Weld Wheels Files for Bankruptcy

Weld Wheel Industries, a Kansas City maker of high-performance automotive wheels, has filed for Chapter 11 bankruptcy protection. A Kansas City Star report said the 21-year-old family-owned business lost $1.1 million in the first six months of this year on net sales of $21.8 million. The bankruptcy petition said the company has total assets of $31.6 million. Weld Wheels has signed an asset-sale agreement with American Racing Equipment Inc. in southern California. American Racing will pay $17 million and assume various debt and lease obligations, according to local news sources.

Weld Wheel has secured up to $20.5 million in post-bankruptcy financing from its lender, PNC Bank, its biggest creditor. As of 16 April, Weld Wheel owed the bank $16.4 million, the Kansas City Star reported.

A Weld Wheels statement said the bankruptcy filing was triggered by three factors: An “ill-advised” expansion into importing cast aluminium wheels from China; a 40 per cent increase in raw aluminium costs; A “significant” slowdown in sales of wheels for trucks and SUVs – driven mainly by recent fuel price hikes.

The decision to import from China “didn’t really mesh well with our core manufacturing competency…[and]…required a pretty significant investment from a cash flow standpoint, and that’s what the biggest impediment was,” said Taylor Weld, chief executive of Weld Wheel and the son of company founder Greg Weld.

In 2003 the company moved to a 280,000-square-foot plant in Kansas’ Valley industrial district, aided by a $3 million tax-incentive package provided by the city and the state. Weld Wheel spent about $15 million renovating the plant, the former home of Rival Manufacturing Co. The company also operates a forging plant in Kansas City and distribution warehouses in California and Georgia.

Last year, Weld Wheel entered a 50-50 joint venture with Sean “P-Diddy” Coombs’ Bad Boy Worldwide Entertainment Group to produce a new line of custom, precision-forged aluminium rims for sports trucks, luxury SUVs and other high-end vehicles. Branded “Sean John Wheels,” they retail for up to $3,000 each.

Greg Weld, a former professional race car driver, founded Weld Wheel’s predecessor company 35 years ago. Weld Wheel makes forged alloy wheels for race cars, off-road trucks, luxury pickups, SUVs, hot rods, motorcycles and high-end automobiles. It has about 255 employees.