Dayton Technologies Inc.
2001 extrusion sales: $87 million
2000 extrusion sales: $87 million
2001 extrusion employees: 350, down from 425 a year earlier
Darwin Brown, president and chief executive officer
``We believe firmly that vinyl will continue to take market share from wood and aluminum - not at the double-digit rate like we did for a lot of years - but I think very conservatively, 5-7 percent,'' Brown said in an April 11 interview at Dayton's headquarters in Monroe, Ohio. ``In the last couple years now, there's been negative growth in units, but I think the whole window industry didn't grow in units, so [wood and aluminum] didn't pick up market share in that process, I'm sure of that.''
What the firm did:
The supplier of window and door lineals avoided a $1 million capital investment in its reclaim area last year by implementing ``total productive maintenance'' and 5S, a workplace organization program. During the past 12 months, it also started implementing single-minute exchange of dies, or SMED.
In January, Brown appointed Michael Hutfless as president.
``We've been working really hard to understand things that we can do for faster start-ups, lower scrap rates, higher throughputs on our dies,'' Brown said.
The year ahead:
Brown and Hutfless plan to grow the business to nearly $100 million in sales this year. At the Monroe campus they have the infrastructure in place to add 30 extrusion lines.
``All of the growth this year will come from new customers and, secondly, we've got customers we know that are growing their market share,'' Brown said. ``We have one of our major customers that is doing significant business with Lowe's Home Improvement Stores. The market itself we expect to grow this year. If those things happen, what we're predicting on our budgets is double-digit growth this year.''
He's still confident in an improved economy this year, barring any additional terrorist attacks. ``If we have another catastrophe in our country, what that would do, who knows,'' he said.
``Companies that are not planning on a global basis are at serious risk,'' he said. ``The global competitors will achieve economies of scale that will give them a significant competitive advantage.''
Royal Group Technologies Ltd.
2001 extrusion sales: $915 million, including $110 million in sales from Marley Mouldings LLC, which Royal acquired Dec. 10.
2000 extrusion sales: $749 million
2001 extrusion employees: 8,680, up from 6,100 in 2000
Vic De Zen, chairman and chief executive officer; and Doug Dunsmuir, president
``We [will] have no problem meeting C$3 billion in sales in 2005,'' De Zen said in a May 15 interview at Royal's headquarters in Woodbridge, Ontario. ``In vinyl siding, fencing, decking, railing, profiles, we're getting our share more than anyone else out there. You can see the growth in North America. We're growing more than anybody else, and it's not by luck.''
What the firm did:
The company completed the consolidation of 24 manufacturing facilities into 14. In the latter part of 2001 Royal acquired Marley Mouldings of Marion, Va., and Pittsburgh-based Thermal Industries Inc.'s extrusion operations. Additionally, Royal struck a joint venture in composite ABS lineals. In March, De Zen appointed Dunsmuir as president, heading up the management team charged with meeting the firm's goal of C$3 billion in sales by 2005.
Despite Sept. 11, Royal pushed on with the Marley deal when other potential buyers backed away, Dunsmuir said.
``We didn't back off from that transaction,'' he said. ``We're so happy with that business. We ended up buying that business for substantially less than we had prepared to pay for it.''
But 2001 was not all positive for Royal. It was the first year in Royal's seven-year history as a publicly held firm that it did not generate growth in profit. According to its annual report, sales growth was insufficient to offset higher raw material costs and higher costs associated with the manufacturing expansion.
``Still, we were able to generate operating cash flow in excess of capital expenditures, in spite of the difficult economic environment and completion of the expansion program,'' De Zen said.
The year ahead:
The focus is on running the business after ``years of hard work,'' officials said.
``Our focus now is return on investment, free cash utilization and repayment of debt,'' Dunsmuir said. ``In terms of acquisitions, we're always looking. It has to be a really good deal for us to do it right now.''
The firm has trimmed capital expenditures and is selling nonstrategic assets, including undeveloped land near Royal's new manufacturing complex.
Royal reported sales of US$515 million (C$789 million) for the first half of this fiscal year.
``Nobody in extrusion puts any money in research and development the way Royal does,'' De Zen said. ``This is the key of Royal, because we keep putting $20 million to $30 million every year in research and development.
``You're going to see, in three to four months, we're going to have brand-new products that will shock the market out there. ... We are pioneers on this. We're spending the money and we want this business to grow.''
Reasoning and strategy:
Royal's plan is to go after the wood window market, officials said. They're also focusing on international growth with the firm's Royal Building System technology, used to construct whole units, including houses and industrial buildings.
``The biggest thing about Marley is, and the whole reason for its existence, is to replace wood,'' Dunsmuir said. ``Vinyl replaced aluminum. This is going to replace wood.''
De Zen said Royal is planning five to 10 years down the road.
``If you pick any of our competitors, they have only a PVC window,'' De Zen said. ``We have ABS, we have the foamed window, we have the composite window and we have PVC.''
Marley's strength in retail distribution also intrigued Royal, which already had a foot in the foam market with Royal Foam.
Expansion in big-box stores has been a key for Royal's sales growth, officials said.
``That's what a lot of the growth in recent years is based on and it will continue to be based on that,'' Dunsmuir said.
``We're now starting to get involved with Home Depot and Menard's in international transactions, where they're establishing stores in additional countries, where we would like to get in on the ground floor with them, providing our [array] of products.''