Aluminum extrusions in transition
Aluminum extruders in the United States represent one segment of the bath-enclosure industry that has seen dramatic changes as a result of imports, said Richard S. James, vice president and general manager of the Aluminum Group at Loxcreen Co. in Roxboro, N.C., during a frank and well-documented presentation at the Bath Enclosure Manufacturers Association annual meeting during GlassBuild America in Atlanta Sept. 14.
James estimates that low-cost overseas aluminum has replaced production from 15-to-20 North American aluminum extrusion lines in the last four or five years. Meanwhile, he warned, consumers now have to deal with long lead times from China, India, Malaysia, Vietnam and other developing countries. As a result, “some users who went overseas now dual-source [their components] to protect against long lead times. We've reached the bottom and will see modest gains in North American-supplied demand and modest price support. Meanwhile, our base is shrinking,” because the aluminum used in bath enclosures has fallen by 25 percent as frameless construction grows in popularity.
Loxcreen produces custom aluminum and vinyl extrusions, and stocks standard extrusions, coil, stainless steel and a complete line of building products.
In tandem with these trends, a large number of extruders fight over the customer base, James said. The cost for foreign suppliers wanting to enter the U.S. marketplace has gone down, resulting in more imports, he noted. “Pricing has gone up from the Chinese, but overseas supplies from the other [Asian] sources keep price increases modest,” he said.
At the same time, bath-enclosure manufacturers who have in the past exclusively sought aluminum extrusions from overseas now start to rethink their sourcing decisions “and are now dual-sourcing to protect against long lead times and supply problems. They want at least one North American manufacturer.”
Marking the changes
To prepare for his BEMA presentation, James joined several other unnamed North American aluminum extruders to reveal a picture of the changes in the North American aluminum extrusion market, he said. They estimated that in 1995, domestic painted aluminum extrusions represented 40 percent of the market, and by 2004 that number had fallen to 10 percent. Whereas domestic anodized aluminum represented 55 percent of the market in 1995, it had fallen to 21 percent by 2004, he said.
Meanwhile, use of aluminum extrusions for bath enclosures had burgeoned with the growing popularity of these items—even though each enclosure may have less framing. By 2004, sales to bath-enclosure manufacturers represented 30 percent of the market, equally split between imported and domestic extrusions, James reported.
Window manufacturers’ move to vinyl has probably eliminated the need for 15 aluminum extrusion lines. Offshore purchases may have removed the need for another 25 lines. The need to comply with environmental standards has removed 11 lines from service in North America during the last two years, James said.
All these plants have not gone out of business, James said, “yet all have presses idle.” Presses run one shift where they used to run three. “What to expect from us extruders: Continued price moderation based on capacity, shorter lead times, increased delivery reliability, partnering on inventory management, more innovation in finishes and colors, and smaller run sizes.” Regarding innovation, James noted, “Extruders have to do this to survive.”
A number of “wild cards” could throw his forecast off, James said. They include currency fluctuations, tariffs, transportation costs of bringing goods from port cities and whether Chinese manufacturers begin warehousing stock in the United States.
“I am cautiously optimistic,” James concluded. “We’ve seen the worst times. [Business] is more predictable now, and let us manage our business better going forward.”