Pool & Spa News

After filing for Chapter 11 reorganization earlier this year, one of the only manufacturers of vinyl for the pool industry has halted production as it continues to seek potential buyers.

HPG International previously issued a shutdown in January, before resuming operations under temporary financing and a Chapter 11 bankruptcy filing. Failing to find a buyer in the weeks that followed, the Mountain Top, Pa.-based company was forced to stop production once again on March 24.

“It was a combination of last year’s steep raw-material price increases, and in the fall, the economy and credit tightening,” CFO Doug Siegrist said. “We have finished the orders we could, and we have some stock items … that we’ll be contacting customers [about].”

HPG was hit particularly hard in late 2008 because it was unable to raise prices in the wake of rapidly rising resin costs. According court documents, the firm claimed liabilities between $10 million and $50 million.

This isn’t the first time the firm has battled financial problems. In December 2001, HPG reorganized under the U.S. Bankruptcy Code, then emerged out of Chapter 11 protection in September 2003.

“I’m just hoping this time they can put something together that will last another three years or so,” said Bob Hotaling, president of Pen Fabricators in Emigsville, Pa. “The competition is narrow enough without losing another [vinyl manufacturer].”

Victory Plastic International, another supplier of vinyl, shut its doors in 2005, leaving HPG, O’Sullivan Films and Canadian General-Tower Ltd. as the primary vinyl manufacturers serving the pool industry.

Fewer vendor options, however, is a less immediate concern for a number of vinyl fabricators.

“I think it’ll have varying effects on fabricators, depending on who the fabricator is and what portion of their 2009 catalog is sourced from HPG,” said Mark Laven, president/CEO of Latham Plastics in Latham, N.Y. “Most fabricators purchase film from more than one source, as we do.”

Companies that relied heavily on HPG may be facing some major hurdles.

“For a small company like ours, especially given the times, [the shutdown] is probably going to hurt us tremendously,” said Mike Smith, president of Vinyl Fabricators in Oroville, Calif.

Pricing pressure has forced Smith’s company to buy wall material in bulk, which it now will have to sell for scrap if the accompanying floor material isn’t available from HPG. Warranty claims on exclusive patterns and marketing materials that have already been printed are other challenges facing industry fabricators.

“A lot of our inventory features their material, and if you send out a brochure where half of the stuff in that brochure is no longer available, how do you think a dealer or a customer responds to that?” Smith said.

HPG was established in 1994 and employed 130 before the March shutdown, roughly half of its reported work force in 2005.