CHICAGO Drew Industries Inc. will exit the aluminum extrusion business and outsource its extrusion requirements with the sale of three extrusion presses to Atrium Windows & Doors Inc., a company official told AMM.
The Elkhart, Ind.-based recreation vehicle and mobile home parts suppliers Lippert Components Inc. subsidiary sold its aluminum extrusion assets to Dallas-based Atrium for $7.5 million, the company said in a statement April 11. Drew expects to record a pretax loss of $2 million in the second quarter as a result of the deal.
Atrium has entered into a six-year aluminum extrusion supply agreement with Drew. Atrium will provide 95 million pounds of aluminum extruded products over the course of the pact at "a competitive market price," Drew president Scott Mereness said in a statement.
"We concluded that our aluminum extrusion assets were not meeting our internal financial standards," Mereness said. "The sale of our extrusion-related assets will free up needed manufacturing space, as well as allow management to focus on other opportunities with higher growth potential."
The sale included three used presses the company purchased about three years ago to meet a portion of its internal extrusion needs, Drew chief financial officer and treasurer Joe Giordano told AMM in an exclusive interview April 11. The company consumes about 40 million to 50 million pounds of aluminum extrusions annually, he said.
With the sale of the three presses in Elkhart, "(Drews aluminum extrusion capacity) will all be outsourced," Giordano said.
Drew had sourced its aluminum requirements externally for decades but purchased the three used pressestwo 7-inch presses and one 8-inch press with a combined nameplate capacity of more than 50 million pounds per yearto bring some of that capacity in-house, Giordano said, adding that the presses rarely operated at or near capacity. "We just determined that our time and spaceboth facility capacity as well as human capacitywere better spent in other areas," he added.
Drew just last year said it was looking to sell aluminum extrusions on the open market (amm.com, May 6) after announcing plans in 2012 to ramp up the three presses and add three more (amm.com, May 2, 2012).
The companys move to unload its presses comes as at least one other downstream aluminum consumer decided to unload aluminum processing equipment. Houston-based Quanex Building Products Corp. recently completed the sale of its former Nichols Aluminum LLC subsidiary to Cleveland-based Aleris International Inc. for $110 million (amm.com, April 1).