Flack Global Metals has partnered with First American Resources in a joint venture that will offer prepainted products to the market later this year.
The deal is a bit of a departure for FGM, which is now the minority investor in an enterprise that is installing high-end coil coating equipment. FGM has achieved $350 million in annual sales using an “asset-light model” in which it does not own any equipment, but rather contracts with other service centers to process customers’ orders.
“We have lived in the tolling space, using other processors’ capacity. This is the first investment FGM has made in a physical production asset. So, we will have direct influence on what goes on in the facility. We are going to be able to take extra care in situations where it is warranted,” explained CEO Jeremy Flack, in an exclusive interview with Steel Market Update.
First American Resources, a subsidiary of Germany’s Hühoco group, is now at work converting a 360,000-square-foot building in Athens, Ga., into a modern coil coating and metal processing facility designed to serve high-end, surface-critical applications in the automotive, truck-trailer, HVAC and architectural markets in the Southeast. The new facility will be equipped to coil coat aluminum, stainless steel and carbon steel in cold rolled, galvanized and Galvalume forms up to 62 inches wide, at gauges from 0.009 to 0.050 inch. The joint venture expects to run test coils this summer and be in full production by the fourth quarter.
First American Resources will be moving its operations from Atlanta to the Athens location, which offers more room for expansion. The new facility will house four paint lines, including new 54-inch and 62-inch lines and two narrower lines relocated from the Atlanta plant, as well as a slitter, blanking line, stamping presses and other equipment.
The new lines will feature the latest technology for quality control, said Chris Koslowski, chief executive officer of First American Resources. The lines will be equipped with an inline tension leveler for flatness; temperature-controlled paint to maintain the ideal viscosity; and laser cameras that can precisely measure film thickness and detect surface flaws beyond the ability of the human eye. The German-made cameras are the same as those used in the production of smartphone glass.
Flack acknowledges there is overcapacity in the prepaint market, but the company sees opportunity in certain underserved niches. “We see industries in which we can expand our reach,” he said. Koslowski adds: “Overall, there is market overcapacity, but if you boil it down and look more closely, you can see some industries that have a dire need for capacity. We intend to go into the markets that need our level of service.”
FGM will help First American Resources find orders for its new lines but will also remain free to source prepainted products from other suppliers if they best meet customers’ needs. “This basically gives us the first right of refusal on tons coming off the joint venture’s line. It’s designed for the high end of the prepaint market,” Flack said.
“We’ll still have large relationships with other coil coaters throughout North America. We want to respect those folks and make sure we don’t create competitive conflicts,” added Brad Pemberton, FGM’s global director of commercial.
“We are excited about our partnership with FGM. Our business models complement each other perfectly,” said Koslowski. Flack’s focus is on wider-gauge material, while First American Resources’ is on narrower-gauge products. “They bring to the table the much-needed sales expertise and we bring to the table the much-needed technology. We basically have no overlap.”
“Certainly, in light of what is going on with the steel and aluminum tariffs proposed by the Commerce Department, we feel that the business landscape is changing,” added Flack. “Now we have a foothold here that will open up new opportunities with domestically produced coated coil.”
Tim TriplettRead more from Tim Triplett
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