For the second time this year, Kearney, Mo.-based Ply Gem Industries Inc. has announced plans to close one of its vinyl siding extrusion plants as it faces a shrinking residential construction market.
Ply Gem officials plan to close the firm's Denison, Texas, plant in the first quarter of 2008. The facility employs about 180.
Ply Gem, a top-tier maker of vinyl siding along with Valley Forge, Pa.-based CertainTeed Corp., is the parent company of Variform Inc. and Alcoa Home Exteriors. Ply Gem closed its plant in Atlanta in the first quarter of this year, citing excess capacity and a need to consolidate operations. That plant employed about 110.
Both the Denison and Atlanta plants were acquired in the $305 million acquisition of Alcoa Home Exteriors in October 2006. The two facilities were deemed the least efficient of the company's operations.
Only the plant in Stuarts Draft, Va., will remain operational from the Alcoa acquisition. Variform plants are running in Kearney; Martinsburg, W.Va.; and Jasper, Tenn.
``Our highest-cost production was in Denison, Texas,'' said John Wayne, president of the Ply Gem Siding Group, in an Oct. 12 telephone interview. ``It was, by far, the highest-cost, both from the combination of transportation costs, and also higher from an energy cost perspective to support that plant. It also had the lowest capacity utilization.
``It was a pretty clear decision for us. It's an opportunity to take high production costs out of the system.''
Customers will not notice any change in service, Wayne said. The company's Stuarts Draft plant is its largest and will absorb most of the Denison capacity.
``We feel very comfortable with the plants we will have remaining,'' he said, adding that there is both the capacity and room for expansion once the residential construction market cycles back toward the positive.
John Pruett, a principal with Exton, Pa.-based building products consulting firm Principia Partners, said that architectural tastes by region are going to come into play in the exterior cladding market.
``There are regional preferences for architectural styles,'' Pruett said. ``Cladding decisions are based on geographic region and climate.
``It shows that when the American homeowner moves to the Sun Belt, they're going to use indigenous materials,'' such as precast concrete, stucco, adobe, and manufactured stone and brick.
Wayne said the company is not only focused on low-cost manufacturing, but also on new product development.
``We're looking at the whole category of shake designs. There are a variety of things we're looking at there,'' he said. ``We're also looking at closely related categories of siding and trim that we're not in today but may be in down the road - other types of cladding that would allow us to go through the existing distribution system, but with new categories.''
Ply Gem is owned by New York private equity firm Caxton-Iseman Capital Inc., which bought the building products firm in 2004.