Fort Smith Plant Owner Files For Bankruptcy

No immediate change in work schedule, pay and benefits is expected for the more than 100 who work at Exide Technologies in Fort Smith as a result of the company filing for Chapter 11 bankruptcy reorganization.

In the documents filed over the weekend and announced early Monday (June 10), officials with the battery-making company blamed the financial bind on Wal-Mart Stores Inc., the continued economic woes in the European market and the high price of lead.

The company has 13 manufacturing operations in the U.S., including the Fort Smith plant located at the corner of Zero Street and Old Greenwood Road, and 74 branch operations which sell and distribute products. Exide has 3,600 U.S. employees, with 1,100 salaried and 2,500 hourly, including 540 union workers.

Exide’s industrial batteries are used in the material handling industry for electric fork-lift trucks as well as in other machinery, including floor cleaning machinery, powered wheelchairs, railroad locomotives, mining equipment, and electric road vehicles. Also, the company’s “network” power batteries provide energy storage for systems that require uninterrupted power supply and are used to power telecommunications systems, computer installations and data centers, hospitals, air traffic control systems, security systems, electric utilities, railways, and various military applications.

Only the company’s U.S. operations, including the GNB Industrial Division, are part of the filing. The international operations are excluded from the filing, and Exide plans to continue to operate globally without interruption during the reorganization. The company is using GCG as administrative agent between the company and the Court through the bankruptcy proceedings. The company said it has more than 20,000 creditors.

In the bankruptcy documents, Exide said higher production costs, “intense” competition, ongoing struggles in the European market and increased difficulty in obtaining affordable credit resulted in the decision to reorganize.

Exide officials said in the documents that competition has “intensified” with large retailers able to “use their buying power to negotiate lower prices and longer payment terms,” or to simply cut off the supplier.

“In this regard, one of Exide’s then major customers, Wal-Mart Stores Inc., designated Johnson Controls — Exide’s principal competitor — its sole-source supplier of transportation batteries and stopped carrying Exide’s transportation products. This switch resulted in Exide’s loss of approximately $160 million in annual revenue. More significantly, in addition to the revenue lost from Wal-Mart sales, Exide also lost an important and reliable source of battery cores under a captive-core arrangement with Wal-Mart,” noted an Exide bankruptcy document.

Following the loss of the Wal-Mart business, Exide moved to reduce expenses by closing its Frisco, Texas, plant and idling its Reading, Penn., smelting operation.

Read more about mitigating factors influencing the bankruptcy at this link from our content partner, The City Wire.