Trainor Glass Default Raises Questions About Sub Vulnerability
Are capital-intensive subcontractors with substantial fabricating operations the most likely not to make it through to the end of the construction recession?
That’s a question prime contractors could ask in light of the latest major subcontractor default.
Austin Industries, the big commercial and industrial contactor, says of its four projects on which Trainor Glass Co. was serving as a subcontractor, three were nearly completed and are running on schedule and the fourth is in a very early stage and is unlikely to be affected.
Based in Farmers Branch, Texas, Trainor Glass shut its doors at nine locations where it had operations Feb. 22 and has made no public statement since then. Trainor was the second major cladding fabricator and contractor to shut this winter.
The default and temporary shutdown just before New Year's Day of ASI Ltd., a principal subcontractor on the $825-million Barclays Center in Brooklyn, N.Y., has delayed completion of the arena's enclosure and forced extra effort by the project's prime contractor, Hunt Construction Group, to keep on track for scheduled completion later this year.
A spokeswoman for Austin Industries’ commercial construction unit says her company is managing any complications of the Trainor Glass default so that there will be no impact on the projects involved.
“We’ve got processes in place to handle anything like that,” she says.
The only one of the four Austin Industries projects involving Trainor Glass where work had yet to go far is the $1.27-billion Parkland hospital in Dallas. On that project Austin Commercial is partner with Balfour Beatty, H.J. Russell and Azteca Enterprises.
Looking back, was it possible to have detected signs of Trainor’s demise?
Last year the company put up for sale a 102,000-sq.-ft. plant it had built in 1999 in Alsip, Ill.
And last May an optimistic story in a glass industry publication reported that Trainor Glass had announced that the company’s chief financial officer had moved into the president’s role and will “focus on continued strategic growth.”
“It’s hard to get riskier than [the companies that fabricate and install] exterior cladding on a structure,” says one construction executive. “These guys have high overhead and high fixed costs, those are the ones that are struggling the most.”
The company was apparently controlled by the Trainor family, with family members serving in other key positions.
An industry source says when he heard about Trainor’s problems he anticipated that the company would undergo a financial reorganization and search for a buyer. But that didn’t happen