Exclusive: Gamma execs talk CBO Glass purchase, growth strategy and 2013 forecast
In an exclusive interview with Glass Magazine, Elliott Kracko, chairman of Gamma, a division of the Far East Global Group Ltd., and James (Jim) Mitchell, president, Gamma Canadian Operations, discuss the contract glazier’s recent acquisition of CBO Glass' assets, the reasons behind its rapid growth, and what the year ahead could bring for contract glaziers in the United States and Canada.
Glass Magazine: Let’s talk about the decision to acquire the assets of CBO Glass. What made this a good fit for Gamma?
Elliott Kracko: Its location was very close to our Toronto facility, so the CBO plant was well located. There was a good labor situation there … and it was a very up-to-date plant. It fit in perfectly.
Jim Mitchell: The other thing we really looked at was the very good workforce at CBO. CBO’s problems were not due to these people.
GM: In a down market, Gamma is growing rapidly. To what do you attribute this growth?
EK: If you look at the projects that Gamma is involved in, [a significant number] are institutional and government work. We also have private sector work, but in the U.S., that has dried up significantly.
JM: In Canada, our success has been in the major markets, but also still in institutional-type work. The Canadian market escaped [the U.S. downturn]. We still had a very strong housing market and a lot of condominium building. And because we have a facility in Quebec, we were able to capitalize on the uptick in the Quebec market.
[To follow up on what Elliott said regarding the U.S. market], 10 years ago―when the market was really good―we would do 40- and 50-story office buildings and couldn’t get involved in any other type of work. Seeing the downturn in the U.S., we shifted our focus.
You have to be flexible and nimble enough to do different types of work. You have to adjust to your customer base and follow the work as you see it. A lot of companies sit with the client base they’ve had for 10 years. If those clients go out of business, and you don’t make the shift, you have a real problem.
GM: What are your expectations for 2013, both for Gamma specifically and the contract glazing industry as a whole?
EK: I think there is considerably more work coming out at this point. We see a lot of bidding action…, and I think you’re going to see a lot of things pop in the next 90 days. In the U.S., commercial buildings and residential high-rises are starting to come out, and I think in the next 90 to 180 days, you’re going to see a lot of work. In Canada, it’s been busy all along, so we have a tremendous backlog. Canada never slowed down.
JM: In Canada, some of the major cities are actually building large office towers, and one or two are being built on spec. People are confident that the market is coming back, and Canada is trying to be the first out of the gate. This is a very cyclical business, and what we are seeing is actually what we’ve experienced every 10 years or so: [there’s a downturn] where the work is in the institutional sector, then that dries up and the private sector begins to gain confidence. The key for curtain-wall companies is to be ready. Sometimes, you can’t look at a one-year return. You have to get yourself seated in the markets where you anticipate a pickup.
GM: Geographically, where do you anticipate seeing the most growth in 2013?
EK: In the U.S., I see a lot of action in New York and on the West Coast. I think the Texas market is also going to pick up.
Jim: In Canada, the Quebec market has been very strong and it seems like it has some legs for at least the coming year.