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Aug 10, 2023

Blow molding machinery maker Kautex declares insolvency

Thomas Hartkaemper, the new CIO from Kautex at their booth at K Show in 2019 in Düsseldorf, Germany. German operations of Kautex Maschinenbau GmbH, an extrusion blow mold machinery maker, is insolvent

Thomas Hartkaemper, the new CIO from Kautex at their booth at K Show in 2019 in Düsseldorf, Germany.

German operations of Kautex Maschinenbau GmbH, an extrusion blow mold machinery maker, is insolvent due to what the company calls "a multitude of exogenous factors."

While the Bonn, Germany, production site is looking for new investors, the company's location in Shunde, China, is not impacted by the company's move, the company said.

Kautex, in revealing the decision Aug. 28, said "uncontrollable external developments" hampered finalization of a company realignment that's been underway since 2019.

Kautex blamed COVID-19 and China's subsequent lockdown, supply chain difficulties, inflation and a shortage of skilled workers in Germany as key factors creating difficulties. Russia's invasion of Ukraine also created political uncertainties that rippled through the economy to cause problems.

"Our realignment was affected by many developments over which we had no influence. We are proud of our progress in the Group, which we nevertheless achieved together as Team Kautex," CEO Thomas Hartkämper said in a statement.

"The next steps are not easy for us, but we will not let this deter us from our path either," he said.

Kautex entered what is known as self-administration of insolvency, which is similar to Chapter 11 of the U.S. Bankruptcy Code, which leaves the company's management in control. An insolvency trustee is appointed by the court to both advise and supervise, according to law firm Mayer Brown.

Kautex Chief Financial Officer Julia Keller indicated the company is already in talks to secure additional funding.

"A structured M&A process has already been set up and intensive negotiations have been conducted with several potential investors. This process will continue and is currently ongoing," she said in a statement.

Kautex describes the company's location in Shunde as a "a second fully equipped production facility." The firm also has regional offices in the United States, Italy, India, Mexico and Indonesia.

In the United States, Kautex Machines Inc. is based in Flemington, N.J., and an official there indicated late last year Russia's invasion of Ukraine had taken its toll.

"The war in Europe drastically increased material costs and increased capital cost resulted in postponement of projects," Manuel Heusinger, Kautex's vice president of sales and service Americas, told Plastics News late in 2022. "Now we expect to close the fiscal year at budgeted level; in other words, stable business."

Declaring insolvency in Germany gives a company the opportunity to reorganize and would be most like seeking protection under U.S bankruptcy laws, although there are differences in the laws and processes in each country.

Kautex, at last year's K 2022 show in Düsseldorf, Germany, stressed the need to embrace sustainability in the company's approach to the market.

Hartkämper, formerly with Husky Injection Molding Systems, was named Kautex CEO in 2020 after joining the company the previous year. He added the title chief sustainability officer in 2021.

"When do we start to learn faster and lead change," Hartkämper said at the K show. "Plastics is one of the most sustainable materials on planet Earth, and there's no lack of it. But we need to take action now."

Kautex, in revealing its insolvency, again pointed to sustainability as a key for turning the company around.

"The goal of Kautex's transformation is to make sustainability affordable for customers," the firm said.

Kautex was founded in 1935 and made its first machines for blow molding PVC tubes in 1949. By 1954 the company was manufacturing blow molding machines for containers with a capacity of up to 5 liters. The first export of machinery to the United States happened a year later.

Plastech Beteiligungs GmbH became majority shareholder of the company with a 74.9 percent stake in 2018, purchasing the stake from company management and investment firm Capiton AG. Plastech's ownership increased to approximately 93 percent in 2021.

Plastech, in turn, is owned by Unternehmens Invest Aktiengesellschaft, a holding company listed on the Vienna Stock Exchange.

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