LAS VEGAS (Feb. 3, 9:05 a.m. EST) — Fast-growing Silver Line Vinyl Extrusion Division has entered a joint venture with Rehau Inc. to produce soundproof windows.
The firms announced the move at the International Builders Show, held Jan. 21-24 in Las Vegas. Officials still are finalizing plans, but Leesburg, Va.-based Rehau will extrude the lineals, using Silver Line as a fabricator.
The relationship is the latest for North Brunswick, N.J.-based Silver Line, which has catapulted into the lineup of the vinyl window industry's fastest-growing firms. The company expects to add nearly 600 employees this year to a base of 6,300.
“Everyone wants to know: what are the new technologies, what we're doing, how we're going to [market]. It used to be, 'Oh, we're no good.' It's a little different right now,” President Ken Silverman said in a Jan. 10 interview at Silver Line headquarters.
The man at the head of the $154 million business is brusque and talks fast. With his firm touting an average annual growth rate of 25 percent during the past six years, Silverman, 52, isn't about to slow down. His company has grown from a fabricator of aluminum windows into one of the largest vinyl window extrusion firms, doing business in 36 states and boasting its own trucking company.
“You just can't have tunnel vision in growing your business as an extruder and then as a window manufacturer,” Silverman said. “As a growing company, we have found that we don't know everything. In doing so, we are partnering up with other extruders on certain products in order to … move ahead a lot faster in the vinyl line. You can't be everything to everybody.”
Silverman credits Home Depot Inc., based in Atlanta, with moving his company ahead. However, Silver Line also has broadened its relationships with independent lumberyards to keep an even mix between new construction and home remodeling.
“Since the Home Depot is not heavy in the new construction market, we are partnering up with our independent lumberyards. We don't necessarily look for the biggest guy on the block. We want the guy to be the most loyal player. One thing we'll guarantee is this: Over a period of three to five years, we will make them the dominant player. We have to go to distributors that don't want to lose no matter what.”
The pressure is on in the vinyl window market, where fundamentals make it tougher to compete: a maturing industry, rising energy costs and unstable resin prices. Silverman compares the industry now with the auto industry, where it's necessary to upgrade and change models every year.
“We're trying to grow under control,” Silverman said. “You grow or get eaten up. There's no way to turn back. Our philosophy is to support the Home Depot because they're the ones that help us grow and groom our business. At the same time, we're trying very, very hard to continue to grow other parts of the business as fast as Depot grows.”
Silver Line, which used to have a reputation as a low-quality supplier, serves as an original equipment manufacturer for Stanley Works in New Britain, Conn.
“If we weren't a high-quality item, we wouldn't have partnered with Stanley in doing this deal together,” he said. “And we're going after high-end items in the Stanley deal.”
Within the walls of Silver Line's 880,000-square-foot headquarters facility, about 16 injection molding machines pound out products like screen pulls and lift handles, mostly made of nylon. It's the only location where Silver Line has injection molding operations, a smaller business known as Custom Craft Plastics Inc.
A lot of people have never heard of the segment, tucked among the more-lucrative extrusion operations. Silver Line is its own biggest customer, but seeks to grow the custom part of that business.
“We've started to go off and quote other markets,” he said. “Once we have plans to go into the fencing and decking business, a lot of the accessory items will be injection molded and therefore it will parallel in sales and we will grow it that way also.”
Still, Silverman won't use injection molding if it's not suitable.
“We put die castings on a lot of our products even though we can injection mold them,” he said. “We would rather use die castings because in certain applications, die casting is better,” he said.
The company does 65 percent of its mold work in-house, which it is working to increase for flexibility's sake.
The ride hasn't been perfect, Silverman admits. The firm still is trying to perfect its decking product line, which he hopes will lead Silver Line into composite windows — although composite products have their drawbacks: They cost more, plus there are market constraints because each company has certain patents. Silver Line will roll out the product with independent lumberyards. Silverman isn't sure yet if that program will be rolled out at Home Depot.
“Our decking business will be a regional market player, due to the fact of weight constraints and shipping constraints of making deck,” he said.
Silverman won't disclose his company's scrap rate, but Silver Line's scrap will be used in its decking, fence and railing products. Officials throughout the industry estimate that window extruders overall average about 10 percent. Silver Line is installing a system to reduce waste.
Even though he's looked actively at acquisitions, it's not likely to happen, he said. Nor will he look at selling out to a larger company.
“It doesn't really make sense for us, for our business model, because the numbers are overinflated,” he said of acquisitions. “No one is getting enough for the money and the investment bankers are raising the bar for manufacturers like myself to go out and buy businesses. So we have figured out that it's less expensive for us to open up our own markets, start a year or two before, put salespeople in the market, build it up, then open up our own plant.”
Silverman said he won't allow his firm to take on a lot of debt, though he declined to be specific.
Line on the future
His plan is to put a plant in every two years. This year, the firm will grow to 83 extrusion lines from 78, with an anticipated throughput of 130 million pounds, up from 120 million a year ago.
For plant locations, he's eyeing Dade County in Florida, and Colorado.
“We're going out to the West, and we're probably not going to build out that way,” he said. “We're probably going to occupy a building for a while, then we'll build.”
As optimistic as he is, he's still approaching 2003 very conservatively. The company has a new plant in Marion, Ohio, that Silverman calls its most efficient, and is working to get a plant started in Fall River, Mass. Silverman predicts a conservative 15 percent sales growth this year.
“We're just afraid of this whole aura. The war, the economy, the environment has us kind of sitting back, saying, we have a war chest of finances to do what we want, and we're better off to sit and get ready and procrastinate a little more, rather than get into a leveraged situation. We're very, very, very conservative.”