After Betting on an Oil Rebound, Small Factories Are Getting in Trouble With Their Creditors

Planning for a pickup in sales, some small manufacturers borrowed money from their larger counterparts to ramp up production. Now, a growing number can't pay for the investments as their forecasts aren't panning out, with energy-related companies being among the hardest hit.

Small factories sometimes borrow from other manufacturers (who tend to be bigger) to pay for goods, with a commitment to repay them at some point in the future. Credit managers for the manufacturers who are owed the money are reporting that more of their clients are so far behind in their bills that the "act of last resort" is being taken: hiring a collection agency to recoup money owed, said Chris Kuehl, economic adviser for the National Association of Credit Management.