GIRARD, OHIO — Instead of the usual business deal in which companies often acquire one another, VinylSource Inc. and Veka USA incorporated an old kindergarten lesson: They chose to share. The firms decided to pool resources to launch Veka's new composite decking, railing and fencing line and to rejuvenate VinylSource's sales.
As part of the May 19 deal, VinylSource will begin extruding all profiles for Veka's composite line, while Veka will provide the dies and any technical expertise needed at Girard-based VinylSource, according to Lawrence Irwin, president of Veka Holdings Inc. of Fombell, Pa.
"We don't own any part of it, but we are going to be working with them closely," he said. "It is a unique relationship."
VinylSource, which recently was acquired by JP Extrusions Inc. of Lisbon, Ohio, currently manufactures vinyl window and door profiles on 18 lines at its 160,000-square-foot plant, said Dave McBride, plant manager.
About 70 percent of the plant is used as a warehouse while the other 30 percent is dedicated to extrusion, he said. Much of the facility stands empty.
That is all expected to change once the first decking and railing planks begin to roll off the lines next month, Irwin said.
"We're fast going to meet the point when we're going to have to add lines and they're going to have to add lines," he said.
There is room for 54 extruders at the VinylSource plant, which Jim Pastore Jr., president of JP Extrusions, said he will be investing in over time.
"We're looking to take this to a 100 million-pound operation in the next three years," he said, referring to annual capacity.
VinylSource already is at 35 million pounds, compared with the 14 million pounds it processed in 1999, McBride said.
VinylSource currently has four lines on order, with five more scheduled to be installed by the end of 2000, McBride said.
"We're ready for growth; we're just waiting for the opportunity," he added.
VinylSource expects that opportunity to arise quickly. The firm is at about 60 percent capacity now, but hopes to be running full throttle by September, McBride said.
Once VinylSource reaches its current capacity, Veka probably will begin to manufacture some of the composite line at its Fombell facility. Though no plans are definite, Irwin said Veka might consider building another plant at that site or elsewhere.
The deal with VinylSource came up unexpectedly at the last minute, he said, prompting Veka to revise expansion plans at two U.S. facilities.
The firm earlier this year announced a $15 million expansion at its Fombell headquarters, part of which was to accommodate the composite line. That 130,000-square-foot expansion still is under way, but instead now will be used mostly for warehousing the company's current product lines, said Irwin. And Veka has put on hold the expansion it had planned for its Reno, Nev., factory.
Veka originally was interested in buying VinylSource from parent company American Architectural Products Corp. of Miami.
"We knew we weren't going to be a competitive bidder," Irwin said, adding that Veka really was interested in acquiring only the company's extrusion lines.
The offer to work with VinylSource was born when the company was sold to JPI, which had a long history of processing all of Veka's scrap, he said.
The VinylSource plant will remain in Girard, and plans for expansion could include additional warehouse space, McBride said.
Meanwhile, JP Extrusions is pursuing acquisitions, including an extrusion facility on the West Coast and two Belgian-owned extrusion companies, Pastore said.
Pastore said he is a partner in other extrusion and molding companies in addition to JP Extrusions.