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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.