CHICAGO Bonnell Aluminum Inc.s cost-cutting measures during the recession should benefit the extruder as the economy recovers and opportunities in the automotive sector rev up, says incoming president W. Brook Hamilton.
Profitability has risen more quickly than sales volumes over the past two years, Hamilton said, with the Newnan, Ga.-based company posting 2012 earnings comparable to those of 2008 even while logging 20 million pounds less in sales volume.
"This is significant because, as business continues to improve, our profitability and cash generation will be even more robust," Hamilton said during the annual shareholders meeting of parent company Tredegar Corp..
Hamilton is succeeding Duncan A. Crowdis, who will retire June 1 (amm.com, Feb. 22).
Bonnell will continue to look to increase its geographic diversity and grow organically, Hamilton said, citing the companys recent acquisition of competitor Aacoa Inc. (amm.com, Oct. 1). That "milestone" move has increased Bonnells customer base and allowed the company to participate in new markets, he said.
Hamilton called Aacoa "one of the very best anodizing suppliers" in the United States and a "world-class extrusion operation" with strong expertise in value-added fabrication. Other synergies between Bonnell and Aacoa include a consolidation of scrap and billet supplies and the transfer of business between their respective facilities, he said.
Bonnell also is well positioned to become a "significant supplier" to the automotive market, Hamilton said, citing the companys plans to invest $17 million in new equipment and infrastructure (amm.com, Feb. 12). The new extrusion press and handling system at Newnan will be capable of supplying 15 million pounds of specialty product to Tier I automotive original equipment manufacturers annually, he said.
Automotive shipment growth rates have been "solidly" in the double digits in recent years and were up approximately 18 percent last year compared with 2011, Hamilton said. Such growth rates "far exceed" those in the building and construction and consumer segments and "outshine" declines seen in some other markets, he added.
Aluminum requirements in the automotive sector should grow thanks to regulations that will require better gas mileage, encouraging the lightweighting of vehicles, Hamilton said. "We are entering the market at the beginning of a strong phase of growth."
Tredegar chief financial officer Kevin OLeary said Bonnell has seen better results thanks in part to better pricing on value-added products and services and due to cost-cutting measures, such as the closure in August of a facility in Kentland, Ind., that was focused on the residential construction market (amm.com, Feb. 2, 2012).
"Bonnell continues to set the standard in Tredegar for operation excellence," Tredegar chief executive officer Nancy Taylor said.