Continued poor results have led Georgia Gulf Corp. to close its PVC resin plant in Oklahoma City and sell off a number of other assets.
The Oklahoma City plant - with annual capacity of 500 million pounds and 45 employees - closed in late April. Atlanta-based Georgia Gulf also idled its PVC resin plant in Sarnia, Ontario, after operating it for a brief time during the first quarter. That plant, with capacity of 450 million pounds per year, originally was idled in December, and officials said it now will serve as a ``swing plant'' to meet demand as conditions improve.
Industry sources said the Oklahoma City plant - which Georgia Gulf acquired from Condea Vista Co. in 1999 - was at a competitive disadvantage, partly from its lack of onsite production of vinyl chloride monomer feedstock.
Regarding assets, Georgia Gulf sold its outdoor storage buildings business for $13 million and generated $13.5 million from a sale/leaseback deal involving several buildings in Vaughan, Ontario. The sale of a shuttered door profile extrusion plant in Winnipeg, Manitoba, yielded $4.5 million, but that deal closed after the firm's first quarter had ended. No buyers were identified for any of the assets in a May 6 news release.
And it doesn't sound like the sell-offs are over. In a May 7 conference call to address first-quarter results, officials said the firm will look at ``more significant sales of noncore assets'' in the remainder of 2008.
Georgia Gulf lost almost $70 million in the first quarter of 2008 - almost double its loss from the year-ago period. The firm posted an overall loss of $266 million in 2007. First-quarter sales roughly were flat at $712 million. PVC-related sales were up about 4 percent, but sales related to window and door profiles were down 12 percent and sales of outdoor building products were off 9 percent.
``We're disappointed by our results for the first quarter, even as we're pleased with efforts to meet some of our goals,'' Paul Carrico, Georgia Gulf president and chief executive officer, said during the conference call. ``Sales volume declined in all four of our seg- ments because of the decline in the U.S. housing market.''
He added: ``The downturn in the economy was almost unprecedented when you go back four or five years. We need to adjust costs to match what demand is.''
Carrico said the firm's sales into the window and door segments ``are just now seeing a pickup'' after a poor start to the year.
A major slump in the U.S. housing market - combined with the 2006 purchase of building products maker Royal Group Technologies Ltd. and higher raw-material costs - has pummeled Georgia Gulf's financial results and per-share stock price. The price was around $20 as recently as July, but was under $5 in early trading May 7 - a drop of almost 20 percent from its opening price.
One bright spot for Georgia Gulf was confirmation that its 450 million-pound PVC addition in Plaquemine, La., is fully operational, placing the firm's overall PVC capacity at 3.1 billion pounds. Officials added that PVC export sales ``significantly increased'' during the first quarter because of a weak U.S. dollar.