It was a relatively brief affair for Los Angeles metals processor Reliance Steel & Aluminum Co. and Canadian steel company Encore Coils.
Reliance announced last week it has sold the assets of Encore Coils, gained as part of a larger acquisition in February, to Samuel Son & Co. Ltd., based in Mississauga, Canada. Terms of the deal were not disclosed.
Encore, which processes and distributes flat-rolled carbon steel products from just five Western Canada locations, recorded sales of about $50 million in 2007.
David Hannah, chief executive of Reliance, said the company sold Encore because Reliance did not have similar facilities nearby that could support the business.
Instead, the company will retain the specialty metals businesses Encore Metals and Team Tube acquired in the same acquisition that brought Encore Coils into the fold.
Encore Metals is a supplier of high-grade steel with locations in Canada and the Western United States; Team Tube, meanwhile, distributes steel tubing across Canada.
The sale marks a departure for Reliance, which has pushed its revenue north of $7 billion by making nearly 40 acquisitions since going public in 1994.
Capstone Climbing
Capstone Turbine Corp., a microturbine manufacturer based in Chatsworth, is making waves overseas.
The company announced last week a $4 million order from BPC Energy Systems for its new, smaller 200-kilowatt machine, which was introduced in September.
The order has sold out the planned production for all of 2008. The company, which had planned to produce just 29 units this year, is looking to up its production capacity to nearly 50 to accommodate expected orders.
A microturbine is a device, about the size of a refrigerator, that runs like a jet engine and produces enough low-emission energy to power a small office building.
The company also announced last week that it has signed a distributor agreement with Fluxo Servicos de Petroleo Ltda. in Brazil. The company provides services to that country’s oil and gas sectors.
“Signing this distributor agreement with Fluxo will enable us to expand the distribution of our products in Brazil,” said Darren Jamison, Capstone chief executive, in a statement.
Making Moves
Northrop Grumman Corp., one of L.A.’s biggest companies, is attempting to break into a new market while it awaits word whether it will receive one of the largest contracts in its history.
The defense contractor, which has extensive shipbuilding experience and is a major aerospace player, announced last week it will team with Oshkosh, Wis.-based Oshkosh Truck Corp. to compete for a multibillion-dollar contract for vehicles that would replace the military’s all-purpose Humvee.
The contract, which could be worth more than $20 billion over the next decade in orders from the Army and Marines, calls for 140,000 vehicles. Northrop is competing against other aerospace giants including Lockheed Martin Corp. and Boeing Co.
The Pentagon plans to award contracts in June.
As Northrop tries to break into this new market of ground vehicles for the Army, it is repositioning itself, said Paul Nisbet, an aerospace analyst for JSA Research Inc.
Since the company has entered the competition as a systems integrator and will be the prime contractor, it will not be responsible for the manufacturing, Nisbet said.
“It’s a new way of doing business with these big defense contractors,” he said. “Northrop is just really getting into it for the first time in any huge manner as a prime contractor.”
This practice is common for defense contractors, in which a handful of powerful and influential companies compete for military contracts even ones in which they have little or no experience and then subcontract the manufacturing.
But the truck contract is not even the biggest one Northrop is seeking.
Within the next few weeks, the Air Force is expected to announce the winner of a $40 billion deal to replace its aging fleet of aerial refueling tankers.
Both Northrop and sole competitor Boeing submitted their final tanker proposals this month. The initial contract would cover the construction of 179 planes, but additional expected orders could push the number to 500 and a contract value over $100 billion.
“Our solution, the KC-30 Tanker, not only offers greater capabilities and versatility than any tanker available today, it offers the lowest entry risk,” said Northrop Chief Executive Ronald Sugar in a statement.
Staff reporter Richard Clough can be reached at (323) 549-5225, ext. 251, or at
rclough@labusinessjournal.
com.
