Gibraltar Steel Corp., moving to expand its steel heat-treating business into the Northeast, has acquired a Pennsylvania company that specializes in providing heat-treating services for powdered metal parts.
The acquisition of Pennsylvania Industrial Heat Treaters in St. Mary's, Pa., will add about $6 million to Gibraltar's annual sales, while giving the company its first presence in the Pennsylvania market and adding new capabilities for handling powdered metal products.
Pennsylvania Industrial, the 13th company that Gibraltar has acquired in the last five years, is expected to increase the company's heat-treating sales to about $90 million a year, putting its annual revenues from that business just shy of the firm's target of $100 million by 2003.
The deal is expected to immediately add to Gibraltar's profits. Pennsylvania Industrial is the seventh heat-treating firm that the company has acquired in the last five years. Heat treating involves taking steel parts after they have been manufactured and heating and cooling them to improve their durability and wear resistance.
Gibraltar executives think the heat treating business will grow rapidly as more companies that currently do that work in-house decide to outsource to specialty firms, like Gibraltar. Gibraltar estimates that 90 percent of the $20 billion spent each year on heat treating is done in-house by major parts manufacturers.
The purchase "underscores our commitment to continue moving Gibraltar into higher value-added, higher margin businesses, like commercial heat-treating and building products," said Brian J. Lipke, the company's chairman and chief executive officer, in a prepared statement.
While heat-treating firms have relatively low sales because they don't own the materials they treat, the business is among Gibraltar's most profitable, Lipke said.
"The Pennsylvania Industrial acquisition further solidifies our position as one of the nation's leading commercial heat treaters," he said.
Because most heat-treating work tends to be done at facilities near the product's original manufacturer, Lipke said the Pennsylvania Industrial acquisition gives Gibraltar access to major manufacturing centers in Cleveland, Pittsburgh and Buffalo, which all are located within 200 miles of St. Mary's.
Being able to heat treat products made with powdered metals also gives Gibraltar a foothold in a growing market from manufacturers in the appliance, lawn and garden, hand tool and business machine industries, said Kenneth Houseknecht, a company spokesman.
Pennsylvania Industrial, which employs 60 people at its 50,000-square-foot factory, will continue to be overseen by its current management.