The housecleaning has begun.
Georgia Gulf Corp., which completed its purchase of Royal Group Technologies Ltd. on Oct. 3, will continue to alter Woodbridge, Ontario-based Royal's corporate landscape during the next couple of years with the primary goal of trimming the building products giant of excess fat and eliminating debt.
Royal President and Chief Executive Officer Larry Blanford has been replaced by two Georgia Gulf vice presidents - Bill Doherty, vice president of custom products, and Mark Seal, vice president of building products.
Meanwhile, Georgia Gulf executives have suggested Royal could expand into faster-growing construction products, including wood-plastic products and complete window systems.
First up, though, are divestitures: Atlanta-based Georgia Gulf is in the midst of an aggressive plan that includes dumping $233 million worth of businesses by the end of 2008, said GGC Chairman and Chief Executive Officer Ed Schmitt in an Oct. 27 conference call.
``Exiting these ventures will eliminate negative cash flow and allow us to focus on the more profitable business,'' he said. ``We're looking for annual cost savings and operating efficiencies of $157 million by the end of 2008.''
Georgia Gulf expects proceeds of $98 million in the fourth quarter from divestitures already in motion.
The company announced Oct. 13 that it was ceasing operations at its Houston and Coral Springs, Fla., plants, which were part of Royal Group's window coverings unit. Royal is selling the North American retail and U.S. contractor segments of the window covering business to Springs Window Fashion of Madison, Wis.
Springs Window Fashion is a unit of Springs Global US Inc. of Fort Mills, S.C., which is a subsidiary of Brazil-based Springs Global ParticipaÃ§Ãµes SA.
Royal's window coverings business unit has lost $13 million through the first three quarters of this year, Schmitt reported in the conference call. Royal is keeping the North American fabricator segment of the window coverings business, and consolidating that work in a plant in Montreal.
Georgia Gulf also will sell its Royal Building System operations in Shanghai, and two plants in Mexico. Royal Building Systems manufactures PVC-cement composite wall panels, as well as roofing products, doors, windows, siding, and gutter and patio accessories.
Georgia Gulf now is selling its own PVC resin to most of Royal's vast network of plants, the company said. That effort will continue until the company is vertically integrated across the board.
Royal operations will continue to be based in Woodbridge, near Toronto, said Will Hinson, a Georgia Gulf spokesman, in an Oct. 27 telephone interview.
``Toronto continues to be a major focal point of our product line,'' he said.
Hinson said Blanford's departure was less a reflection of his job performance that it was a desire by Georgia Gulf to put its own management in place. ``As the acquiring company, we made a decision about having leadership that fell in line with the philosophy of Georgia Gulf,'' he said.
Georgia Gulf officials also suggested that the company could expand segments of its building products portfolio. In an October interview with the Atlanta Journal-Constitution, Schmitt specifically identified expansion into wood-plastic composites and into manufacturing complete window systems as viable investment opportunities moving forward.
``This is all about generating cash and eliminating debt,'' Schmitt said.