Miller Industries is cutting ties with the Delavan brand after losing $1.3 million on a joint venture to build large, over-the-road trailers at Miller Industries' Greeneville, Tenn., plant.
Miller is selling its stake in the venture to its partner on the deal, Lohr Group, a private French company that specializes in transportation, less than a year after the Chattanooga tow truck equipment manufacturer spent $1.8 million and added 23 jobs to start producing the trailers for the North America market.
The sale is expected to close March 31.
"Although we incurred losses in 2013 from the joint venture that will extend into the first quarter of 2014, it did not and will not have a material impact on the core business of the company," co-CEO Jeff Badgley said in a statement.
Miller Industries will wind down production of Delavan products at its Greeneville plant in the first quarter and expects to lose another $500,000 on the venture. Miller's chief financial officer and executive vice president Vince Mish said the company is not laying off any full-time employees.
"We're finding other things for them to do," he said.
Miller did see a 31 percent increase in fourth quarter sales in 2013 -- at $108 million -- compared to $82 million in fourth quarter 2012. For the year, net sales hit $404 million, up almost 18 percent over 2012's end-of-year results.
But the company barely beat its 2012 net income, earning $9.2 million in 2013 -- a smidgen above the $9.1 million earned in 2012.
"Looking ahead, we believe the company is operating from a position of financial strength and will benefit from a more normalized operating environment, which is underscored by healthy order levels and improving customer sentiment," Badgley said in a release.
Miller Industries' quick end to the unprofitable Delavan venture stands in stark contrast to early company history, when the tow truck manufacturer branched out into the service side of the towing industry in 1997. The move backfired in several ways, sparked an anti-trust investigation by the Department of Justice in 1998 and put the company about $150 million in debt.
In that case, the company finally divested in 2003, five years after starting the move. This time, Miller is pulling the plug on the unprofitable Delavan venture just seven months after it was announced.
Contact staff writer Shelly Bradbury at 423-757-6525 or email@example.com.