Industry Speaks Out on Alcoa's Announcement to Acquire Traco
June 30, 2010

Perhaps another example that construction industry companies are continuing to struggle, Alcoa, Kawneer's parent company, announced on Monday it was acquiring Traco (CLICK HERE for related article). Some say the announcement was not unexpected and we can certainly expect to see more similar acquisitions before the economy returns to a more prosperous state; others say they how are not sure how this news will impact the industry or what's left to come.

One industry source who asked to remain anonymous told USGNN.com™ that the announcement by Alcoa that it was acquiring Traco did not come as a big surprise. "Traco, like many other companies, has been struggling in the current economy. I suspect we will continue to see greater consolidation at all levels of our industry--window fabricators, glass fabricators, glazing contractors, etc. There is simply not enough business to support all of the current capacity in the various markets," said the source. "With price and margin declines hitting everyone it will be simply a matter of time before we see either more acquisitions or business closures as a result of this economy. This is very similar to past cycles."

Burgess Snyder Industries in Virginia Beach, Va., is one contractor that has worked with Traco for a number of years. Tom Johnson, the glazing contractor's executive vice president, says he is unsure of what the transaction, once completed, will bring.

"We've had a great relationship with Traco for a long time," said Johnson, explaining that they still do not yet know enough to say how it will affect business for them.

"I do see that there can be a lot of benefits from the synergies between Traco and Alcoca/Kawneer, but as far as [what will happen next] we will have to wait and see."

Over the past two years Alcoa and Traco have both seen their share of challenges resulting from the slow construction market. In January 2009 Alcoa announced plans "to conserve cash, reduce costs and strengthen its competitiveness during the current economic downturn." This included reducing employees by 13,500 as well as instituting a global salary and hiring freeze (CLICK HERE for related article).

Likewise, in March of last year Traco closed its manufacturing plant in Bainbridge, Ga., affecting about 70 employees (CLICK HERE for related article). Later that year it closed its Johnson City, Tenn., location, impacting about 180 jobs (CLICK HERE to read a related article.)

Stay tuned to USGNN.com for news on this matter as it's made available.

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