A Franklin-based metal alloy manufacturer plans to close its Massachusetts plant this summer, shifting its focus to a profitable local division.
IBC Advanced Alloys will focus on its profitable Copper Alloys division at its Franklin plant, 401 Arvin Drive, ceasing production this summer at its Massachusetts beryllium-aluminum alloy plant because of insufficient long-term demand for cast beryllium-aluminum alloy products. The company announced the move on April 25, company officials recently announced.
It is anticipated the move will expand free cash flow, strengthen gross margins and position IBC on a better path to sustained profitability. The Copper Alloys division has operated profitably since the quarter ending Sept. 30, 2020, for a total of 14 quarters to date, a news release on the announcement says.
The Copper Alloys division serves various industries, including automotive, defense, electronics, foundry industrial equipment, injection molding, manufacturing, oil and gas, and resistance welding it operates a “vertically-integrated” copper alloy production facility in Franklin, which takes raw material through the foundry, forge and rough and final machining, company officials say.
Since navigating the market disruptions of the COVID-19 pandemic, consolidating three copper alloy plants into one facility in 2022, and completing construction of its modernized and expanded production facility also in 2022, the division has significantly grown revenue, generated more robust free cash flow, improved its gross profit margins and operated profitably, company officials say.
While this division has operated profitably, there is no guarantee that IBC Advanced Alloys will achieve profitability on a consolidated basis, company officials say.
IBC’s decision to close its Engineered Materials division in Massachusetts was driven “primarily by insufficient long-term demand for cast beryllium-aluminum alloy products and the resulting continuing losses,” officials said. The division’s net losses — including a loss of $7.4 million in the 12 months ending June 30, 2023, and a loss of $5.2 million in the trailing 12 months ending Dec. 31, 2023 — depleted available working capital for the Copper Alloys division at a time when demand for copper alloy products was growing, company officials say.
“The IBC team worked very hard over a dozen years to expand markets for its innovative beryllium-aluminum cast alloy products, but sufficient steady, long-term market demand simply did not materialize at a level that allowed for consistently profitable operations,” Mark A. Smith, CEO and board chairman said in the announcement. “By focusing on growing our copper alloys business at our integrated and highly efficient foundry in Indiana, we see significant opportunity to expand the business to a whole new level and seek consistent profitability.”
In a call with investors Monday, Smith added there were no new sales contracts beyond current work for the Massachusetts facility, which contributed to the decision as well.
Prior to halting operations in Massachusetts, IBC officials plan to complete existing production contracts for beryllium-aluminum alloy products, including components it manufactures for F-35 aircraft and other defense systems. Alternative production of these alloy parts for the F-35 and other defense systems is expected to be available after the closure of this facility, which employs 24 workers. IBC expects to incur a charge to operations in respect of the plant closure and is negotiating with suppliers and its landlord to minimize such costs, company officials say.
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