The former Aluminum Shapes to reopen but not as a mega-warehouse

The former Aluminum Shapes to reopen but not as a mega-warehouse

The former Aluminum Shapes in South Jersey, a manufacturing complex caught in an international tax scandal and liquidated through bankruptcy in 2021, is back from the dead. Instead of being turned into just another warehouse, two companies bought the equipment and melting furnace in what amounted to an industrial yard sale and will restart the factory, officials with the companies and the real estate firm that owns the complex said this month.

Almag Aluminum Inc., in Canada, and Western Extrusions Corp., in Texas, will lease the plant. The location off I-95 enables easy access to East Coast markets, and the companies can quickly reutilize the industrial equipment as the U.S. economy deals with pandemic-related supply-chain nightmares, executives said.

At one time, Aluminum Shapes, which was founded in Philadelphia in 1954, employed 3,000 in Pennsauken. By late last year, the complex’s workforce had dwindled to 110 workers who lost their jobs in the bankruptcy.

The new aluminum companies could hire a combined 300 workers over the next few years, the executives at the family-owned firms said in separate interviews. They don’t compete directly with each other and will operate in separate areas of the subdivided complex.

Available and skilled former Aluminum Shapes employees also were a benefit in a tight labor market, the executives said.

» READ MORE: The Aluminum Shapes plant appeared destined to become an Amazon-style distribution center.

“We are ready to start right away,” said Bennett McEvoy, president of Western Extrusions. “We already have 20 employees, and once we get the permits we will have greater hiring.” Western bought a 16-inch aluminum extrusion press, one of the largest in the United States, and the complex’s scrap-melting furnace.

Officials said that the former owner let the permits to operate an aluminum-manufacturing plant expire. They expect new permits to be issued within a couple months.

Velocity Venture Partners in Bala Cynwyd, a real estate investment firm that specializes in acquiring older industrial buildings and that owns about 6.5 million square feet of space, is leasing to the aluminum companies. Velocity bought the Aluminum Shapes property and equipment for $32 million in a bankruptcy auction last November. Velocity then sold off the office and manufacturing equipment.

Other firms bidding in the auction saw it as a “scrape-and-redevelop” site for warehousing or nonmanufacturing uses, said Velocity founding partner Tony Grelli. He also spoke about the site as a potential warehouse earlier this year.

But there was “so much irreplaceable infrastructure there” — such as a high-amp electric supply into the complex powered partly by methane gas and solar, and an on-site wastewater treatment plant — that Velocity believed it could remain a viable manufacturing site with the proper tenants, Grelli said.

“We thought we would capitalize on the building’s history rather than run away from it,” Grelli said. “These guys are leaders in their industry and we did a ton of research on them before we leased to them.” Grelli said the terms of the leases are five years “with significant extension options.”

The aluminum manufacturing operations will occupy about two-thirds of the complex, Grelli said. Velocity is still seeking tenants for the remaining space. That tenant could be a manufacturer, warehouse operator, or distributor.

The last owner of Aluminum Shapes was Chinese aluminum kingpin Zhongtian “Big Boss” Liu, who headed the largest aluminum extrusion company in Asia, China Zhongwang. Liu’s companies were accused of devising an elaborate scheme to avoid paying punitive U.S. tariffs from 2011 to 2014. Aluminum pallets were imported as finished products, a distinction that would enable Liu’s firms to dodge a whopping 374% tariff. The pallets were stored in warehouses in California and Mexico and in Pennsauken, and ultimately remelted into other products.

At Liu’s direction, defendants “would stockpile and cause to be stockpiled aluminum extrusions in the form of pallets … at the Irvine, Ontario, Fontana and Riverside warehouses [in California] and at Aluminum Shapes in New Jersey,” the indictment said.

Last August, a California jury found six companies tied to Liu guilty of defrauding the U.S. of $1.8 billion in duties on the aluminum pallets. The companies were based in California. Neither Aluminum Shapes nor its South Jersey executives were charged in the 2019 indictment.

McEvoy, 39, is the second generation to run Western Extrusions, which began operations in Carrollton, Texas, in 1980 under a circus tent because construction of its plant wasn’t finished. Early on, the firm manufactured residential and commercial window frames. It now has one million square feet of space in Carrollton, employs 850 workers, and has diversified into truck-trailer, solar, and other markets.

Pennsauken will be its first location outside of Carrollton. The company had been looking to expand. When the Texas ice storm in February 2021 shut the Carrollton plant for about three weeks, the need became more urgent, McEvoy said. He did not disclose what the company paid for the Aluminum Shapes equipment. But he said that Western Extrusions would put millions of dollars into upgrades.

Almag opened in 1953 and has three plants in the Toronto area and two in Alabama, with combined employment of 550 workers. The company sells extrusions for the architectural lighting, office furniture, store fixture, and signage markets, said Joe Jackman, the company president.

At Aluminum Shapes, Almag bought two smaller presses, the anodizing line for coating, and fabrication equipment. Almag considered trucking the Pennsauken equipment to Canada or Alabama but decided to keep it in South Jersey after conversations with Velocity, Jackman said. Almag signed the lease for the manufacturing space about two weeks ago.

Almag also could melt waste aluminum, a manufacturing by-product, at Western Extrusion’s foundry without shipping it outside Pennsauken. Jackman called the cost savings a “huge benefit.”

Commenting on the Aluminum Shapes saga, Jackman said “this could be a good movie.”

https://www.inquirer.com/business/aluminum-shapes-pennsauken-manufacturing-philly-20220622.html

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