Hartford Business Journal

7 HARTFORDBUSINESS.COM | JANUARY 31 2022 DEAL WATCH Lightning protection manufacturer buys Torrington building for expansion By Michael Puffer mpuffer@hartfordbusiness.com W insted-based East Coast Lightning Equipment recently paid $1.2 million for a Torrington industrial building for its growing space needs. East Coast co-owner Jennifer Morgan said the company will maintain its foundry operations in Winsted and move machining and assembly operations to the Torrington building. She hopes to have the second location up and running some time in the second quarter of 2022. "We are excited to have new space," Morgan said. "We have needed it for a while." The 37-year-old manufacturer bought the 26,237-square-foot, concrete-block building at 187 Commercial Blvd., in Torrington in late December. East Coast is hiring in anticipation of the expansion. Morgan said she hired three new people the week of Jan. 9, and plans to hire four more, for a total of 46. East Coast Lightning Equipment's history goes back to the Ackerman Lightning Protection Co., launched by Morgan's parents — Charles and Judy Ackerman — in Winsted in 1967. The company installed and serviced lightning protection on residential, agricultural, industrial, commercial and government structures in Connecticut and New York. Charles Ackerman began making components and, in 1984, the couple opened East Coast Lightning Equipment as a manufacturer. They sold the installation business to two employees to avoid competing with their new customer base. Jennifer Morgan and her husband, Mark Morgan, joined the business in the early 1990s, eventually buying it from Charles and Judy Ackerman. Today, East Coast Lightning has a 2,515-item catalog, selling to lightning protection installers in North America times," NAHB Chairman Chuck Fowke said. "NAHB analysis indicates the aggregate cost of residential construction materials has increased almost 19% since December 2020. Policymakers need to take action to fix supply chains. Obtaining a new softwood lumber agreement with Canada and reducing tariffs is an excellent place to start." Costs for steel mill products rose 125% between August 2020 and August 2021, according to a recent Hinckley Allen analysis of construction material supply chain problems, produced for the Connecticut Construction Industries Association. Milled copper and brass products were up 45% in the same period, while lumber spiked precipitously and then tapered, ending at 16% up year over year as of August. "We are not surprised when you see a 5% or 10% increase, but when you see a 40% increase in a product that you bought two months ago, that began to alarm us," said Anthony Valenti, a managing member of Newport Realty Group, which recently put a roof on a 16-apartment building along Farmington Avenue in Berlin. "And it continues." Newport's three-story property will have 7,000 square feet of retail on the first floor. When complete, the "Steele Center" development will have five buildings and 76 apartments. Windows began going into the building in mid-January. The sign out front reads "Available FOR OCCUPANCY FALL 2021." Work began last March. By July material prices were rising quickly, Valenti said. "Wood has probably been the biggest expense," Valenti said. "Now we are seeing everything else [increase], there is not one thing that is immune from the increases." Design changes and aggressive shopping helped keep the overall increase to the first building's $4 million budget under 10%. Instead of shopping through one or two product vendors, Newport now seeks material bids from five or six. "We are more diligent than ever," Valenti said. "We are spending an awful lot of time doing that." Building materials aren't just more expensive, they are harder to find. There was a three-week delay in framing due to a behind-schedule delivery of 1,800 steel bolts. Despite challenges, Newport is pressing ahead with Steele Center. In fact, Mark Lovley, Valenti's business partner, said high demand is keeping the company as busy as ever. Newport is building 61 houses in a 55-plus development on the Farmington-Plainville line. Forty- nine sold in 12 weeks. Newport is seeking local approvals for another 12 houses in a separate Plainville location. Newport is also partnered with Manafort Brothers on a 175-apartment mixed-use development in downtown Plainville. Valenti said he hopes to begin construction in the third quarter of 2022. Valenti said supply chain woes are probably suppressing development activity. Veteran builders will still launch projects, he said, but they must work harder and be more selective about what they take on. Valenti said Newport is running multiple pro forma statements on prospective projects these days. "If it is a good project, we are going to launch," Valenti said. "But if it is a marginal project, we are going to pass. It has to be a good project to launch today." Valenti said he doesn't expect material prices to ever sink back to 2019 levels, but he predicts an end to price and supply volatility around midyear. Anticipated interest rate hikes and a tapering of COVID-related federal stimulus will see cash tighten and demand taper, Valenti predicts. He also believes that housing supply will begin to catch up with demand. Unclogging ports Tao Lu, an assistant professor at the UConn School of Business who researches the global supply chain, said there is hope for a gradual improvement leading to tangible changes midyear. COVID-19 has resulted in production slowdowns and labor shortages that have clogged ports, Lu said. That's translated into shipping costs from China tripling year over year. But vendors are beginning to find new routes and use new ports, he said. Some larger companies are chartering their own vessels to ship containers, Lu added. "According to my research, people in the shipping industry believe this will remain for the first half of 2022," Lu said of the clogged supply chain. "We do see some progress, but it will still take some time to get back to the real normal situation before the pandemic." Mike Freimuth Tao Lu and the Middle East. Morgan said her company produces the vast majority of parts in its catalog, sourcing materials from domestic producers whenever possible. Jennifer Morgan said she considered expanding the operation to northern Florida, which offers lower taxes with similar logistical advantages for distribution. But she said her own difficulty recruiting new staff, and similar problems relayed by client installation companies, swayed the decision to remain in Connecticut. East Coast Lightning Equipment bought its new Torrington property from Decade LLC. Decade's principal is Daniel Schreck, of Naples, Fla. Schreck was also principal of FCT Electronics Management, an electronics parts supplier once located in the Torrington building. "We are excited," Morgan said. "Torrington has been wonderful to work with. Winsted-based East Coast Lightning Equipment paid $1.2 million for an industrial building at 187 Commercial Blvd., in Torrington, where it plans to move some of its operations. Fernando Kelly, production supervisor of East Coast Lightning Equipment, ladles molten metal into sand molds at the company's Winsted foundry. PHOTO | CONTRIBUTED PHOTO | COSTAR

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