Volume 9, Issue 11 - December 2008
Volume 9, Issue 11 - December 2008
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What's News PLANT CLOSINGS Hilco Financial LLC, a Window Enterprises debtor, had filed a request for this action. As receiver, Donnell will: “Several [unnamed] institutional investors, in addition to participation from senior management, recapitalized the company in April and are committed to the long-term growth prospects of the company,” read the release. Hilco Financial LLC is a company designed to provide senior secured bridge loans for mergers and acquisitions, acquisitions of distressed debt, and specialty financing, according to the company’s website. Window Enterprises wasn’t the only company who announced closings recently. Kensington Windows in Vandergrift, Pa., shut its plant on October 27, leaving 150 employees out of work. Survivor Technologies in Hillside, N.J., also ceased operations according to newspaper reports. Both were owned by Jancor Cos. Inc. of Ohio. In late October, it was reported that Kensington vice president of operations Chuck Wetmore was working with investors in an attempt to revive the company. As of press time, though, no announcement had been made. Ply Gem Industries Inc. announced that it will close not one but two door and window manufacturing facilities—Hammonton, N.J., and Phoenix. Together, the two facilities employ a total of approximately 306 employees. “This action was difficult in that it impacts a number of our employees, however, the market conditions that exist today and that are expected to persist into next year, combined with the competitive climate demands the most efficient operating structure and this decision to consolidate these operations will improve overall performance and is in keeping with Ply Gem’s commitment to its customers and the financial community,” says Gary E. Robinette, president and chief executive officer. Lynn Morstad, president of Ply Gem’s U.S. Window Group, adds, “Decisions of this kind are always difficult … We must address this issue due to excess production capacity in light of current market conditions.” Morstad says the Hammonton and Phoenix plants were selected because of their proximity to other Ply Gem facilities. While Ply Gem made its announcement in late November so did MI Windows and Doors Inc., based in Gratz, Pa. The company will close its Lebanon, Ind., window fabrication facility. “Our decision to close the Lebanon facility has been extremely difficult,” says Matt DeSoto, president, Eastern Division of MI Windows and Doors. “Anytime we affect team members and their families by eliminating jobs it comes with much concern and anxiety. The decision is not a reflection of how our team in Lebanon has performed, rather a necessary reaction due to the continued downturn in the housing market and the economy as a whole.” The company will be deploying the assets based in Lebanon to its other window fabrication facilities. “The team is dedicated to providing quality products and seamless service for our Lebanon based customers from MI Windows and Doors fabrication plants located in Pennsylvania and North Carolina,” says DeSoto. DWM columnist Michael Collins, vice president of the building products group at Jordan, Knauff & Company, an investment banking firm that specializes in the door and window industry, commented on the closings. “This is the type of activity that I’ve predicted … in my discussions of capitulation over the past months,” he says. “Capitulation is when you’re afraid to read a paper or a newsletter about the industry because it’s almost certain to contain more bad news. The bailout package and the drying up of lending has helped add some sharpness to the process of capitulation in this industry but, otherwise, things are progressing as they must in order for this market to turn around.” Collins adds. Collins also has some predictions and some badly needed words of wisdom for 2009. “While it’s likely that the New Year will find more companies being sold in hurried auctions, this is a process that is as vitally needed in this industry as are periods of growth,” Collins says. “With excess capacity wrung out of the system, the companies that are able to survive the storm or be paired with larger entities should emerge from this period extremely well-positioned to take advantage of the eventual recovery.” He encourages companies that are financially strained to evaluate their options and seek help sooner rather than later. “There are still numerous buyers out there seeking companies to acquire and there are non-bank sources of capital that can help a company survive a tough period like this. It’s important not to wait until the eleventh hour, though.”
Republic Windows and Doors in Chicago attracted national media attention in December when the company closed its doors abruptly. This wasn’t unlike what occurred in other window plants recently, such as Kensington Windows and Survivor Technologies (see story at left). What was different here is that workers refused to leave without the pay and benefits owed them. After a six-day sit-in, Republic reached a settlement with its employees in which they will receive eight weeks of pay, two months continued health coverage and pay for all accrued and unused vacation. The settlement totals $1.75 million. Bank of America is extending a $1.35 million loan to Republic so it can pay employees, while JP Morgan Chase is funding $400,000 of the agreement. During a press conference announcing the settlement terms, UE director of organization Bob Kingsley announced that the group is forming a foundation called “The Window of Opportunity Fund,” which will be dedicated to re-opening the plant. It will be started with funds from the UE national union and the thousands of dollars of donations to the local UE that resulted from the workers’ occupation of the Republic plant. Republic Management: Their Side of the
Story Republic issued a statement on December 8 saying officials knew since mid-October that the company would be closing, and that on November 25, the company requested permission from the Bank of America to issue vacation pay to all employees. According to Republic, that request was rejected on November 26. “Despite inheriting a company bloated with overhead and lacking any type of manufacturing discipline and/or productivity, the company made significant improvements only to encounter an unprecedented decline in new home construction, which led to a decline of company sales to new construction of 80 percent,” reads the statement from Republic, in reference to the period leading up to the closure. “This placed the company in the impossible position of not having the ability to further reduce fixed costs, coupled with severe constrictions in the capital debt markets and an unwillingness of the current debt holder to continue funding the operations.” While some employees say they were shocked concerning the plant’s closing, others weren’t as surprised. DWM contributing writer Alan Goldberg visited the Republic plant on Monday, December 8, and spoke to workers. Raul Flores, who joined the company eight years ago, said strange things started to happen about three weeks ago. “One day, we’re told that there is no material,” Flores said. “Then two weeks ago, we went home [on a Friday night] and [when we returned on Monday] machinery was gone. There were eight trailers outside. We became very suspicious.” Martin Rodriguez, a 16-year veteran, said it wasn't just machinery that would disappear. “We were missing something else everyday,” Rodriguez said. “There was no material. We knew something was going to happen.” However, while the Republic situation was unfolding, it was disclosed that Republic CEO Richard Gillman had formed Echo Windows and Doors, which was incorporated in the state of Illinois on November 18. His wife, Sharon, was also listed as an officer of the company. On Thursday, December 4, one day after Republic announced plans to close, TRACO, based in Cranberry Township, Pa., announced that it sold its residential window business to Echo Windows. FINANCIAL NEWS Force V Environmental LLC, which recently purchased Schuco’s vinyl window assets, currently is in the process of moving its plant from the existing Schuco building in Connecticut to Greenville, S.C. Company officials hope to complete the move to the new facility, which has twice the space of the original building, during the first week of January. The company is notifying customers that orders received after December 15 will have a longer lead time, but officials hope to be back on track by February 1, 2009. ACQUISITIONS Hurd Windows and Doors of Medford, Wis., has announced that a private equity firm, Longroad Asset Management in Stamford, Ct., has signed a definitive purchase agreement, which was approved by the U.S. Bankruptcy Court in which Hurd’s case is under review. “Hopefully it will close in the month of December,” says Richard Latto, managing director for Longroad. “We’re very excited about owning it. We turn companies around.” Hurd president Dominic Truniger also sounds optimistic about the new ownership. “We are truly excited about Longroad becoming our new owners,” Truniger says. “This is a rebirth, of sorts, for Hurd. Longroad’s investment in our future will provide Hurd with greater financial security and better position us for growth. We have a number of exciting new products planned for 2009, and the infusion of capital will provide us with the resources to support the manufacturing, distribution, sales and marketing of these new products.” Longroad’s Steve Zambito will become chairman of Hurd when the deal closes. “We are looking forward to being associated with such a great brand and professional management team—who will now be given the capital to grow,” says Zambito. Zambito also confirmed that the management team and employees at Hurd will remain in place, and that the manufacturing operations will remain in Medford and Merrill, Wis. ASSOCIATION NEWS The American Architectural Manufacturers Association (AAMA) has released AAMA 713-08, a voluntary test method for sealants and flashings. The test method outlined in the eight-page document, titled Voluntary Test Method to Determine Chemical Compatibility of Sealants and Self-Adhered Flexible Flashings, is intended to provide a means to determine the chemical compatibility of liquid-applied sealants and self-adhered flashings that may come in contact during the installation of fenestration products. The test method describes a laboratory screening procedure for evaluating the chemical compatibility of self-adhered flashing and sealant materials intended for use in construction and fenestration installations that are installed properly.“This test is intended for flexible sheet membrane materials that include an integral adhesive layer, which are generally installed as concealed flashings behind claddings on exterior walls,” says Ken Brenden, AAMA technical standards manager. “However, this method can also be applied to other interfaces in the building envelope,” he adds. Adhesive compatibility or overall performance and integrity of the weatherseal at the sealant and self-adhered flashing interface are not addressed by this method, however; AAMA notes that sealant performance should be tested in accordance with AAMA 800, Voluntary Specifications and Test Methods for Sealants, and self-adhered flashing performance should be tested in accordance with AAMA 711, Voluntary Specification for Self Adhering Flashing Used for Installation of Exterior Wall Fenestration Products. WDMA Introduces OneVoice™ Advocacy System The Window & Door Manufacturers Association (WDMA) has announced the development of phase two of its OneVoice Advocacy System.The platform is designed to provide WDMA members and other players in the industry unique access to legislative and regulatory information, allowing the community as a whole to come together on common positions and execute advocacy strategies from the standpoint of a single “voice,” according to the association.“This is exactly what our industry needs,” says John Stoiber, WDMA President. “OneVoice will allow our window, door and skylight members 24/7 access to information about issues that matter most to their businesses and will ensure that all interested parties are being heard. Issues that are considered to be of top importance to members are prioritized, allowing WDMA to quickly identify the specific strategy or approach necessary to act quickly.”OneVoice will be introduced to members in more detail at the WDMA Leadership Summit in Tucson, Ariz., February 15-17, 2009. NFRC Board Approves Permanent During the November meeting of the National Fenestration Rating Council (NFRC) the board approved a motion for permanent label requirements. The ballot modifies the permanent labeling requirements as outlined in section 6.7 of the NFRC Product Certification Program (PCP) document. The modifications to the PCP are proposed to provide window manufacturers additional flexibility in the format and location of the NFRC permanent label. “The new permanent label requirements provide manufacturers with additional latitude in the manner in which the product being certified is marked or ‘labeled,’” explained John Lewis, technical director for the American Architectural Manufacturers Association, who also serves as chair of the NFRC permanent labeling task group. “Previously, manufacturers were required to affix a permanent label (which can be a label, a tab on a label or a series of marks or etchings that provide the end user—generally the home owner—all of the information needed to trace the product back to the manufacturer) that was visible after the product was installed. The revisions to the NFRC requirements now allow the permanent label to be placed beneath a removable element of the window or door.” According to Lewis, this is a significant change in that it continues the evolution of how certified products must be marked. “Permanent marking cannot be separated from certification, so in a broader sense, the notion of what a certified product is continues to evolve as well. Industry-wide, I foresee other changes in permanent labels on the horizon; the goal is to provide options for manufacturers and homeowners while still providing the marking and traceability requirements for a viable certification program.” The following are some of the ballot changes: These changes will be required once the PCP is published with the approved modifications and notice is sent to all membership. A publication date for the revision language in the PCP has not yet been announced. EVENT NEWS The National Fenestration Rating Council’s (NFRC) Fall Meeting was held in November at the Crowne Plaza in Jacksonville, Fla. Various committees met during the meeting and this included the Research & Technology Committee. Willie DuPont of Sunergy Consulting reported on the Window 6 and Therm 6 validation research. He explained that the software programs now have new capabilities for calculating solar heat gain coefficient (SHGC) and U-factor for glazing products that cannot be modeled or simulated currently, including fritted glass. The first part of the research task is to compile and evaluate existing SHGC and U-factor test results and compare physical testing against simulated testing based upon the new software. During the Optical Properties Subcommittee the group reviewed NFRC 300 and 301 ballot negatives. One negative in particular that saw a bit of discussion stated that the inclusion of ASTM G197 in Section 7.2.5 represented “the first step in adopting a new spectral weighting function into NFRC’s programs that may significantly increase SHGC and VT ratings …” Joe Hayden of Pella Corp. spoke up and said, “This is big. If approved, is the Department of Energy prepared to adjust Energy Star® criteria accordingly?” Hayden made a motion that the negative be found persuasive and substantive and recommended that the implementation of NFRC 300 be delayed until at least April 1, 2009. The ballot will now go back to the task group and will be re-balloted. Later that day the meeting really heated up during the U-factor Subcommittee meeting. The discussion centered around NFRC 100 ballot negatives concerning the inclusion of having two rated sizes for each product line. According to Randy Van Voorst of Quality Testing Inc., having more than one size would “muddy the water,” because it would allow every product line to have two different numbers for U-Factor and Solar Heat Gain Coefficient (SHGC). Tom Culp with Birch Point Consulting LLC spoke in favor of having more than one rated size. Ultimately, the subcommittee voted against having more than one size. Mike Thoman, subcommittee chair, pointed out that the issue of rating actual sizes will still need to be covered. “Disparity in the information we’re putting out about products is what caused this …” Thoman said. “The commercial guys have a valid point and we will need to discuss it at some point.” COMPANY NEWS Urban Machinery has announced that it has made some restructuring changes to the company, which includes the closing of its West Coast office in Port Townsend, Wash., effective immediately. All work previously performed by that office is being transferred to its Cambridge, Ontario, head office for sales and service, according to Volker Lamprecht, president and chief operating officer. “The changes made by Urban in North America are necessary and will allow Urban to help all of our North American customers during these uncertain economic times, by reducing our overhead and allowing us to supply our customers with more cost-effective solutions to their needs,” he adds. He stresses that Urban Machinery continues to be a strong and stable manufacturer and supplier of equipment to the door and window industry worldwide including North America. Urban is supported by its corporate head office in Germany as well as its secondary production facilities in Austria and Fredericton, NB, Canada. “We assure all of our customers that once our market returns to prosperous levels, Urban Machinery will once again open a West Coast sales and service office,” says Lamprecht. “We have been in business for more than 50 years and will continue to be in business for many years to come.” In a letter to customers, Lamprecht said that any open orders and down payments for machines, parts or service placed with the Port Townsend office have all been transferred to Cambridge. Any future orders and down payments for machines, parts or service will now have to be placed with Urban in Cambridge.
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