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Fombell manufacturer Veka rides vinyl demand rise

| Monday, July 7, 2014, 11:06 p.m.
Veka CEO Joe Peilert discusses the company at its U.S. headquarters in Fombell on Monday, June 23, 2014. Started by a German company in 1983, Veka employs more than 400 people.
Philip G. Pavely | Tribune-Review
Veka CEO Joe Peilert discusses the company at its U.S. headquarters in Fombell on Monday, June 23, 2014. Started by a German company in 1983, Veka employs more than 400 people.
Finished product is moved on the floor at Veka’s U.S. headquarters in Fombell on Monday, June 23, 2014.
Philip G. Pavely | Tribune-Review
Finished product is moved on the floor at Veka’s U.S. headquarters in Fombell on Monday, June 23, 2014.
The inner workings of a window frame are sorted at VEKA's U.S. headquarters in Fombell on Monday, June 23, 2014.
Philip G. Pavely | Tribune-Review
The inner workings of a window frame are sorted at VEKA's U.S. headquarters in Fombell on Monday, June 23, 2014.

The forklift driver was stacking 21-foot-long bundles of vinyl inside Veka's warehouse in Fombell when his vehicle stalled.

“Out of gas,” he called to his boss, Veka CEO Joe Peilert, standing below.

Peilert grinned and replied with the optimism of someone leading a company on the rebound.

“We never run out of gas,” Peilert said.

These are busy times for the company as it builds new lines of business and rides a slow but steady housing market recovery. Veka makes window “profiles,” turning large silos of powdered resin into the engineered angled strips that window manufacturers use to make frames.

The company is on track for a third consecutive year of double-digit sales growth, which would boost annual revenue from $133 million. It is adding workers, too. It used a $190,000 state grant to hire 38 workers at its Fombell plant in 2013. “We're growing at a strong rate,” Peilert said.

That's quite a distance from where the company was headed during the housing collapse and Great Recession. The company lost 30 jobs in 2008-09, the first staff reductions since its founding in 1983, as sales declined.

“The bursting of the housing bubble with all that economic turmoil, there was just a tremendous amount of movement,” said Jeff Lowinski, vice president of technical activities at the Window and Door Manufacturers Association. “Money flow just completely dried up.”

While smaller competitors were either acquired or closed during the past six years, Veka managed to survive the difficult period for window manufactures and related companies by exploring new markets.

When demand for new home products fell, Veka shifted to replacement windows as homeowners remodeled and took advantage of federal energy efficiency tax credits available under a 2009 law.

It added products aimed at commercial uses, such as for schools, hotels and hospitals. It also marketed its services to larger window manufacturers that made vinyl profiles in-house.

Veka was among the companies that had a boost in business from the federal stimulus efforts. The gains, however, were short-lived when the homeowner energy efficiency tax credits went away in 2011. “It felt like somebody shut the faucet on it,” Peilert said.

But having a corporate parent with deep pockets can help. Veka is owned by a German company with facilities in 20 countries and more than $1 billion in annual sales. “This is where you draw from the strength of a global group,” Peilert said.

Because the housing market has begun to recover, it can lean less on its parent for support. New home sales in May reached their highest level in six years, increasing 18.6 percent to a seasonally adjusted annual rate of 504,000 units, the Census Bureau reported. The number of housing starts in May increased 9.4 percent from last year.

As demand for new home construction grows, so does the market for vinyl windows and doors, which have become popular in recent decades because of their energy efficiency advantages, versatility in design and ease of maintenance, said Angela Dickson, spokeswoman for the American Architectural Manufacturers Association.

The vinyl-window market increased from 8.2 million units sold in 1991 to 30.1 million in 2013, according to AAMA's latest figures. Vinyl accounted for 69 percent of the overall window market last year.

Even in 2011, when Veka was unprofitable, the company continued to invest in workforce training, a decision that has allowed it to meet growing demand during the housing recovery, Veka officials said.

Nearly 100 employees have completed Veka's basic apprentice training program since 2011, said Thomas Vandebunt, Veka's corporate tooling training and maintenance manager.

“We've just seen the benefits of it,” Vandebunt said. “People do work more skilled. They're not frustrated, and production is much higher.”

With the improving market, the company has been adding jobs lost during the recession, and Peilert said it returned to profitability in 2012. He didn't disclose specifics. The company's employee count is 14 more than its pre-recession high of 388 in December 2007. And, with a more diversified business, Veka isn't as concerned about running out of gas soon.

“We spend a great deal of time making sure we control our destiny,” Peilert said.

Chris Fleisher is a staff writer for Trib Total Media. He can be reached at 412-320-7854 or cfleisher@tribweb.com.

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