In May 2022, Nucor announced its agreement to acquire C.H.I. Overhead Doors. The U.S.-based garage door manufacturing company has been acquired by Nucor Corporation in an investment deal estimated at $3 billion. Although senior management is anticipated to remain unchanged under the new deal, the impact of the acquisition on the company and its employees remains uncertain.

Potential Advantages of Nucor’s Acquisition

Given Nucor’s expertise as a specialized steel manufacturer, its involvement in the company could prompt innovation and product advancement.

Additionally, having a steel giant backing C.H.I. may alleviate some of the supply chain issues that the garage door industry has experienced regarding raw materials.

Possible Disadvantages

Of course, a $3 billion deal means shareholders expect to recoup their investment. While KKR’s approach to generating returns was people-oriented, Nucor might take a different approach. Generating value for shareholders is never straightforward. Each approach involves trade-offs and sacrifices, and any decision made could jeopardize what made C.H.I. Overhead Doors a valuable asset. Let’s explore some of these possibilities.

• Corporate Restructuring: KKR’s substantial investment in C.H.I. Overhead Doors’ workforce is notable and has yielded impressive returns, as evidenced by C.H.I. exponential growth. The Nucor acquisition could signal a new era for employees at C.H.I. Overhead Doors. This means that some of the perks and benefits that C.H.I. employees enjoyed under KKR may diminish as management shifts its focus toward investor needs.
• Cost-Cutting and Price Increase: With inflation at a 40-year high and ongoing labor and supply shortages causing market disruptions, it would be unsurprising for executives to try to reduce production costs and raise prices for the company’s garage doors, springs, and hardware.

Potential Impacts on Garage Door Repair Companies and Consumers

C.H.I. Overhead Doors could benefit from increased production scale, especially with Nucor’s status as a steel producer, potentially resulting in shorter wait times. Cost-cutting measures might result in reduced garage door and hardware quality, leading to more repairs and a higher demand for replacements. However, Nucor and C.H.I. could leverage their new partnership to invest in research and development, promoting innovation in the industry.

C.H.I. Overhead Door’s products are already priced significantly higher than competitors, and in some cases, they may not provide the best value. The acquisition and investment could lead to further price increases, adding to the 50-100% price hike for wholesale garage doors since 2020. Therefore, consumers looking to replace or install garage doors may consider consulting a licensed garage door repair company to explore other options before purchasing from C.H.I.