If change comes rapidly and with great force, PW Eagle Inc. is making an example of itself.
The Minneapolis-based pipe extruder announced a major restructuring Oct. 2, including selling noncore assets, restructuring its management team and relocating its headquarters.
``We've really taken some major steps to maximize shareholder value,'' said Chief Executive Officer Bill Spell, who is relinquishing that title as part of the changes. ``We expect to cut a meaningful, significant amount of expenses associated with this move. We believe the companies will operate more efficiently and effectively and we'll save costs doing this by headcount reduction and elimination of overhead.''
All the changes are done with the intent of assuaging shareholders and boosting the value of the publicly traded company, and one has to pay close attention to keep up:
* PW's Minneapolis office will close by year's end, relocating to Eugene, Ore.
* Spell will cede day-to-day management responsibilities to other members of a new management team. He will become co-chairman along with his father Harry Spell, the current chairman. Bill Spell will still handle the strategic direction of the company, he said by telephone Oct. 3.
* Dobson West, who has served as chief administrative officer and general counsel, will resign from his position this fall. West's duties also will be transferred to the new management team, the result of the integration of PW's existing PVC pipe business and the Extrusion Technologies Inc. business it acquired from Uponor Oyj earlier this year.
* On Oct. 1, officials sealed a deal to sell Mid-States Plastics Inc. to Carson Industries LLC, in Glendora, Calif. That transaction includes one injection molding facility in Mount Sterling, Ky., where Mid-States molds plastic water meter boxes. PW Eagle acquired that business in March as part of the Uponor ETI transaction. Officials said the deal will allow PW to reduce its senior bank debt by more than $4 million.
* Focusing on its core PVC pipe business, PW Pipe and ETI businesses now will operate under one management team. ETI was based in Denver, and its top two officials will relocate to Eugene. Jerry Dukes, formerly senior vice president of operations with ETI, has been named president. Scott Long has been named chief financial officer, replacing Roger Robb, who is leaving the company to pursue other interests. Long formerly was ETI's president.
``We're going to maintain and operate all of our facilities,'' Spell said. ``Nothing will really change for the operating plants.''
The firm has 10 PVC pipe facilities across the United States.
* The company has finalized the separation of its polyethylene pipe segment, which operates as PW Poly. The firm has transferred the business to a separate, wholly owned subsidiary, PW Poly Corp. PW Poly has established its own credit facility with Wells Fargo Business Credit. That facility paid $1.5 million to PW Eagle upon the transfer of assets that included equipment and machinery, inventory and intangibles.
In order to beef up that business, PW Poly has acquired a 30 percent interest in W.L. Plastics LLC, an extruder of large-diameter PE pipe based in Casper, Wyo. The firm began production in 2001, focusing on a methane recovery project in the Powder River Basin. That deal closed the week of Sept. 29, Spell said.
``We think it's a growing business and great management team,'' Spell said. ``This provides our shareholders with another means of growth in an exciting part of the industry.''
Also, PW is performing a sale/ lease back on several properties, including sites in Hastings, Neb.; Baker City, Ore.; Visalia, Calif.; and Sunnyside, Wash. Officials said the sales will provide additional cash, which will be used to reduce the firm's senior bank debt.
The moves are not surprising in the current PVC pipe market.
``We see some of the same market dynamics consistent with 2001, which was one of the worst years in 20 years,'' Spell said, promising that when the economy and market improves, the firm will be ready.
PVC pipe producers ride the wave of resin price increases and decreases on a product that has commodity status. PW Eagle has the added pressure of being publicly held.