What’s News July/August 2023

August 17th, 2023 by Nathan Hobbs

Leading News

Assa Abloy Completes Acquisition of HHI, Headed to Court Over Employee Allegations

Assa Abloy completed the acquisition of Spectrum Brands’ Hardware and Home Improvement division (HHI) in June, while divesting its U.S.- and Canada-based Emtek and Smart Residential business to Fortune Brands Innovation Inc. No sooner did the company end its nearly two-year legal battle than it could be headed back to court. An employee of the Entrance Systems division has filed charges against the manufacturer and the International Brotherhood of Electrical Workers (IBEW) Local 441, alleging he was fired after failing to complete a union membership form. HHI was consolidated into Assa Abloy as of June 20, for the total consideration of $4.3 billion USD on a cash and debt-free basis. Emtek and the Smart Residential business, including Yale and August residential smart locks, represented sales of about $400 million in 2022, fetching a selling price of $800 million on a cash and debt-free basis.

The deal to acquire HHI was announced in September 2021, as an “important step” in the development of Assa Abloy’s residential business in North America, but a year later drew the scrutiny of the U.S. Department of Justice (DOJ). According to DOJ officials, Assa Abloy and Spectrum were two of the three largest producers of residential door hardware in a $2.4 billion U.S. industry, leading the department to file a civil antitrust lawsuit, seeking to block the deal.

Assa Abloy responded by initiating the sale of Emtek and its Smart Residential business in the U.S. and Canada, which the company suggested would “fully resolve” the alleged concerns over competition. Fortune Brands surfaced as a buyer in December 2022, agreeing to a total sale price of $800 million.

A D.C. District Court scheduled the matter for a bench trial, which began in April 2023. A settlement was announced a month later. According to court documents, the U.S. did not contend that relief obtained through a Final Judgment will fully eliminate risks, but the company was allowed to proceed on the agreement that it make certain divestitures to Fortune Brands or another entity within a timely manner.

No sooner did the celebratory cork fall on Assa’s acquisition than, in June, an employee of the company’s Entrance Systems division filed court documents stating that union bosses urged company management to fire him after he failed to fill out a union membership form. Jaime Zambrano, who is represented by the National Right to Work Legal Defense Foundation, is seeking “his immediate reinstatement.”

“IBEW union officials are playing outrageous games with Mr. Zambrano’s livelihood and potentially the livelihoods of many other workers who simply don’t want to affiliate with the IBEW,” says Mark Mix, president of the National Right to Work Foundation. “Getting a worker thrown off a job merely for refusal to join a union is a violation of black letter federal labor law. Union officials who can’t get workers to join voluntarily certainly shouldn’t be able to compel such membership by threatening to upend the careers of those who dissent from the union.”

Zambrano’s defense team argues that while firing a worker for refraining from union membership is a clear infringement of federal labor law, union officials also failed to provide Zambrano with a timeline of when the form should be completed. That, they allege, was a “failure to comply with the requirements of Philadelphia Sheraton,” an NLRB case requiring union officials to inform workers of their obligations.

M&A

Metrie Completes Acquisition of Anderco Inc.

Metrie, a North American manufacturer and distributor of millwork solutions, recently completed the acquisition of Anderco Inc., a manufacturer and distributor of doors and door frames that’s based in Fullerton, Calif. Anderco is Metrie’s fifth acquisition since 2020, a move that company officials say enhances its integrated millwork portfolio.

“With this acquisition, Metrie will be able to provide our customers with even more options when it comes to selecting high-quality millwork products,” said Kent Bowie, Metrie president and CEO. “As market consolidation continues, we believe there is more that we can do for our customers, suppliers and partners. The Metrie team continues to actively seek other millwork-focused businesses that are exploring exit opportunities.”

Recalls

ODL Recalls Severe Weather Inserts

ODL Inc. issued a product recall for one of the company’s door glass products designed for impact-resistance and hurricane protection. Issued in connection with the U.S. Consumer Product Safety Commission, the recall pertains to “Severe Weather” door glass inserts manufactured between the dates of May 1, 2022, and December 6, 2022. Products manufactured before or after those dates are not involved or subject to the recall, officials said. Approximately 39,100 products are affected.

“Under severe weather conditions (such as hurricane conditions), the adhesive holding the door glass into its frame can fail, allowing the door glass insert to become separated from the door. This could result in property damage or injury under severe weather conditions,” the company reported.

Affected products originally were sold by the company under its ODL, Western Reflections and Kenyon’s Glass brand names. Products were also sold to intermediate distributors, after which they were packaged with doors and other products, then sold under separate, third-party names. Among the impacted brands is Jeld-Wen, which sold products through Lowe’s, Lowes.com, Home Depot, Homedepot.com and Zabitat.com. Door glass products that were not pre-installed in doors were also sold through Zabitat.
com, officials said.

According to company information, corrected products can be identified via an ‘R’ etched into the bottom right or bottom left corner of door glass. Pictures are available through the company’s website to aid customers in properly locating and identifying products. In order to arrange for repairs, customers can submit a form through the company’s website, or contact the company, Monday through Friday, from 8 a.m. to 5 p.m. ET, at 800-221-2839 or by emailing recall@odl.com.

Tariffs

Senators Press Commerce Over Exclusion Rules for Tariffs

Members of the U.S. Senate, led by Senator Tom Cotton (R-Arkansas), appealed to the Department of Commerce (Commerce) recently, urging Secretary of Commerce Gina Raimondo to revise exclusion rules for tariffs on aluminum extrusion products. In a letter addressed to Raimondo, a bipartisan group of seven U.S. Senators suggested that General Approved Exclusion Rules have “placed unnecessary burdens on domestic aluminum manufacturers,” while producing a surge of foreign imports. According to the letter, imports for extruded aluminum products have risen
by 82% since 2019, leading to a loss of “millions of tons of possible sales.” Foreign market penetration now exceeds 25%, the group said, marking the highest level in more than a decade. As a result, they’re urging Commerce to reform an existing Section 232 exclusion process for extruded aluminum.

According to the letter, in 2018 Commerce reported that rising aluminum imports were weakening the domestic economy. As a result, a 10% tariff was imposed. Aluminum imports then fell by 31%, while domestic production increased by nearly a billion dollars between 2018-21, the group said. Officials for the Aluminum Extruders Council (AEC) commend the Senatorial group for “leading this effort to ask the DOC to address the serious threats to the U.S. aluminum extrusion industry and its workers from un-tariffed imports.”

Expansions

PPG Invests $44 Million to Boost Global Powder Production

PPG recently invested $44 million to upgrade five powder-coating manufacturing facilities in the U.S. and Latin America. The projects are part of the company’s strategic efforts to expand its powder coating offerings and increase global production. Collectively, the company expects an investment of $30 million for U.S. plants and $14 million for facilities in Latin America to increase overall capacity, add production capabilities for bonded metallic powders, improve processing times with automated packaging and enhance capabilities to produce small-, medium- and
large-sized batches.

Enhancements and expansions are already completed or under way at powder production facilities in Brazil, Ind.; Gainesville, Texas; Greensboro, N.C.; San Juan del Rio, Mexico; and Sumaré, Brazil. Officials said the company expects to complete the total projects by fourth quarter 2023.

Environmental

FGIA Alerts Members About Possible Impacts of Programs Targeting Plastics

At its annual Summer Conference, officials and speakers for the Fenestration and Glazing Industry Alliance (FGIA) raised the alarm for how a renewed focus on reducing global plastics pollution in the U.S. and abroad could carry ramifications for door and window manufacturers.

In a vinyl material forum, Aine Curran, president and CEO of Vinyl Institute (VI) Canada, spoke about a Canada-wide “Strategy on Zero Plastic Waste.” Five years ago, Canada’s federal, provincial and territorial governments adopted the strategy, which takes a lifecycle approach to evaluating plastics, Curran said, also instating a nationwide action plan. Following Curran’s presentation, her U.S. counterpart, Ned Monroe, president and CEO of VI U.S., alerted attendees to a separate program developed by the United Nations.

The United Nations Environment Programme (UNEP) seeks to implement a legally binding, global climate agreement on plastics pollution by 2024, Monroe said, keying in on two possible approaches: one that tackles the issue via pollution reductions and another that focuses on production. Among the measures currently under discussion are bans on certain polymers, ingredients and products, including PVC. The U.S. also has a number of programs in development that focus on plastics pollution, but is aiming for a national plan, on the premise that a global approach will not work in some locations. At the same time, a cohort of nearly 160 countries suggests that a global plan is necessary. A resulting “high ambition plan” for global programs is pressing for a scope that includes “not just plastics packaging, but all plastics,” Monroe said.

“Some high-ranking government officials truly believe that we can live in a world without plastics,” said Kathy Krafka Harkema, U.S. technical operations director for FGIA, in a separate session. “This is a high ambition coalition that is focused on their objectives and in some cases that means either placing restrictions on the manufacture of plastics, or prohibitions or reductions of them. And that could include PVC,” she warned.

FGIA is working with VI Canada and VI U.S., “because this is a very serious issue that could impact all of our businesses,” Krafka Harkema told attendees.

UNEP is preparing a zero draft of its international agreement ahead of a session due to take place in Nairobi, Kenya, in November 2023.

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