Gemcor, the West Seneca aerospace fastener manufacturer that had planned to more than double its work force when it moved to a new plant in 1997, has filed for bankruptcy protection after a Russian customer failed to pay for $2 million in orders.
Gemcor, which is located at 100 Gemcor Drive in West Seneca, said it will continue to operate under current management after filing to reorganize its finance under Chapter 11 of the U.S. Bankruptcy Code.
The company, which makes equipment that the aerospace industry uses to install the fasteners and rivets that are used on commercial airplanes, now employs more than 100 workers, down from a peak of about 200.
Gemcor executives said the company also has been squeezed by a slowdown in the aerospace industry, which led to a drop in the number of factories that are installing new capital equipment, like the automatic fastening systems that Gemcor makes.
"The business downturn has required retrenchment by the company over the short term," Gemcor said in a prepared statement.
Gemcor managers said the company previously has endured downturns within the industry, which caused the firm to start cutting costs after the slowdown became apparent.
But those cost-cutting efforts could not prevent the bankruptcy filing after the company wasn't paid for two big systems ordered by a major Russian customer, who couldn't raise enough foreign currency to pay for the equipment as the depressed Russian economy continued to weaken.
"We would not have been forced to file to obtain court protection if the company had been paid in full for two, very large, completed systems manufactured for delivery to Russia," Gemcor said.
The systems now are in storage while the company awaits payment.
Gemcor, which said it has more than $14 million in assets and roughly the same amount in liabilities, indicated that it is current in its obligations to the company's secured creditors. But the company, whose formal name is General-Electro Mechanical Corp., said it will have to restructure its debts to trade creditors.
The company said the bankruptcy filing relieves Gemcor "from the distraction and expense of pending litigation. This court protection enables the management to focus on the business plan for the company."
Gemcor executives said the company has made considerable investments in recent years to develop new technology that is 25 percent faster than conventional systems in addition to being easier to assemble and maintain.