USGlass -2009 October

Volume 44, Issue 10 - October 2009

feature

NewMachineryNow?
Glass Fabricators Share Their Tips for Growing During a Recession

by Megan Headley

Sure, purchasing a new piece of glass processing machinery can help increase the capabilities of your fabrication facility and potentially attract new business, but who’s going to invest big bucks on new equipment in these tough economic times?

Surprisingly enough, a number of fabricators are making significant equipment investments, although they’re hardly rushing into these purchasing decisions. USGlass spoke with four fabricators who installed new equipment recently, and has their tips for growing production capabilities during a recession.

Consider Debt with Caution
Eugene Negrin, president of Galaxy Glass & Stone® in Fairfield, N.J., recently purchased a large-format water jet that was being installed even as he spoke with USGlass at the end of August.

“We process heavy laminated glass and natural stone,” Negrin explains, “and there is a lot of time that can be saved by CNC programming that we were doing in alternative ways. We felt that it would be a good addition to our fabrication/production mix.”

The company found this particular piece of machinery through its own research. He says that the machine will help improve the company’s ability to produce very complex shapes in heavy laminate, “which is a lot of what we do.”

Before You Buy
Before you make your machinery purchase, consider the following:
1. Take on debt with caution. If trying to decide between various new machines, make the purchase that will add more to your bottom line than it will to your debt;

2. Take advantage of the fact that pricing for new machinery is in the buyer’s advantage, as are interest rates;

3. Remember that companies that take steps to position their product line now will be the ones best able to grow as the economy returns. This may be particularly true for smaller fabrication companies, with less overhead than their large competitors, that are more easily able to adapt their capabilities to market demand; and

4. Flip through the classifieds, network with other fabricators at trade events and get to know your machinery distributors to learn about the availability of rebuilt machinery as a more economic option for expanding your product line.

When asked if now is a good time to be investing in expensive new equipment or machinery, Negrin offers a conditional answer.

“There’s another machine that I want that is substantially north of the $1 million mark that I am electing to wait on,” he explains. “This particular piece of equipment that I purchased will impact my bottom line positively. Some of the other equipment will as well, but the issue is debt service and it’s just not a good time to take on additional, substantial debt. You have to be careful. We’ve analyzed it; we feel that this is a positive element in our product mix and how we fabricate things; and we made the decision to purchase even though it’s a large purchase and there are financial implications in a down market. It’s the right thing to do.”

Buy While You Have the Resources
TriStar Glass Inc. in Tulsa, Okla., has been using its new HOAF modular laminating system only for a few months, since Mike Kelley, who handles special projects for the company, made the decision to purchase it at glasstec in October 2008. Kelley notes that he started looking for this equipment as early as the 2006 event (see the January 2007 USGlass, page 51, for our visit with Kelley during that event), but that now was really the only time to invest in new machinery.

“As far as we’re concerned, now’s the only time. When you’re not in a recessionary period you’re too busy taking care of business. So really the only time to efficiently expand is in a downturn because then you have the resources to do it,” Kelley points out. “In the 35 years we’ve been in the glass business we’ve tried to do all of our expansion during downturns.”

And invest they have. “During this period this year we’ve also added a Bromer storage and retrieval system and we’ve just signed a purchase order for a CNC router and we added the LiteSentry unit on the end of our tempering lehr to improve our quality control a little bit,” Kelley says.

For TriStar, these investments allow the company to better position itself for a recovery and future growth opportunities.

“We wanted to wade into the industry,” Kelley says. “We wanted to position ourselves to be able to get in, but not invest an awful lot of money. We don’t anticipate there’s going to be a lot of volume [right now], so we’re not looking for the most efficient way to do it, but we’re looking at the easiest way to get in even if we’re not building the most competitive products. We’re just looking for high quality, low volume.”

Kelley notes that business has in fact stayed steady for TriStar so far, but that things will get tighter for the commercial construction arena before they get better.

“As of right now we have not seen any slowdown whatsoever but I will say that the level of bidding for next year’s business is way off. We see next year as our slowdown year,” Kelley says. He adds, “We’ll have a lot of new equipment to work the kinks out of in our slowdown year.”

Reuse, Recycle—Rebuild
When Mark McGann, president and owner of Wolverine Glass Products in Grandville, Mich., made the decision to add a cup wheel flat edger to his fabrication mix, he knew right off the bat that a brand new machine wouldn’t be the right investment just now. “Just because of the economy, I didn’t want to go new,” McGann says.

Rebuilt machinery offered an economic option for expanding the company’s capabilities. When McGann found the piece of machinery that fit his specifications, it turned out that a machinery distribution company was eyeing the same piece of a rebuild.

“I thought, well, it might make more sense to have them do the rebuild; they have better resources and more available people than we do,” McGann says.

But even if a less expensive option is available, McGann cautions that a savvy business owner won’t go rushing into a new machinery purchase without knowing the business is there and waiting.

“Any time we bring a piece in it’s always because we have some kind of market research where we know there’s some business available,” McGann says. “We’re not going to bring in a heavy piece of equipment hoping we can have some work going forward. We did market research before we made the decision.”

Know Your Overhead
Alex Kastaniuk is no stranger to the glass industry. Though he sold Trident Consolidated Industries in 2001 (see July 2003 USGlass, page 16), he couldn’t get the industry out of his system.

“I went through my five year non-compete and, being restless and being in the industry, in October 1, 2008, I went and bought the assets of a company called Textured Glass Industries in Los Angeles,” he explains. Some people may have been reluctant to make such a big investment at a time when other companies were beginning to feel the pinch of a recession, but Kastaniuk has found that running a small company has its advantages. The owner of what is now TriView Glass Industries LLC in City of Industry, Calif., says that being a small glass fabrication house with little overhead allows him to maneuver more easily than large fabrication companies.

“A lot of people are downsizing because they’ve already built up a big overhead,” Kastaniuk says. “At my size, right now, my overhead is low so I don’t need the big sales compared to some of my competitors that have gotten to a certain size. For example, I don’t have high price sales personnel, high price office personnel, high price production people, etc.”

The fabrication company brought with it a number of capabilities, including laminating and insulating glass, but late last year Kastaniuk made the decision to purchase a new tempering furnace, followed closely thereafter by a new autoclave.

“I did a lot of looking at different furnaces,” Kastaniuk says. It helped that from his previous life at Trident he had built relationships with machinery distributors that guided him in his decision. However, he adds, “Seeing this machine, in a smaller version, in operation was what finally sold me … You’ve got to know what you’ve got.”

He notes that not all new companies out there should dive into purchases such as this, but there are advantages to making these purchases right now.

“If this is the time to upgrade [for your company], now would be the right time because pricing is more advantageous than when the market is very busy. Machinery companies are more aggressive in making the sale than before. And right now, let’s face it, interest rates are down, so you’re not paying high interest rates to get into the business,” Kastaniuk says.

Megan Headley is the editor of USGlass.