Window and fence profile extruder Veka USA Inc. of Fombell, Pa., is expansion-minded as it celebrates the opening of its fifth extrusion plant in North America and plans for capacity expansions in Reno, Nev., and Edmonton, Alberta.
The selection of Terrell for the new site, dubbed Veka South, means Veka will close a warehouse in Monterrey, Mexico, by the end of June and transfer that work to Terrell, officials said during a May 17 ribbon cutting ceremony and plant tour.
``Texas is an emerging market in an otherwise mature market,'' said Veka USA President Walter Stucky. ``The trend of aluminum to vinyl is gaining strength. The market is really taking off.
``Being here in the ... southern United States is of essential importance. ... Vinyl is just at the beginning of its growth. There's a lot more opportunity. The building industry is doing fabulously well in the South because the U.S. population wants to live in warm climates more close to the ocean.''
Officials are making the commitment even as total housing starts dipped 7.4 percent in April to a seasonally adjusted annual rate of 1.85 million units, according to the Commerce Department.
That means that new-home construction for the first four months of the year was down 0.8 percent from the first four months of 2005, according to the National Association of Home Builders. Single-family housing starts were down 5.6 percent in April to a pace of 1.54 million units, NAHB said. Multifamily housing construction dropped 15.1 percent for the month to a seasonally adjusted pace of 314,000 units.
``The declines in starts and permits for April reflect a natural payback for the weather-related surge in production earlier in the year, as well as builder adjustments to eroding demand and rising inventories,'' said NAHB Chief Economist David Seiders, in a news release. ``We continue to believe that the evolving slowdown represents an orderly adjustment toward more sustainable levels of housing production, following the record surge in 2005 that was fueled by extraordinary demand for single-family homes and condo units by investors/speculators.''
``NAHB's forecast continues to show a 6.1 percent decline in total housing starts for 2006 as a whole, following an equivalent increase last year,'' Seiders added.
To offset any decline, the remodeling market strengthened in 2006, according to NAHB's Remodeling Market Index, which measures remodeler perceptions of market demand for current and future remodeling projects.
``Though the frenzy in home buying is slowing down, the remodeling spending associated with purchasing a home usually lags behind,'' Seiders said. ``The run-up in home sales during the past five years will fuel remodeling growth for the next several years and the long-term growth looks to be solid as well.''
In vinyl, Veka officials expect boosts from demands for storm windows in the Gulf region, especially as the population rebuilds from the devastation of the 2005 hurricane season. Additionally, homeowners will be making long-term plans to protect their homes from future hurricane activity.
The firm named Robin Stephenson its new sales manager for the region.
Veka's Terrell plant will create 60 jobs in the first year, said Terrell Mayor Frances Anderson. Veka invested $6 million in the physical plant.
``We thank you for adding to our employment base,'' she said. ``And we anticipate the second year of operation that Veka will employ 80 or more.''
The plant itself was built after an 18-month site selection process that began in the Texas capital of Austin. At 100,000 square feet on 25 acres, the plant is set up to hold 18 lines, said Steve Dillon, Veka's marketing manager. Veka currently has four lines installed. The company also has the option for a rail spur.
``Every industry right now is affected by gas prices,'' Dillon said of the challenges of shipping product amid rising freight costs.
``There's so much potential here for growth. Our goal is to have facilities in North America where we don't have to ship more than 500 miles.''
Veka's plan to tackle the North American market with regional plants is even more important as the U.S. market sees increased imports from China, officials said.
``We are convinced that this strategy to have decentralized production sites in the main markets ... is one of the keys to success,'' said Hubert Hecker, chairman of parent company Veka AG, which is based in Sendenhorst, Germany.
``We are sticking to this strategy also as a company group. In the world of globalization, groups are trying to export PVC profiles from other parts of the world into the U.S. market and to Europe,'' he said.
``We are facing up to these competitors; however, we have to realize that in some cases they are not playing with fair means because the products are in part delivered from government-subsidized companies.
``To make it clear, I mean China,'' Hecker said.
Veka's growth will not be limited to North America, Hecker said.
Emerging markets include the Ukraine, where Veka will build an extrusion facility.
``That's a growing market,'' Hecker said. ``We are now looking for land and trying to find the right place.''
Still, worldwide expansion has not been a cakewalk. Veka's sales have lagged in China for the past two years. The company started a joint venture in China in 1994, under which Veka AG had a 75 percent share.
``The past two years have been very tough for us in China,'' Hecker said. ``This year, we have nice growth and we think the people understand more what quality means. On the other hand, you know, the Chinese community develops and there is more purchasing power.
``So the awareness of quality is increasing.''