after announcing a deal that would give a New York investment group an 80% stake in the company for $1.5 million in desperately needed cash, Chairman James Orefice said the deal had fallen through.

"This has been an extremely difficult time," Orefice said in announcing the collapse of the deal on Feb. 21. The investment group's cash, he said, "would have furnished critical assistance in our effort to turn the business around."

The company's stock, traded on the Nasdaq market, closed at 1.5 cents a share Thursday.

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