Time Will Tell
Few in our business remain unaware of the announced purchase of U.S. Aluminum by C.R. Laurence (CRL) last week. Actually, the purchase was met with a sigh of relief in many circles because CRL is known as extremely well-run company. And the idea that there will be another quality metal supplier around with knowledgeable industry veterans such as Tom Harris running it is both comforting and exciting to many. It’s a brilliant move by CRL for sure.
The purchase, though, has left a fair number of people wondering what the “new U.S. Aluminum” will look like. Certain assets of the company were purchased by UMEX late last month. At the time, Glenn Brown, who works in sales for UMEX, told USGNN.com™ it was his understanding that the company had purchased all assets of International Aluminum. He said his company is primarily focused on extrusion and roll forming and was most interested in the Waxahachie, TX, location. He also said that UMEX had hired some of the company’s former sales staff.
So, on the surface, it does not appear that CRL has purchased the extrusion presses from the company.
Experts have told me that the most likely scenario in purchases such as this is that companies purchase blocked-out time during which its products will be extruded. Though I have no knowledge of whether or not this is the case, such a scenario makes sense. UMEX gets a dedicated and loyal customer and CRL gets some tools to help its U.S. Aluminum business to grow.
Most likely CRL’s purchase includes the name, of course, and customer lists and access to the very valuable dies that are used. There’s a lot of value in those dies. So while it remains to be seen how it all works out, on the surface it like an excellent strategic move by CRL.
Bankruptcies hurt a lot of people. There are those directly in the line of fire like the employees and the suppliers (and, in most cases, the outgoing owners as well). And there are those who are collateral damage. I recently heard a story about a U.S. Aluminum customer who had shipped $100,000 worth of all new custom hardware to Waxahachie to be used on a custom door order. That company is now faced with finding a new supplier for the order and in trying to extricate its hardware from the bankruptcy proceedings. In the meantime, it’s had to reorder or the hardware. Maybe CRL can fix that too.
Thanks to everyone who came out of the woodwork two weeks ago with their own theories on the future of Binswanger in response to my last blog in June. Three additional ones emerged with such frequency that I feel compelled to handicap them here:
Scenario Five: A foreign entity swoops in and purchases Binswanger in total and uses it as an installation outlet in the States. While international influence in the U.S. continues to increase, such an effort would require major expansion on a different level for many companies, unless of course, it was a company such as a Pilkington looking to grow into retail. Pilkington, for its part, has said in the past that it has no interest in doing so, but manufacturers have been known to grow downstream before. Odds: 1 to 3.
Scenario Six: A team lead by Binswanger ex-pats buys it. There’s a mighty talented team that includes Tom Sistrunk, vice president and general manager, who might want to put a group of former employees together find some capital and go. Interesting theory, but my gut says if it’s not in the works already, it won’t happen. Odds: even.
Scenario Seven: Vitro buys it. Well, they did it once and I guess they could do it again. This theory says Vitro will buy Binswanger back from Sun. A variation of this theory has Vitro starting up its own retail company. (There are no non-competes in a bankruptcy sale after all, and Vitro still owns the name.). But Vitro Vidrio S.A.B. has quite a full plate with its own bankruptcy and entanglements, so the timing is not right. Odds; 1-2.
Stay tuned – more to come.