Owens Corning: Showing Benefits of Move Away from Housing & Into Composites

Jul.30.08 | About: Owens Corning (OC)

Looks like the St. Gobain deal will be paying off in spades for Owens Corning (NYSE:OC). Owens acquired the Gous-Khrustalny, Russia, production facility as part of its 2007 acquisition of Saint-Gobain's composites businesses.

OC announced that
it will more than double the production capacity of its glass fiber composites facility in Gous-Khrustalny, Russia, to meet growing global demand.

This investment will serve existing customer growth in Russia and throughout Europe and the Middle East," said Mike Thaman, chairman and chief executive officer. "The expansion leverages our 2007 acquisition of the Saint-Gobain composite businesses by building out our platform in Russia to take advantage of strong market demand.

The expanded facility in Russia will produce a complete range of composite products using Owens Corning's best technology for glass fiber production and fabrication. It will incorporate the company's patented Advantex® and advanced glass-melting technology platforms that bring world-class energy efficiency and emissions control in manufacturing, while providing customers with unique product benefits including corrosion resistance and high strength.

Our additional capacity in Russia will create meaningful value for our customers, said Chuck Dana, president of Composite Solutions. The expanded facility will meet growing global demand for glass fiber composite products in infrastructure, wind energy, construction, electronics and automotive markets. This expansion is ideal in the favorable business climate of the Vladimir Province, and establishes a foundation for the addition of a technical fabrics operation that will fully capture the growth of wind energy and distribution in Western Europe.

The growth rate of glass fiber composite demand in Russia is estimated to be greater than 10 percent per year, and growing at nearly twice the rate of gross domestic product [GDP] around the world. Construction is planned to begin in 2008, with start-up anticipated by the end of 2009. The facility will continue full production during the expansion process.

Owens corning has been diversifying into composites and away from its reliance on US housing for a year now. That effort has picked up steam in the last 6 months and shareholders are seeing the benefits.

Disclosure:Long OC