Leesburg, Va.-based Rehau Inc. is exiting commodity markets for cross-linked polyethylene plumbing pipe and municipal PVC pipe in North America to focus on innovative developments in applications that promote energy efficiency and sustainability.
The company is shutting down a 40-worker PVC pipe plane in Prescott, Ontario. Rehau will no longer make PVC pipe. Another 30 workers among its PEX manufacturing operations, sales force and North American headquarters will be eliminated.
The reduction will have no impact on Rehau's 260,000-square-foot, two-plant operation in Cullman, Ala., said Kathleen Saylor, the company's North American chief executive officer, in an Oct. 31 telephone interview.
Moving forward, Rehau's PEX production will be focused on fire protection and radiant floor heating systems, as well as geothermal and solar thermal applications.
``Products that are in this area of energy efficiency, sustainability, that's where we do best,'' Saylor said. ``We're not a commodities player. Twenty-five years ago, PVC pipe wasn't a commodity. But as years go on, it became a commodity. … And we need to cycle out of that because it's just not who we are.''
The PVC business and commodity plumbing business represents about 7 percent of the company's North American business, Saylor said.
``We have realistically assessed the commoditized nature of the PEX plumbing systems market, recognizing that right profit margins cannot justify future efforts,'' Bill Johansen, business unit manager for Rehau's heating and plumbing group, said in a company news release.
The Cullman plant exports products to Asia, Australia and Russia, which has helped stabilize domestic drops in demand.
The company will provide municipal PVC pipe and PEX plumbing systems through March 31 to existing customers, and will do everything possible to ensure a smooth transition to alternative plumbing systems products thereafter, the release said.
``We have come to this decision at a time when choice is still viable, and outside market conditions have not yet required us to formulate an urgent conclusion,'' Saylor said.
Rehau Inc. is part of Rehau AG + Co. of Rehau, Germany. The parent company employs about 15,000 worldwide.