Leading News

New Administration Could Have Immediate Impacts on Manufacturing

Once President Biden took office in January, immediate actions by his administration were set to impact American companies—including a “Buy American” executive order and legislation advanced by fellow democrats to increase the federal minimum wage.

The White House says the “Buy American” order will ensure that when the federal government spends taxpayer dollars, funds will go toward goods made in America by American workers and with American-made components. While federal law requires government agencies to give preference to American companies, those preferences haven’t always been consistent or effective, the administration claims, nor have requirements governing preferences for domestic goods and services been updated substantially since 1954. The new order directs agencies to close current loopholes in how domestic content is measured, while increasing requirements for the amount of a product that must be made in the U.S. for it to qualify under the Buy American law.

Janice Yglesias, executive director for the Fenestration and Glazing Industry Alliance (FGIA), says the order could benefit FGIA members. “The effects of COVID-19 have impacted all aspects of the fenestration and glazing industry from delayed and stalled supply chains to lost production days for American manufacturing workers,” Yglesias said. “Helping to boost the U.S. manufacturing segment benefits the entire American economy.”

Other calls by the President for increasing the federal minimum wage were answered by newly proposed legislation aiming to increase the minimum to $15 per hour. The Raise the Wage Act of 2021 would start with an increase from the current rate of $7.25 per hour to $9.50 on the effective date of new legislation. The rate would then increase by an additional $1.50 per year for three years thereafter, followed by a $1 increase in 2025 to $15 per hour. After reaching the $15 mark, the bill then calls for indexing future rates by median wage growth in order to ensure that the minimum keeps pace with economic inflation.

As for how those increases would affect door and window companies, numerous dealers tell [DWM] there would be no immediate impacts, as their entry-level positions already pay above the proposed minimums. In the future, however, increased wages across other industries could extract workers from positions such as door and window installers, fears Troy Jenkins, CEO of Walker Windows in Anaheim, Calif.

“Long term, I believe it would impact our business because entry level workers would have more options to take less labor-intensive jobs, which will drive our minimum rate of pay higher,” Walker says.

Others say they fear that increases would make it difficult for unskilled laborers to obtain jobs and work their way up through the industry.

“We will eventually have to make sure we pay our skilled labor more than an entry level employee,” says Tom Casey, sales manager for Home Town Restyling in Hiawatha, Iowa.

In addition to the federal rate, the majority of states also have minimum wage laws that employers must comply with—including 30 states that currently require above the federal level. According to an independent analysis conducted by the Economic Policy Institute, if enacted, currently proposed increases would raise wages for nearly 32 million Americans.

Labor

The U.S. Department of Labor (DOL) announced a final rule, clarifying the standard for what constitutes an employee versus an independent contractor under the Fair Labor Standards Act (FLSA), helping employers to identify which employees are covered. As a federal law, FLSA establishes such things as minimum wage, eligibility for overtime pay and recordkeeping requirements.

The rule reaffirms an “economic reality” test designed to determine whether an individual is an independent contractor or is “economically dependent on a potential employer for work,” constituting designation as an employee under FLSA. Two “core factors” are explained, including the nature and degree of control a worker has over their work and opportunities for profit or loss based on such things as worker initiative and investment. In cases when those two core factors fail to coalesce, the final rule points to three other factors for analysis, including the degree of skill required to perform work, the degree of permanence of working relationships between worker and potential employers and whether or not work is “part of an integrated unit of production.” The rule also provides six specific examples for applying factors.

The rule is set to take effect 60 days after publication on the Federal Register on January 7, 2021.

M&A

PGT Innovations Acquires Majority Stake in Eco Window Systems

PGT Innovations Inc. signed a deal to acquire a majority stake in Eco Window Systems and its related companies. The $108 million deal closed in February, giving PGT 75% ownership in the manufacturer and installer of aluminum, impact-resistant doors and windows. The purchase price of $108 million was comprised of $100 million cash and $8 million of PGT Innovations common stock.

PGT Innovations retains an exclusive option to buy the remaining 25% of Eco beginning on the second anniversary of its purchase. Eco has the right to require PGT Innovations to purchase the remaining 25% interest if it hasn’t done so by that date.

Banner Solutions Acquires Wholesale Division of Builders’ Hardware

Banner Solutions, a wholesaler of security opening hardware products, acquired the wholesale division of Builders’ Hardware and Supply Co. in Seattle.

“In moving our wholesale business to the Banner Solutions platform, we better align our services to deliver more for our customers,” said Aaron Davis, vice president of the wholesale division at Builders’ Hardware. The acquisition marks Banner Solutions’ sixth as a platform, and first under the private equity firm Tailwind Capital.

Manufacturers

Bonelli Doors + Windows Moves Headquarters to Mesa, Ariz

Bonelli Doors + Windows is moving to a new headquarters in Mesa, Ariz., where the aluminum door and window manufacturer will set up production in an existing 50,000-square-foot space for production. The company’s president, Cameron Wyatt, points to a Cardinal Glass manufacturing plant as a “feedback loop for other suppliers and manufacturers in the door and window industry” to locate in Arizona.

The move is expected to generate opportunities for employment in manufacturing, as well as business administration. Bonelli was acquired by Pella Corp. in 2018.

Legal

Court of Appeals Says Jeld-Wen Must Divest

The United States Court of Appeals for the Fourth Circuit Court filed a decision in February, upholding an order for door and window manufacturer Jeld-Wen Inc. to divest of its Towanda, Pa.-based manufacturing plant. A panel of three judges upheld the original ruling, stemming from a trial-by-jury process in 2018, finding that Jeld-Wen’s acquisition of Craftmaster International (CMI) in 2012 violated antitrust provisions. The trial followed an action filed in 2016 by fellow door manufacturer Steves and Sons Inc. (Steves), alleging damages on six counts, including violations of numerous sections of the Clayton Antitrust Act.

In its decision to enforce divestiture, the judiciary panel vacated a jury’s prior awarding to Steves for $139.4 million in damages in future lost profits.

Referring to the case as “a poster child for divestiture,” Judges Albert Diaz, Henry F. Floyd and Allison Jones Rushing determined that returning the Towanda-based operation to an independent status is expected to restore appropriate levels of competition to the market for domestic door skins. Steve’s preference for divestiture in lieu of $139.4 million in damages, “may signify that it hopes to buy Towanda at a bargain price,” the court document added. “But Steves won’t run the auction process,” the judges pointed out, cutting off concerns over conflicting interests. Jeld-Wen will also have the opportunity to challenge whether a sale to a selected buyer will serve the public interest.

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