Legal

Jeld-Wen Ordered to Divest of Towanda Plant as a Result of Antitrust Ruling

A court ruling brought a more than yearlong legal battle between door manufacturers Jeld-Wen and Steves and Sons Inc. (Steves) to a close October 5, following a trial-by-jury process finding that Jeld-Wen’s acquisition of Craftmaster International (CMI) violated anti-trust provisions. A three-day evidentiary hearing followed and, according to a court-published document, the request that Jeld-Wen divest its Towanda, Pa.-based manufacturing plant was upheld. Jeld-Wen acquired the facility via its purchase of CMI in 2012. Court rulings said that returning the Towanda-based operation to an independent status as a stand-alone provider is expected to restore appropriate levels of competition to the domestic door skins (doorskins) market. Other remedies requested by the plaintiff were rejected, after being deemed unnecessary to the over-all process, while a Special Master (judge-appointed subordinate official) will ensure the remedy’s success.

The trial followed an action filed June 29, 2016, by Steves, alleging damages on six counts, including violations of numerous sections of the Clayton Antitrust Act which focuses on such acts as price discrimination, price fixing and unfair business practices. The company also alleged breaches of contract, which were upheld, while counts pertaining to breach of warranty, specific performance, and trespass to chatels were dropped by Steves voluntarily.

“This decision is great news for our company, our industry and for competition in the American market-place,” comments Sam Bell Steves II, president of Steves.

According to official court documents, while there were three manufacturers between the years of 2001 and 2012 of doorskins for interior molded doors, selling those products to independent manufacturers (like Steves), all three were vertically integrated providers (also manufacturers of doors). In May 2012, Steves reached a seven-year, automatically-renewing supply agreement with Jeld-Wen, shortly after which Jeld-Wen announced an intent to acquire fellow doorskin provider CMI, which it did in October 2012, leaving but two doorskin suppliers in the U.S.: Jeld-Wen and Masonite. As a result of that merger, and Jeld-Wen’s conduct, a jury found that competition was substantially lessened going forward, causing Steves sustained injuries—specifically of the type that court documents suggest antitrust laws were established to prevent. Further, the court found that following the acquisition of CMI, Jeld-Wen violated conditions of the supply agreement established between the two companies, by continuing to increase prices despite declining input costs, while also hampering its commitments to reimburse the full cost of doors in the event of defective skins. Meanwhile, records show that Steves was unable to fulfill its needs for doorskins adequately via foreign suppliers.

Ultimately, the court found that if the two companies could not reconcile their relationship, Steves would be driven out of business after 2021, following the expiration of a supply agreement. And in 2015, court documents suggest, it “became obvious that negotiations with Jeld-Wen would not work,” leading to dispute resolution efforts, followed by mediation and ultimately a legal suit.

The jury awarded Steves $58.6 million in antitrust damages, which, when trebled (tripled, as required by statute) total approximately $176 million. Further damages were assessed at just over $12 million, pertaining to the breached long-term supply agreement, but will be reduced to approximately $2 million.

In support of its decision for divestiture, the court points to the success of the Towanda-based facility prior to its acquisition. And while no formidable buyers have surfaced for the facility to date, the court concludes that buyers can be expected once legal battles have ended.

In a public statement, officials for Jeld-Wen say the company plans to appeal.

“Jeld-Wen firmly maintains that it has not violated any antitrust laws,” says Gary S. Michel, president and chief executive officer. The company will use all of its available resources to continue challenging the verdict, he says.

Corporate

Vinylmax Windows Celebrates Eight Accident-Free Years

Hamilton, Ohio-based manufacturer Vinylmax recently celebrated eight years without a lost work time accident, marking the event with a staff luncheon. Company officials say the accomplishment follows numerous advancements in facilities-based technology over the past few years.

“Commitment to the diligence and hard work that safety requires every minute of the day, sprinkled with good fortune, keeps Vinylmax a very safe environment,” says plant manager Mark Nolte.

The accomplishment arrived on September 4, after Vinylmax also exceeded the mark of two million man hours.

“We are thrilled to celebrate this milestone with our customer,” says Jeff Faulk, divisional sales manager for Veka Inc. “Vinylmax aims for excellence and certainly sets the industry standard for safety among window manufacturers.”

Sealants

Dow Announces New Investment Plans

The Dow Chemical Company (Dow) recently announced new low-capital-intensity, high-return investments in its upstream and downstream silicones franchise, which company officials say are aimed at accelerating innovations for high-growth markets—including high-performance building and components assembly.

Investments will include a series of incremental siloxane debottlenecking and efficiency improvement projects over the next three years, to further increase capacity for worldwide manufacturing. A new hydroxyl functional siloxane polymer plant will be added in Carrollton, Ky., designed to increase polymer capacities in the Americas by 65 percent, while other expansion projects aim to increase capacity among the company’s performance silicones products and intermediates. Improvements include a new specialty resin plant in Zhangjiagang, Jiangsu, China, designed to provide resin inter-mediates for high value silicone products, including home-related. The company also recently announced a study for the development of a new world-scale siloxane plant.

“Dow is committed to our ongoing investment in both upstream and downstream assets to bring a reliable supply to our customers,” says Mauro Gregorio, business president. “As an essential addition to Dow’s global silicones manufacturing footprint, the proposed new siloxane plant will expand our access to differentiated monomers and intermediates around the world, while strengthening our capabilities to accelerate and execute our strong innovation pipeline.”

Corporate

Roto Frank Group Adds New Services Division

Roto Frank Group announced that, as of January 1, 2019, it will add professional services to its roster as a third division. Going forward, the group will be comprised of a Window and Door Division, Roof Window Division and Roto Frank Professional Services.

The newest division comes in lieu of a recently acquired services-based business, and will focus on building maintenance, window replacement and spare parts. All divisions will report to a new, non-operative parent company, which officials say will allow the group to consolidate financial results, work on unified strategies, acquisitions, corporate design and identity. The parent company will be led by Dr. Eckhard Keill, former head of the Window and Door Division. A replacement for Keill’s current position will be announced in 2019.

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