Lamson & Sessions Co. wants to curtail the impact of PVC resin price fluctuations on gross margins, so officials are equipping two extrusion plants with compounding operations.
By the end of the year, the Beachwood, Ohio-based pipe and conduit maker will be compounding at sites in Woodland, Calif., and Nazareth, Pa.
The announcement means compounding operations will cease at Lamson's facility in Pasadena, Texas, but the firm will continue extruding there.
The project will result in 85 million pounds of compounding capacity at each site. The Nazareth site is to be complete in late June. The West Coast site should be complete by fall. Officials would not divulge the company's total compounding capacity. Its largest compounding site is in Oklahoma City, which also is home to Lamson's largest processing plant.
``We do tend to run more compounds than the typical electrical conduit converter,'' said John Schulze, president and chief executive officer. ``Depending on the diameter of pipe we're running, we do run different compounds. It certainly does help in the supply-chain equation.''
On April 30, the firm held its annual meeting of shareholders and released first-quarter results, reporting sales of $79.4 million, a 16.7 percent increase over the same period a year ago. Its PVC pipe segment experienced strong growth with a 60 percent increase in sales over 2002's first quarter. Officials attributed the growth to higher prices and improved volume.
Lamson's selling prices for PVC pipe increased 25 percent from the first quarter of 2002, said Jim Abel, Lamson's executive vice president and chief financial officer. Resin prices for the quarter were up 37 percent from the same period in 2002. Utilization rates rose to 75 percent, from 60 percent one year ago.
Its Carlon business segment reported a decrease of $1 million in sales, which officials attributed to weakness in the commercial and telecommunications construction markets.
Last year the firm halted production at high density polyethylene extrusion sites in Erie, Pa., and Tennille, Ga., as it struggled under the collapse of the telecommunications market. Lamson also extrudes HDPE products in Woodland and Mount Grove, Mo.
Schulze said each halted location now operates at 30-40 percent capacity; its Mount Grove site is at full capacity and Woodland is at 50 percent capacity. Lamson has worked to develop alternative markets for HDPE capacity, including gas collection and water and sewer.
``We've added HDPE product for water into the Vylon pipe segment, so we are seeing some additional volumes going through as a result of that,'' Schulze said. The firm also has tooled up to produce geothermal products from HDPE, which Lamson plans to release in the third quarter on the West Coast.
Officials think the telecommunications market has bottomed out.
``It looks pretty stable. We're seeing some project work this year that we haven't seen in the past couple years,'' Schulze said in an April 30 telephone interview. ``I'm encouraged by that. I'm not, as a result of that, prepared to say that we're going to grow our business.''