Latham International is continuing to take hold of the fiberglass market.
The manufacturer of components and accessories for vinyl liner and fiberglass swimming pools finalized the acquisition of Royal Fiberglass Pools June 30.
The transaction is part of an aggressive growth strategy for Latham, which purchased four fiberglass pool businesses in the past seven years, and has completed eight total acquisitions in the last 11.
“The company is strong and wants to grow,” said Tom Straub, president of Viking Pools, LLC, the fiberglass division of Latham. “We feel this is a good time to plant our geographic footprint throughout all of North America and potentially even worldwide.”
The 53-year-old company first entered the fiberglass pool market in 2005 with the acquisition of Viking Pools. In 2010, Latham purchased Blue Hawaiian Fiberglass Pools. Then, last fall, the manufacturer brought Trilogy Pools into its fold.
With this most recent deal, Latham now is producing pools in eight strategic locations.
“Transportation costs are a big element of [what] consumers pay for fiberglass pools, and the closer our plants are to our builders, the more competitive they can be in the marketplace. That was a key objective of the Royal acquisition,” said Mark Laven, Latham’s president.
The decision to enter the fiberglass space was prompted by increases in the category’s market share as well as consumer research conducted by Latham, which indicates most new owners of fiberglass pools specifically chose the product over vinyl liner and gunite.
“Having made that choice ... they are referring [fiberglass] to friends and neighbors,” Laven said. “I think that’s what’s behind the market share growth that we’ve seen in the last five to 10 years.”
Research also indicates fiberglass and vinyl-liner pools combined sell more than 50 percent of the new pools in the country today, and more builders now are offering them in addition to gunite. Laven attributes it to the recession.
Despite the increased popularity in products made by the company, Latham couldn’t escape the effects of the down economy. The manufacturer had to cease operations of its North Carolina plant for more than a year, and drastically cut back operations at its Florida location. Then, in December 2009, the firm voluntarily filed for Chapter 11 bankruptcy protection.
“In retrospect, our timing couldn’t have been worse because as we were trying to expand the business as the market was collapsing,” Laven said. “It was a sound plan when the market was doing well. We just didn’t anticipate this kind of recession.”
Ultimately, the company rebounded, thanks in part to the financial backing of the Greenwich, Conn.-based private equity firm Littlejohn & Co., which became the majority owner of Latham in 2010. The subsequent acquisition of Blue Hawaiian later that year enabled the reopening of its North Carolina facility and added volume to its Florida location, according to Laven.
“From a financial standpoint, it was a good move for the organization because it really positioned us to move forward,” Straub added.
Latham isn’t the only company to take advantage of the increasing interest in fiberglass pools. In the past five years, approximately 10 new regional manufacturers have entered the market, according to Kirk Sullivan, president of San Juan Pools, a Lakeland, Fla.-based manufacturer of fiberglass pools and spas.
“The barriers to entry are not that great, so if you have a factory that makes things out of fiberglass, like a boat, it doesn’t take a whole reprogramming of your world to make a pool instead of a boat,” Sullivan said.
Whether these newcomers remain players is yet to be seen. However, Straub believes the shift away from concrete will potentially allow some of the more powerful fiberglass firms to take advantage of expanding on their businesses and building market share in the industry.