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Tariffs Shut Out US Window-Makers in Favor of Colombian Company

Aug. 13, 2018
Tecnoglass Inc. doesn’t have to pay the aluminum tariff since it mainly sells windows assembled in Colombia.

By Ezra Fieser

The Barranquilla, Colombia-based company has seen rivals raise prices as much as 10% as tariffs increased the cost of importing aluminum to the U.S., said Chief Operating Officer Christian T. Daes. Tecnoglass doesn’t have to pay the duty, since it mainly sells windows assembled in Colombia.

"I love Trump for that," Daes said, lifting his hands emphatically into the air, during an interview in his office on Colombia’s Caribbean coast.

In March, Trump placed import duties of 25% on steel and 10% on aluminum in an effort to protect U.S. manufacturers. Major companies from Ford Motor Co. to Alcoa Corp., the biggest American aluminum maker, have said that the tariffs are driving costs higher. Tecnoglass has supplied aluminum windows for several Trump-branded buildings -- as well as structures from Miami to New York.
For Tecnoglass, only its aluminum window frames – which represent about $10 million in annual sales – are subject to the duty, and it’s passing some of those costs to customers. That’s less than 3% of 2018 sales, which the company estimates at $345 million to $365 million this year.

The Nasdaq-listed stock, which has 1 buy recommendation and 1 hold, has gained 22% this year, according to data compiled by Bloomberg. U.S.-based rivals Apogee Enterprises Inc. and PPG Industries Inc. are up 7.6% and down 8%, respectively.

“Ironically, the tariff issue in the U.S. is helping a Colombia-based company and hurting its U.S.-based competitors,’’ said Julio Romero, an analyst with Sidoti & Co. who follows the sector. “The competitors have to import the raw materials and pay the tariffs on them and then sell the finished product.’’

The company plans to take advantage of the situation, keep its prices low and expand its reach further into the U.S., Daes said. Sales are up for the entire sector, thanks to the strength of the economy, he said.

Miami High-Rises

After selling $210 million in U.S. dollar bonds last year, the company ended an investment stage that allowed it to expand its 2.7 million-square-foot factory. The plant churns out everything from custom-built windows for Ohio hospitals to hurricane-proof glass for Miami high-rises.

It has supplied windows for projects such as the pyramid-shaped Via 57 West in New York and towers on Ocean Drive in Miami Beach. Among the Trump-branded projects Tecnoglass has provided for are Trump Tower in Hollywood, Fla., and Trump Palace in Sunny Isles, Fla.

Daes sees the U.S. market for construction glass and architectural windows – which Tecnoglass estimates was worth $25 billion in sales last year – growing under Trump.

“Everybody’s complaining right now,” he said. “But everybody’s also building. The economy in the U.S. is as strong as it’s ever been."

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