Volume 44, Issue 3 - March 2009

Company News

Glass CEOs Offer Predictions for Commercial Drop, Turnaround

How long will it last? “We probably have 24 months before we get back to some normalized level of activity. That’s what I’m preparing for.” So said Russell Huffer, chief executive officer of Minneapolis-based Apogee Enterprises Inc., during the company’s third quarter 2009 earnings conference call.

Although the company expects to end fiscal 2009 (which extends from March 1, 2008-March 1, 2009) with record revenues and earnings, sales and income from the architectural segment is expected to be lower in fiscal 2010 (beginning March 1, 2009), compared to 2009, due to slower commercial construction; lower capacity utilization; and some impact from pricing pressures. 

“We currently expect 2010 revenues to be down at least 10 percent,” Huffer said.

Russell Ebeid, president of Guardian Glass Group in Auburn Hills, Mich., commented that the bottom is approaching but not here yet during an exclusive interview with USGlass in mid-February.

“I do think sometime in the early- to mid-third quarter we will have reached the bottom,” Ebeid said. “That’s not to say we’re on the incline yet. I believe the incline will vary based on the different aspects of the glass business.”

Huffer said Apogee already has “implemented and continue[s] to evaluate further cost cutting initiatives, ranging from reduction of headcount and discretionary spending to productivity improvements” to manage the downturn (see February 2009 USGlass, page 12).

Among items being looked at in the future to keep business strong are green building initiatives. “Green building is a growing trend that’s here to stay,” Huffer commented.

He pointed to new energy-efficient products from its Viracon division and Wausau Window and Wall System’s new green facility as examples of movement in that direction.

Huffer also noted that the company will focus more heavily on institutional building, which is forecasted to remain strong, at least compared to new construction in the office building sector.

In comparing the forecast downturn for 2009 and, potentially, 2010, the Apogee representative drew comparisons to similar periods in recent years. In comparing the year ahead to a downturn in the late 1990s, Huffer said, “There was a rapid downturn there as well, but the rapid downturn followed too much construction of office put in place and that’s different this time.” He added, “We believe the market did not yet overbuild and so therefore, when the market turns this time, we should have our normal lag time to the economy so it should be a normal turn time for us to come back versus the last time, which took several years …”

Ebeid added that while the residential sector may take four to five years to “return to what we have known in the past” due to gross overbuilding and speculation, the commercial industry won’t be hit as hard. 

“Commercial-wise I think we’ll bounce back faster because, first, they are working on their backlog and much of new business is not being awarded commercially yet,” he said. “So their downturn, we’ve not reached that point yet. However, they have not overbuilt, so I don’t believe the decline will be as lengthy as residential and their rebound, therefore, will come sooner than residential.”

Huffer pointed out that this time around high performance glass is much more widely used in the commercial construction marketplace than it was in the 1990s.

“I think the real plus will be as we come out of this, we’ll come out much sooner and stronger and better,” Huffer said.

Assets of Stroupe Mirror Sold During Public Auction

Many of Thomasville, N.C.-based Stroupe Mirror Co.’s assets, including machinery and equipment, were sold during a public auction in October by order of the U.S. Bankruptcy Court, Middle District of North Carolina. 

James Stroupe, president of the company, filed for Chapter 7 in April, after declaring more than $2 million in liabilities. Among its assets the company included $100,000 in machinery, fixtures, equipment, and supplies used in business, and nearly double that in its glass and mirror inventory, according to court documents.

USGlass was unable to reach anyone from Stroupe Mirror for comment on the auction, but one industry source said the company’s liquidation was “symptomatic of the North American mirror industry right now.”

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