December 10, 2021

More On Recent Acquisition by Saint-Gobain

GCP to help Saint-Gobain target construction sustainability

Al Greenwood

09-Dec-2021

HOUSTON (ICIS)–Saint-Gobain expects its pending $2.3bn acquisition of GCP Applied Technologies will help it capitalise on rising demand for construction materials that can make homes and buildings more energy efficient and sustainable, an executive said.

The boards of both companies approved the deal, and Saint-Gobain expects to close on the acquisition at the end of 2022.

The GCP acquisition falls in line with Saint-Gobain’s focus on light construction and sustainability, the subject of its investor-day presentation in October, said Mark Rayfield, CEO of Saint-Gobain North America. He made his comments in an interview with ICIS.

GCP makes concrete admixtures and cement additives, and these can lower the carbon emissions produced from making concrete.

Concrete produces a lot of carbon dioxide (CO2), accounting for about 8% of the world’s emissions of carbon, according to Chatham House, a UK-based think tank.

“By adding additives and admixtures to cement construction in both infrastructure and commercial construction, you’re decarbonising that industry significantly and driving towards a more sustainable building practice,” Rayfield said. He estimates that these products can reduce the carbon intensity by a third or even higher versus traditional concrete.

Saint-Gobain already produces concrete admixtures and cement additives through its Chryso business, which it acquired earlier this year for €1.02bn. Much of Chryso’s footprint is in Europe and the Middle East. GCP complements this with its larger presence in North America, Asia-Pacific and Latin America.

“This is really building a significant global leader in this type of construction-chemical business across Saint-Gobain,” Rayfield said.

GCP also makes products used in fire protection, roofing underlayments and building envelopes. These products prevent air leakage, water damage and fire.

Saint-Gobain already makes these products, but the GCP acquisition will give the company a larger selection to meet the evolving needs of the construction industry.

The construction industry accounts for 40% of global emissions of carbon dioxide (CO2), and 120 countries have committed to carbon neutrality, Saint-Gobain said during its recent investor day.

To achieve those carbon-neutrality goals, policy makers will impose stricter energy-efficiency standards for buildings. On top of that, some companies are adopting their own energy-efficiency goals independent of government, and these targets could filter down to any buildings they renovate or construct.

Energy efficiency will put new demands on the performance of buildings. To meet those demands, companies will approach building design from a standpoint of systems and not from one of individual products.

“The world you and I grew up in was product, product product,” Rayfield said. “The world we are going into is systems and solutions.”

The GCP acquisition will help Saint-Gobain provide these companies with such systems, be it roofs or facades. The systems will make homes and buildings consume less energy, last longer and feel more comfortable.

CONSTRUCTION OUTLOOK
For residential construction, the US is at a good level of activity, Rayfield said.

However, it has not returned to the highs it reached before the financial crisis of 2007-2008. The following chart shows new housing starts in the US. Figures are in thousands of units and they are not seasonally adjusted.

Source: US Census Bureau

In the years following the financial crisis, the US construction industry has not built enough houses to keep up with the country’s demographics. Based on the rate of family creation, Rayfield estimates that the construction industry underbuilt by 4m houses.

The rate of housing construction is still good, but it is being moderated by supply-chain constraints, labour shortages and limited availability of land, he said.

For nonresidential construction, spending has surpassed its highs from the time of the financial crisis. However, it is still below pre-pandemic highs, as shown in the following table. Figures are in millions of dollars and are not seasonally adjusted.

Source: US Census Bureau

Nonetheless, Rayfield noted signs of recovery. “We’ve seen a lot nonresidenial construction in warehousing and those types of spaces that support the order-from-home type of environment,” he said.

At the same time, companies are renovating revamping offices so they can accommodate post-pandemic work habits.

“You’ll see the market in different areas go at different speeds, but I think it is starting to recover now,” Rayfield said.

That recovery should receive a boost from this year’s $1tr infrastructure package.

Construction uses several coatings, adhesives, sealants and elastomers (CASE), which are important chemical end markets.

The white pigment titanium dioxide (TiO2) is used in paints.

For polymers, expandable polystyrene (EPS) and polyurethane (PUR) foam are used in insulation.

Polyurethanes are made of methylene diphenyl diisocycanate (MDI), toluene diisocyanate (TDI) and polyols.

High density polyethylene (HDPE) is used in pipe. Polyvinyl chloride (PVC) is used to make cladding, window frames, wires and cables, flooring and roofing membranes.

Insight by Al Greenwood

www.icis.com/explore/resources/news/2021/12/09/10714521/insight-gcp-to-help-saint-gobain-target-construction-sustainability/

December 10, 2021

Another Arsenal Acquisition

Arsenal’s APPLIED Adhesives Acquires Bird Song Adhesives, Inc.

MINNETONKA, Minn., December 9, 2021– APPLIED Adhesives, a premier custom adhesive solutions provider in North America, today announced that it has completed its acquisition of Bird Song Adhesives, Inc., a regional supplier of specialty adhesives located in Madison, Tennessee. This acquisition strengthens APPLIED’s commitment to providing industry leading products, technical expertise, and exceptional service to its customers.

“Bird Song Adhesives’ longstanding commitment to their customers has enabled them to build an impressive business with a very loyal customer base,” said John Feriancek, President and CEO of APPLIED Adhesives. “We are thrilled to welcome Bird Song Adhesives to the APPLIED team and look forward to continuing to provide their customers with an outstanding customer experience.”

Bird Song Adhesives’ and APPLIED Adhesives share a passion for delivering a superior customer experience that is centered on understanding their customer’s manufacturing and production processes and providing adhesive solutions crafted to meet the specific needs of each customer.

“Since 1991, our goal has been to provide our customers with quality goods, excellent service, and a fulfilling experience. We knew if we did those things, the benefits would return to us, and they have. The success we have realized has been a blessing to both us and our customers,” said Greg Rogers, Co-Owner of Bird Song Adhesives, Inc. “It is with excitement that we join the Applied team and are confident our core values will only be enhanced, providing our customers more than ever.”

Bird Song Adhesives, Inc. is APPLIED Adhesives’ fifth acquisition in 2021. About Bird Song Adhesives, Inc. Located in Madison, Tennessee, Bird Song Adhesives, Inc. is a regional supplier with over 30 years of providing quality products and service to their customers. Their philosophy is to treat each customer with the respect and provide the attention they deserve, simple, but one that has proven successful. About APPLIED Adhesives APPLIED Adhesives, founded in 1971, is a premier custom adhesive solutions provider in North America. The company is a value-added distributor of hot melt, water-based, and reactive adhesives as well as dispensing equipment. APPLIED Adhesives serves as a critical supply chain partner to leading adhesive manufacturers and formulators by offering reach and high service levels to an expansive customer base. For more information, please visit www.appliedadhesives.com.

About Arsenal Capital Partners Arsenal is a leading private equity firm that specializes in investments in middle-market industrials and healthcare companies. Since its inception in 2000, Arsenal has raised institutional equity investment funds of more than $7.0 billion, completed more than 200 platform and add-on investments, and achieved more than 30 realizations. The firm works with management teams to build strategically important companies with leading market positions, high growth, and high value–add. For more information, please visit www.arsenalcapital.com.

Is potential tax reform a driver?

December 10, 2021

Another Arsenal Acquisition

Arsenal’s APPLIED Adhesives Acquires Bird Song Adhesives, Inc.

MINNETONKA, Minn., December 9, 2021– APPLIED Adhesives, a premier custom adhesive solutions provider in North America, today announced that it has completed its acquisition of Bird Song Adhesives, Inc., a regional supplier of specialty adhesives located in Madison, Tennessee. This acquisition strengthens APPLIED’s commitment to providing industry leading products, technical expertise, and exceptional service to its customers.

“Bird Song Adhesives’ longstanding commitment to their customers has enabled them to build an impressive business with a very loyal customer base,” said John Feriancek, President and CEO of APPLIED Adhesives. “We are thrilled to welcome Bird Song Adhesives to the APPLIED team and look forward to continuing to provide their customers with an outstanding customer experience.”

Bird Song Adhesives’ and APPLIED Adhesives share a passion for delivering a superior customer experience that is centered on understanding their customer’s manufacturing and production processes and providing adhesive solutions crafted to meet the specific needs of each customer.

“Since 1991, our goal has been to provide our customers with quality goods, excellent service, and a fulfilling experience. We knew if we did those things, the benefits would return to us, and they have. The success we have realized has been a blessing to both us and our customers,” said Greg Rogers, Co-Owner of Bird Song Adhesives, Inc. “It is with excitement that we join the Applied team and are confident our core values will only be enhanced, providing our customers more than ever.”

Bird Song Adhesives, Inc. is APPLIED Adhesives’ fifth acquisition in 2021. About Bird Song Adhesives, Inc. Located in Madison, Tennessee, Bird Song Adhesives, Inc. is a regional supplier with over 30 years of providing quality products and service to their customers. Their philosophy is to treat each customer with the respect and provide the attention they deserve, simple, but one that has proven successful. About APPLIED Adhesives APPLIED Adhesives, founded in 1971, is a premier custom adhesive solutions provider in North America. The company is a value-added distributor of hot melt, water-based, and reactive adhesives as well as dispensing equipment. APPLIED Adhesives serves as a critical supply chain partner to leading adhesive manufacturers and formulators by offering reach and high service levels to an expansive customer base. For more information, please visit www.appliedadhesives.com.

About Arsenal Capital Partners Arsenal is a leading private equity firm that specializes in investments in middle-market industrials and healthcare companies. Since its inception in 2000, Arsenal has raised institutional equity investment funds of more than $7.0 billion, completed more than 200 platform and add-on investments, and achieved more than 30 realizations. The firm works with management teams to build strategically important companies with leading market positions, high growth, and high value–add. For more information, please visit www.arsenalcapital.com.

Is potential tax reform a driver?

December 8, 2021

Truckers and Trailers

What’s Tougher: Finding Drivers Or Trailers?

by Tyler DurdenWednesday, Dec 08, 2021 – 03:25 PM

By Todd Maiden of FreightWaves,

Supply headwinds facing the trucking industry were front and center at an investor conference on Wednesday and Thursday. While executives said driver recruiting and broader supply chain bottlenecks are ever so slightly easing, the procurement of equipment has gotten tougher.

“I would predict at this juncture, in our looking out at the trailer OEMs (original equipment manufacturers) and the tractor OEMs, that it could even be more difficult in 2022 on production and delivery than it was in 2021,” said Mark Rourke, CEO and president of Schneider National, at the Stephens Annual Investment Conference held in Nashville, Tennessee.

Finding trailers won’t get any easier in 2022 (Photo: Jim Allen/FreightWaves)

Lack of trailers becoming the new driver shortage?

Equipment purchasing for truckload carriers will be below normal replacement in 2021 given semiconductor and parts shortages as well as COVID-related labor issues that are plaguing the OEMs.

Derek Leathers, Werner Enterprises chairman, president and CEO, said current tractor and trailer orderbooks extend well beyond the OEMs’ manufacturing capacity for all of next year, meaning the industry fleet, which has gotten older and smaller during the pandemic, won’t be increasing anytime soon.

“I think you see continued contraction or at best case stabilization in ’22 but with an older fleet,” Leathers said.

Werner’s average truck age was 1.8 years heading into the pandemic with trailers 4 years old on average. While a recent acquisition skewed average ages slightly higher, an inability to get all of the replacement equipment wanted has really pushed those averages up, to 2.1 years and 4.4 years, respectively.

Leathers said Werner wants to refresh equipment but “there’s no line of sight to when that moment is, it’s certainly not in ’22.”

“The best-case scenario is you may see some return to normalcy by third quarter ’22 and that’s way too late to have any impact on the year in terms of additional capacity. So I think we have a structural cap that’s different than anything we’ve seen historically.”

Eric Fuller, president and CEO at U.S. Xpress, also pointed to the third quarter as the earliest date for relief. He said the OEMs are guiding to “a few more months” for tractors that should have already been delivered.

“A number of the OEMS are going back to some of their larger orders and reducing the amount of tractors they’re actually going to be able to produce in 2022,” Fuller said. “I think the trailer situation is worse. In some cases, to get a significant order we’re being told it could be multiple years … 24 months, 36 months.”

Trailer manufacturer Wabash said it would build only 50,000 dry van trailers next year compared to more than 57,000 in 2019. The company’s backlog, which extends into 2023, has increased to more than $2.3 billion from $1.9 billion at the close of the third quarter. It’s in the process of converting refrigerated manufacturing capacity to dry van production lines but that won’t be completed until early 2023.

Management from J.B. Hunt said delays in equipment deliveries will result in holding onto trade-ins longer than originally anticipated, which will drive its cost of service higher. The increased maintenance expenses associated with running older equipment will be an incremental component of its customer’s rate structure in 2022.

Less-than-truckload carrier Yellow noted a lack of trailers throughout the supply chain as trailing equipment sits longer at shipper facilities that are dealing with issues recruiting and retaining workers.

Yellow CEO Darren Hawkins said he’s most concerned about being able to take delivery of the trailers Yellow has ordered for 2022. He said the company can postpone planned trailer retirements if needed but noted that overall trailer utilization has become a material burden on operations.

“We do not have access to our own equipment as readily as what we’ve seen in the past,” Hawkins said. “And then when you do get that equipment, it’s in the wrong part of the country and we’re having to reposition it.”

Yellow would normally use the rails to reposition trailers but given current network congestion, they have more freight than they can handle.

“I have not seen it ease. I actually feel like demand is expanding for our services,” Hawkins added.

He said Yellow is focused on making timely freight pickups as that is its customers’ biggest concern. “They’re not as focused on transit times as they are getting their freight picked up and getting it into a system and being able to tell their customers that it’s actually in transit.”

Driver hiring issues have eased … kind of

Most trucking executives said that multiple rounds of pay increases and sign-on bonuses, as well as the end of enhanced unemployment benefits in September, have helped driver recruiting, but only on the margins.

Fuller noted that August was the toughest month for driver hiring, with only slight improvement since. “If August was a 10, it’s a 9.5 [now].”

J.B. Hunt said difficulties sourcing drivers have plateaued but at a high level.

“For drivers, we’re at a high watermark and we’re holding,” Shelley Simpson, chief commercial officer and EVP of people, commented. She said driver recruitment hasn’t really kept the company from bringing on new business because it can utilize its digital 360 freight platform for capacity and backfill with permanent resources later.

But she said the labor headwinds extend beyond drivers. Difficulty finding workers throughout all levels, from maintenance techs to office employees, has been a burden for the company.

“In the past, we were able to tweak pay or turn pay and that typically would fix 95% of the problem. Today, that’s not the case when it comes to labor,” Simpson continued.

The American Trucking Associations’ estimate of the current driver shortfall is approximately 80,000. But the organization sees that number moving to more than 160,000 by 2030.

“It’s the most difficult driver market I’ve ever seen,” Leathers said. “Has it stabilized at very difficult? That seems to be the case. So it’s staying very difficult but it doesn’t seem to be worsening.”

Searching for a cure

Werner has been bringing on drivers through its academies. It had four additional driver schools operating at the end of the third quarter, 17 in total. The company will have 22 open by the end of the first quarter. Driver sourcing costs and labor expenses incurred as a result of equipment downtime due to parts shortages led Werner to miss third-quarter expectations.

When asked about potential solutions to the driver issue, Leathers said he sees the most potential in opening the driver pool to include candidates as young as 18 years old. He said the plan to reduce driver ages would be “one of the largest advancements for safety” the industry has seen in a while.

“These are true apprenticeships. This is not, ‘You’re 18 years old and here’s the keys to a truck and good luck.’” He said the current proposal for preparing these individuals would require multiple months of training with experienced drivers as well as curfew restrictions. He believes it would also allow the industry to recruit people “from the front of the class.”

“What do you get at age 21? If you wait to 21 because you think that there’s something magical about the number, you get the people that were unsuccessful as an electrician, a plumber, a roofer or welder versus going to the front of the class and getting the best and brightest and putting them in a multi-month apprenticeship.”

He said relaxing hours of service rules wouldn’t be fair to the driver. “They should not bear on their backs our inefficiencies,” Leathers said, referring to the increase in the amount of dwell time drivers are experiencing due to congestion throughout the supply chain.

Leathers doesn’t think increased vehicle or cargo weights will help either “at a time when our nation’s infrastructure is already crumbling.” He said it will take at least a decade until recently approved infrastructure money results in material improvements to the highways.

Rourke said a new rule for entry-level candidates, requiring training from a certified institution listed on an approved provider registry, will further limit driver resources.

“For the state licensing, you have to then verify where this schooling took place and the accreditation of that school, which has a minimum number of hours, a minimum curriculum. It isn’t just, ‘I just took the written test, let me go out and take a test and I get a CDL.’ So it radically changes that entry point into the industry.”

https://www.zerohedge.com/energy/whats-tougher-finding-drivers-or-trailers