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Quick
thinking results in $31 million expansion for JW Aluminum
Cover story with photo
By Wayne Caparas
JW Aluminum Company of Mt. Holly, S.C. will soon complete
a two-year, $31 million facility expansion, increasing the company’s production
capacity by 60 percent. Equally impressive is the story behind the expansion,
a tale that proves that a corporate giant can still operate with the innovation and agility of a much smaller
firm.
The company, a manufacturer of high-demand
sheet aluminum most commonly used in air conditioning systems, achieved its
growth plans by purchasing--lock, stock and barrel--a cutting-edge manufacturing
plant from South Korea.
A pleasant dilemma
Some time during the mid-1990s, JW Aluminum found itself
confronting a pleasant dilemma: demand for their product was growing at a phenomenal
pace.
“Between 1990 and 1997 we had expanded our
plant three times, doubling our productivity,” recalls Roy W. Lindquist, the
company’s president and chief operating officer. “We were running our facility around the clock, and were growing
10 percent per year. From a market standpoint,
we saw an opportunity to accelerate our growth.”
In late December 1996, a member of JW management
spotted an ad in a trade paper for the sale of a Korean manufacturing plant.
He immediately brought the ad to the attention of executives within JW
Aluminum as well as those at corporate parent Walter Industries (formerly Jim
Walter Metals Co.) in Tampa, Florida.
With their approval, the JW team quickly researched
the Korean plant. The equipment, they
learned, was similar to their own facilities.
The plant was up for sale because it couldn’t compete with the low labor
costs found in Communist China and many other Pacific Rim countries. Shortly
after opening the plant, the owners decided to cut their losses and liquidate
the assets.
According to Lindquist, “The major challenge
was to quickly negotiate and complete the purchase of the equipment before other
interested global parties were able to formulate their bids.”
It was basically a race to the bargaining table.
“We put together a capital expenditure process on an accelerated basis
[and] our board said, ‘If it fits in with your plans, go ahead.’
For a company the size of our parent company (Walter Industries has total
revenues of $1.8 billion) this is a pretty unusual turnaround time.”
“They
would not sell piecemeal,” adds Lindquist, “so we bought the whole plant, shipped
the equipment piece-by-piece and stored it at the Naval Base while we worked
on expanding the facility.”
Walter executives view the project as a
case study in innovative corporate thinking. The Korean plant’s machinery was
manufactured by the same U.S. firm that supplied JW’s existing equipment, and
most of it was in mint condition and has the same life expectancy as brand-new
equipment.
The plant facility bargain will increase production
from 150 million pounds to 240 million pounds of aluminum per year. The expansion
will also create 100 new jobs at the Mt. Holly facility.