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Sudden closure of Trainor Glass likely to cause ripple effect across industry

Post Time:Feb 29,2012Classify:Company NewsView:294

 

The news of Trainor Glass Co.'s 

 

"We are saddened to learn of Trainor's closure, as we have partnered with them for decades on many projects," says Garret Henson, vice president of sales, 

 

"We are saddened and troubled by these recent developments," says Mic Patterson, director of strategic development for 

 

Many people expressed surprise at the complete shutdown of the company, rather than the closure of individual locations or divisions. "My initial reaction was one of shock," says John Heinaman, chairman and CEO of 

"Most people in the industry knew about their 

 

The news certainly came as a surprise to one former Trainor employee, who said the Modular Wall Division was gaining momentum and “selling a lot of jobs.”

 

“We knew the glass side was having some issues; some job bids had gone wrong and were going south. But, we were doing well,” the employee says.

 

Warning signs


According to several industry representatives, there may have been warning signs that Trainor was in trouble, including unprofitable expansions to the West and Southwest, one source says. "They expanded too quickly," he says.

 

The company also rapidly expanded into several other businesses, including solar. "At a time when the economy is not robust, glazing subcontractors should stick to what they do best and manage it," says Jeff Haber, managing partner, 

 

Considering the state of the construction market, the news of another closure in the glazing industry is not entirely surprising, Patterson says. "There has been widespread industry speculation that the prolonged adverse market conditions might ultimately result in this kind of damage. Some express surprise that it has taken this long. We have recently seen 

 

Paul Main, U.S. division manager for 

 

The ripple effect


The closure of the large glazing contractor―which had annual sales of between $150 and $175 million in 2010―could cause a ripple effect across the industry, posing challenges to suppliers and other contract glaziers, according to several sources. "This is a hit. Ultimately, of course, the industry will rebound, but this is not good for any of us," Patterson says.

 

"The extent of the damage remains to be seen," he continues. "At worst, building developers lose a façade provider serving widespread regions. But, there is also the impact to the supply chain providing upstream materials and services, and the probability of a ripple effect that can be anywhere from annoying to devastating for these companies. Then there is the tendency for the market to tighten in reaction—developers get edgy about implementing new projects, bonding and insurance gets tougher, [and] there is a general increase in caution and scrutiny that just makes an already tough market tougher."

 

Haber agrees. "Every bonding company is going to start tightening the leash. They are going to start raising the capital requirements, and general contractors are going to be more selective as to who gets work," he says. "This will be painful in the short term. ... It might expose a few more [contract glaziers] that are in bad shape."

 

According to one supplier representative, there were 176 Trainor projects in play as of last week’s closure.  "In at least one case, a general contractor in Washington, D.C., has temporarily hired former Trainor employees to finish the job they were working on,” the rep says.

 

Similarly, the 

 

"It is likely Trainor is involved in projects that are going to need to be completed,” Patterson says. “The banks or surety companies may step in to shore up Trainor, at least until these projects can be finished. ... Still, none of this is good for the industry."

 

As for suppliers, "I would imagine many will not be paid in full, and this will make the credit terms stricter for the rest of us," Heinaman says. "Banks who lend to contract glazing companies will be more restrictive in their terms, and sureties will require higher levels of collateral."

 

Chojnacki agrees that some suppliers will be negatively affected. "As a supplier, I hate to see others get burned for product and services they provided in good faith. Unfortunately, some good people and companies will suffer financial loss without any fault of their own," he says.

 

Chojnacki adds that he hopes Trainor's closure won't affect innovation at other glaziers. "I hope it does not impact ... the willingness to look at new methods and products," he says. FabTech was in discussions with Trainor Glass prior to its closure about developing preglazed storefront and other new approaches to glazing. "We never got to partner on these innovations with Trainor. Others are moving forward with these methods, but it would be a shame if innovative thinking at glazing companies suffered," he says.

 

The news serves as a wake-up call to the industry, Haber says. "Trainor was one of the top 10 glazing companies in the country. If they can go out of business with no notice in the span of a year, it can happen to anybody," he says. Companies should take this opportunity to reevaluate their own operations and contracts. "Owners should ensure they have sufficient capital reserves," he says.

 

In terms of contracts, owners should make certain they have good margins, and that payment terms and bidding terms are fair. "At some point, you have to make a profit. To just take work for the sake of taking work is a mistake and cannot lead to long-term success," Haber says.

 

Heinaman agrees. "This could make other contract companies realize that we are in a high risk business and we must earn a profit on a consistent basis to assure we have reserves for non-profitable projects," he says. Additionally, "we are part of a real 'hands-on' business that requires constant, close management."

 

Source: http://www.glassmagazine.comAuthor: shangyi

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