ELKHART — Drew Industries, through its subsidiary Lippert Components, has entered into a six-year contract to obtain extruded aluminum from Atrium Windows and Doors, which includes selling Lippert’s extrusion assets to Atrium.
Atrium is based in Dallas, Texas, and will pay Drew Industries $7.5 million over the next four years for the extrusion assets. In addition, Atrium will pay an additional $1.25 million once 95 million pounds of aluminum extruded products are purchased during the supply agreement.
Drew stated in a press release Friday that it expects to take a $2 million pre-tax loss in the second quarter this year related to the sale.
Drew Industries Inc. is a supplier of components for recreational vehicles and manufactured homes and other industries, and has 34 plants nationwide.
The companies did not immediately state how the deal and purchase will impact employment at Drew facilities. But the release did state the extrusion will be performed in Texas.
“We look forward to this new supplier relationship with Lippert Components,” said Brian Slobodow, chief operating officer of Atrium. “Atrium has been extruding aluminum for over 35 years, with a history of producing high quality products. This additional extrusion volume will be produced at our existing Texas facility and will significantly increase the capacity utilization of our plant.”
For Drew, the deal means a steady supply of aluminum will be available.
“Extruded aluminum is a key raw material for us, and identifying a strong supplier such as Atrium was critical in our search for a new third-party supplier,” said Scott Mereness, Drew’s president. “We were able to reach an agreement with Atrium to supply us with a portion of our extruded aluminum requirements over the next six years at a competitive market price.”
The company intends to repurpose its extrusion facilities.
“As part of our ongoing evaluation of capacity and asset utilization, we concluded that our aluminum extrusion assets were not meeting our internal financial standards,” Mereness said. “The sale of our extrusion related assets will free up needed manufacturing space, as well as allow management to focus on other opportunities with higher growth potential. The outsourcing of these aluminum extrusion requirements to Atrium will immediately be accretive to earnings.”