Trex sets aside reserve for flaws in Fernley production

Trex Company Inc. said last week it's set aside a $45 million reserve to handle replacement of flawed decking produced by its plant at Fernley.

The company headquartered at Winchester, Va., said the flawed product was produced between 2003 and mid-2006, but it's confident the problems now have been resolved.

Consumers said the surface of the decking began to flake within two or three years of its installation.

Trex executives told investment analysts they believe only a small percentage a number in the low single digits of the production of the Fernley plant was affected by the problem. They said the company completely revised the formulation of its product, stepped up quality testing and changed production processes after the problem was discovered.

Trex makes decking, rails and fencing from a blend of reclaimed wood and plastic. The company said a failure to completely surround wood fibers with plastic at the Fernley plant appears to have created the flaking.

Struggling with the slow housing market nationwide, Trex said it lost $41.2 million on sales of $64 million in the third quarter. The sales were up 2.6 percent from year-earlier figures.

In a cost-cutting move a few weeks ago, Trex moved production from a now-shuttered plant in Mississippi to the Fernley location.

And last week, the Reno office of CB Richard Ellis said it represented Trex in a seven-year lease for 337,500 square feet of space in the Pacific Gateway Industrial Center in Fernley. The property is owned by Panattoni Development.

Trex is building a storage and receiving center on the property.