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URL:  http://boards.fool.com/us-pipe-is-owned-by-walter-industries-but-they-22791603.aspx

Subject:  Re: Free Education for science and engineering Date:  7/24/2005  9:44 AM
Author:  PaulEngr Number:  977 of 1651

US Pipe is owned by Walter Industries, but they have somehow spun them off and combined them with Mueller to have a complete waterworks package. Lots of debt there though, so they may have a tough time pulling it off. Prices may suffer as they seek market share.

McWane and Griffin (that I know of) have tried the same thing in the past (bundling fittings with pipe; owning a fittings operation). Both failed to make any ground with it. I predict that U.S. Pipe will do similarly.

Margins on fittings are even less than the pipe itself. The market is almost entirely price driven (mostly bidding on municipal contracts). So you can't get a boost in profitability by owning a higher margin product line, and you can't charge higher prices with a "bundling" deal on either fittings or pipe.

Gaining market share by reducing prices has been tried last year. Griffin picked up substantial market share for a short period of time by lowering prices (actually, raising prices slower as steel prices climbed). In the price war, it sounded like U.S. Pipe was the one that took it on the chin, so I doubt they'd want to attempt that one again, especially if they are taking on even more debt. McWane, Griffin, and ACIPCO have pretty deep pockets relative to U.S. Pipe.

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