Tom Nentwick of Extrusion Supplies joins us to discuss Soft Alloy Extrusion Equipment Market Values.
About this segment of Blackbird TV
Guest: Tom Nentwick, Founder / President, Extrusion Supplies. To learn more about our guest, visit ExtrusionSupplies.com, or call 330-506-9291.
Recorded: December 9, 2020
Published: December 15, 2020
Segment transcript
Today’s guest with me on Blackbird TV is Tom Nentwick, and Tom is with Extrusion Supplies in in Canfield, actually Youngstown area Ohio. Thanks for joining me today, Tom. Thanks for having me, David. You had an interesting tidbit about about Youngstown Ohio I want you to share that with me again. Well a lot of people that aren’t familiar with the industry don’t realize that Youngstown is the birthplace of the soft alloy extrusion business in North America. And that’s what we’re going to talk about today is soft extrusion, soft alloy extrusion, what is that? There’s soft alloy and hard alloy. The soft alloy business is generally focused on applications for building, building and construction, automotive, transportation, consumer durables, electrical, the hard alloy business is aircraft alloy, to kind of put in a quick nutshell. And your your sweet spot is the soft alloys, or both? Soft. All right okay. That’s what, I do a little bit in the hard, but not much. So we’re going to talk about aluminum extrusions, everyone has touched one at some point, probably far more often than they think, we’re not going to get into that today. What I wanted to ask you particularly, this is December 2020, we’re in the second wave of this pandemic, and industries are upside down, some are doing really really well. What have you seen happen in the aluminum extrusion space, and has Covid impacted this in any way? Well initially when Covid hit our industry, actually hit our world, March and April last year, everything slowed down quite a bit, and then in May it came out like gangbusters, and our industry has made up for lost time and I’ve had many of my customers tell me they’ve never been as busy in their entire history as they have been this year. Sorry to interrupt you, do you have any idea, I mean is there anything you can point a finger or two at to come up with an answer as to why they’re so busy now? There’s certain segments that have had a dramatic increase in business, for instance the RV business. People don’t want to stay in hotels, so they’re buying RVs and instead of traveling by air, they’re traveling by RV, so the RV industry has just gone gangbusters. Another segment of our business is building construction, and home sales, as most people know we’ve been going through the roof this this year and and remodeling and all that involves a lot of aluminum extrusion applications so just those two segments alone, and automotive now automotive i think has rebounded um nicely across most of America and more and more aluminum extrusion has gone into the automotive industry in recent years. What I’m finding in interviewing other other experts in other industries, in a lot of cases, there was this complete shutdown of everything back in the late March and April time frame, where we tried to figure out how to deal with this, and that caused a big backlog, and people are just trying to catch up with that backlog in a lot of these industries, but what you’re speaking about is more so an increase in demand, that’s a spin-off because of the pandemic. Really fascinating. So how does that impact equipment values and and how do these pieces trade? If i needed to get a used extrusion press right now, how would I go about doing that? Well, in recent years, the extrusion business has been very healthy actually since about 2011 when the aluminum extrusion council was successful in suing for anti-dumping legislation against China, and once they were successful in that then extrusion companies in North America became very healthy and the equipment has been highly utilized, so since 2011, but particularly in the last five or six years, every available asset is being used and there’s very little there has been very little available good equipment on the used equipment market, so if you were looking for something, your best to buy new. Interesting. And the values on these, remember, the Blackbird customer typically is a bank or a bankruptcy trustee or a lender and sometimes these presses are used as collateral on a loan, oftentimes your companies, your clients are very big or publicly traded, so they may not be using commercial financing, but if these are used as collateral or a single piece of equipment and a line is used as collateral would you say that that collateral value has held stable through the pandemic? Absolutely… this equipment is being highly utilized and it’s very valuable to the owner, and I would say therefore very valuable to the creditors. You had indicated that used presses aren’t even trading because of the supply and demand and if you want a press you have to get a new one, so from that I can surmise if there was a used press that came on the market, it could be placed pretty quickly into somebody’s hands, correct? More than likely if it’s a good piece of equipment, if it’s a very old piece of equipment probably not because the extruders out there that are healthy they want better pieces of equipment going forward and if they can’t find a good used press then they’re buying new equipment. Yeah we’re finding that a lot of machine tools and other things, controls in the economies of newer equipment with energy consumption certainly rule for replacements with new equipment and in a lot of cases, so, fascinating information, Tom. I appreciate your time today. Thanks for joining us. Thanks for having me, David.