On the Road with USGlass

The News Today, Oh Boy

The M&A news these past two weeks has been so thought-provoking that we must once again shine a light on it. In doing so, I think I know how Dwight Eisenhower felt when he shined one on the military-industrial complex. Everyone nodded their heads in knowing agreement, some even publicly said Ike had gotten it exactly right; and then everybody went back to doing things the same old way.

First came the announcement that MiTek Industries had acquired Benson Industries LLC of Portland, OR. Anyone who has been around the industry for a while would surely categorize Benson as a solid contract glazier. Under the expert leadership of Lou Niles, the company grew even more, forged key partnerships and expanded geographically. It eventually became attractive to MiTek, a company that began by supplying housing trusses, to majority ownership.

Marriage made in heaven? MiTek gets a quick and effective introduction into the highrise commercial construction market around the world. Benson gets access to capital and resources beyond measure as MiTek is a Berkshire Hathaway company, a fact noted repeatedly in the company’s press release announcing the sale.

And the glass industry gets another super fabricator-contract glazing company as Benson joins the ever-growing list that started years ago. These uber-fabricators combine the supply of glass and metal with the ability to serve as contract glaziers for it. It’s a strategy being used by Grey Mountain and a number of others to change the face of contract glazing. And it will be the single most important change to that industry in the past 30 years.

In fact, just since I began writing this blog, it looks like Grey Mountain is going to score again in what I call the “friendly” bankruptcy of Dlubak. If a judge agrees on Friday, Grey Mountain will pick up that company’s non-real estate assets for $2 million.

Regional players, including the strong ones, should look long and hard for the subtle and shadowed disintermediation that results from these types of acquisitions. It’s there and it changes things.

Witness the acquisition last week of Custom Window Company Inc. of Denver, CO, by Wausau Window and Wall Systems, an Apogee company of Minneapolis, MN. Check out this description of Wausau as provided in the company’s announcement of the purchase:
“Wausau is one of the architectural businesses of Apogee Enterprises Inc., a public company that provides solutions for enclosing commercial buildings and framing art … “Wausau’s purchase of Custom Window supports Apogee’s strategy to grow our architectural framing systems segment through geographic expansion, new products and domestic acquisition. It presents an opportunity to better serve customers and prospects in the Western U.S. and the historical renovation market throughout the country,” says Apogee CEO Joseph F. Puishys.

It’s a logical and smart move for Apogee and Wausau, both of which are being led expertly right now as well. And Apogee also has contract glazing services available through its ownership of Harmon Inc.. But it will shake up the marketplace significantly as Custom and Wausau were often the only two companies that would compete on any number of jobs. Thus, supply has now tightened and we know this usually leads to higher prices.

But others aren’t so sure. Former employee Ed Bartlett, the long time face of Custom Window had some interesting thoughts in a blog he released last week. See what you think of his comments.

Contract glaziers have always been my heroes. I would hate to see our industry end up with a group of “haves” and another of “have nots” in which the big boys, with access to great capital and resources can keep up with technology, bonding, IT and other changes and the smaller ones cannot. Under this scenario the “haves” become bigger and the “have nots’ become labor-only.