Weldbend continues winning tradition

despite recessionary environment

 

BY MORRIS R. BESCHLOSS

PVF & economic analyst emeritus

 

With the U.S. industrial sector under assault by both government restrictions and globalization, it’s a matter of pride that PVF giant Weldbend stands as a distinguished example of American ingenuity and success.

 

During a recent trip to Chicago, I had occasion to spend several hours touring the massive 36-1/2 acre facilities of Weldbend, located in Bedford Park, a community right outside Chicago, and not more than 10 minutes away form Midway Airport.

 

This coincidental location serves as a convenient facility from which to effectively use Weldbend’s company plane as a way to stay in touch with customers and constantly audit manufacturing sites and production equipment in various parts of the world. It also serves to bring in a constant retinue of leading distributors and end users to acquaint them with the ultra-modern, cost-effective infrastructure available to them.

 

Such a highly automated facility makes Weldbend one of the nation’s largest full-line and size manufacturers of butt weld carbon steel fittings and flanges. These are effectively produced, shipped and marketed in the great Midwestern hub. Weldbend has achieved a reputation as a top quality mass producer, acquiring a legendary reputation for excellence domestically and worldwide.

 

Despite the intense competition for this extremely wide range of products, Weldbend has achieved a superior brand name reputation for its quality and service that places them at the top of the pipe-valve-fitting sector’s list of outstanding names.

While most manufacturers and distributors have pared down their inventories in these financially troubling times, Weldbend continues to maintain a massive product reserve. This allows for same-day shipments on all but the most highly specialized items on an immediate service basis.

 

Weldbend, headed by Jimmy Coulas, son of the legendary founder, James Coulas, Sr., prides itself in maintaining a highly motivated stable workforce that provides the backbone of the company’s high productivity. President Coulas is particularly proud of the company’s outstanding product performance, which has been responsible for the firm’s achievement as a gilt-edged brand name by distributors, as well as the wide variety of industrial and commercial end users that it serves.

 

In a September trip to Europe, Coulas was made aware of a grievous malfunction in a French manufacturer’s plant by a comparable competitive product that caused inestimable losses. This unfortunately, has happened too often over the years, Coulas explained. “Weldbend’s highest quality manufacturing equipment and its maintenance is at the very top of our list of responsibility in keeping this from happening,” emphasizes Coulas.

 

“The critical nature of Weldbend’s products used in production facilities relating to energy production, refineries, utilities, power generation, etc. make such responsibilities paramount in saving lives as well as avoiding severe financial loss,” he added.

 

“Being in full control of the total manufacturing process at our greater Chicago-based plant, we take every precaution that such mishaps do not occur, and are proud of our record in this regard,” stated Coulas.

 

Such fastidious attention to Weldbend’s customers’ needs has been responsible for the company’s continued outstanding performance during the midst of a devastating recession. “I’m sure this has largely contributed to maintaining our strong business momentum, which has turned out far better than we expected during this recessionary period,” concluded Coulas.

 

Although much of Weldbend’s flourishing revenues are generated by the Company’s massive inventory of a wide range of butt weld carbon steel fittings and flanges, a growing portion of its marketing efforts is involved in the expanding sector of energy projects on the drawing boards today.

 

Even such fast-growing renewable energy sources as solar power-generating development are on the Company’s radar screen. Most recently, a major facility under the jurisdiction of Lockheed Martin near Phoenix and three upcoming facilities in Southern California’s Riverside County are now on the drawing boards.

 

With the government calling for 25% of utility power to be provided from this globally surging source by 2020, Weldbend is looking to such new opportunities for ever-expanding growth.

 

Capmark Financial Group bankruptcy reflects worsening commercial investment scene

 

The tenuous nature of the commercial lending markets has been severely exacerbated by the Chapter 11 bankruptcy of Capmark’s Financial Group. Originally a financing affiliate of General Motors Acceptance Corp, its financial condition has severely deteriorated in the recent few months leading to a warning that bankruptcy action could be inevitable, which finally took place.

 

Beset by an increasing number of loans to major commercial property developers in office towers, strip malls, hotels, etc., Capmark’s fixed assets have recently exceeded its liquidity, preventing the commercial lending giant from meeting its long-term loan obligations.

 

Capmark’s private equity owners include Kohlberg, Kravis, Roberts & Co., Goldman Sachs Partners and Five Mile Capital Partners — altogether paying $1.5 billion in cash to acquire lender GMAC’s commercial real-estate business in early 2006, which they renamed Capmark. As it turned out, Capmark’s timing couldn’t have been worse, as the new company bought into major commercial investments as they were reaching their peak in 2007.

 

With office and hotel occupancy hitting multi-year lows, and shopping centers and department stores under pressure, the bulk of commercial development is looking to get worse before improving later in the year.

 

This could seal the doom of other financial institutions, holding debt paper of troubled commercial properties. We’ll keep you posted as this situation evolves. GMAC’s current bid for additional tarp funds may be just a new wave of such commercial loan companies’ need to plead with the government to keep them afloat.

 

Solar power is busting out all over

 

Solar power and California’s Coachella Valley are turning into a marriage made in economic heaven. With the recent visit by Secretary of the Interior Ken Salazar, a pronouncement indicating three upcoming solar panel production installations in this 350 days-a-year sun-soaked area guarantees that solar energy will become a leading industry in this valley.

 

Supported by a government mandate calling for 20% utilization of wind and solar energy by electric utilities before 2020, this has given such utilities the incentive to offer installers a 35% rebate from the gross price, which can be paid directly to the contractor and/or subcontractor from the gross cost to the customer. On top of that, the Feds have weighed in with a 30% credit against Federal income tax— starting in January 1 this year and running through December 2016.

Even a state-wide tax rebate is under consideration, but held up by California’s deficit problems. However, if an installation produces a surplus of solar energy, the utility is required to buy this amount at predetermined market prices. Such an initiative was recently signed into law by Governor Arnold Schwarzenegger.

 

Between the Federal Government’s choice of the Coachella Valley as a major solar energy production site, plus generous incentives to installing clients means that success is practically guaranteed to a geographic area tailor-made for this approach to renewable energy.

 

Even if cap-and-trade is not imposed on America, the Environmental Protection Agency will enforce an even stricter mandate, guaranteeing soaring electric price increases. Just imagine what such prices will look like 10 years from now. The excess energy that a home or business owner produces will be subtracted from soaring electricity bills. And when one eventually sells their business, this benefit should add to the structure’s assets. This is a win-win all the way.              

 

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