(June 30, 10:30 a.m. EDT) — Uponor Oyj, a Vantaa, Finland, building products conglomerate, has taken steps during the past few years to refocus the company. Most recently, that meant divesting Uponor ETI, which PW Eagle Inc. acquired in March.
“Uponor's core business is now related to housing solutions,” said Jyri Luomakoski, Uponor's executive vice president and chief financial officer. “Municipal is no longer a core business for Uponor. We believe that we can find a better home for this business. It's best for everybody for it to be in the hands of someone who will treat it as a core business.”
The municipals America business also includes high density polyethylene gas distribution segment Uponor Aldyl, with an injection molding facility in Shawnee, Okla., an extrusion facility in Tulsa, Okla., and a smaller facility in Buenos Aires, Argentina. Luomakoski would not comment as to when the company expects to have a buyer for that unit.
Still, officials said the company's emphasis remains finding new ways to use plastic, including all-plastic plumbing systems. Uponor injection molds polyphen-ylsulphone (PPSU) pipe fittings at a facility in Nastola, Finland, but uses contract molders for the North American market. According to company information, Uponor has been increasing its sales of high-performance plastic fittings at a yearly rate of 30 percent since the company first entered the market in 1997. For 2002, the company reported $255 million in extrusion sales for North America.
In a May 20 telephone interview from Uponor's Finland headquarters, Luomakoski discussed the company's approach.
Q: Divesting the ETI business marks a significant retrenchment by Uponor in the North American market. Can you discuss Uponor's strategy?
A: We no longer consider Uponor a pipe company. Our goal is to become a leading housing solutions provider. That statement also includes the North American market. When you look at just what Uponor has produced, it's 1.5 billion meters [4.95 billion feet] of PEX pipe around the world. You can go about 37 times around the world, or a round trip two times to the moon. These pipes are continually in use. [But] marketing a PEX system is not selling pipe. We offer a total package, such as the Wirsbo floor heating, which is North America's most-installed brand of hydronic radiant floor heating.
Uponor already provides a variety of systems to homes and commercial buildings, which originate from our pipe background. [These systems include heating, plumbing and fire safety applications.] There are also others, such as indoor air quality, cooling, solar and geothermal energy, control systems to the above, etc. Rather than looking at these as independent, stand-alone systems, our goal is to develop an integrated offering combining the above into one modular package which gives the homeowner or facility manager considerable benefits in functionality, total life-time costs and serviceability.
The speed at which we bring such new offering to market will vary from one region to another. We have already made good progress both in the U.S. and in some European countries.
Q: What are Uponor's strategies for growth in the North American market in the coming years?
A: We have a lot to do. We believe there are opportunities to grow by making Uponor's comfort offering more comprehensive, that is, easier to design, faster to install, while maintaining our level of support. We will work on that through internal development and growth relationships with other companies.
Q: Is there anything imminent in that arena that you can talk about now, such as joint ventures, etc.?
A: Time will show.
Q: Uniting Wirsbo Canada and Plasco manufacturing was part of the company's overall branding strategy; now the company has one corporate brand and three global systems brands. Why was this branding change necessary?
A: In the past few years, when we've acquired companies, most of them continued with their own brands. We believe our current focus makes Uponor much stronger and much more efficient. We are focusing resources on brands that can generate the loyalty of customers, and we are de-emphasizing or removing local brands that are not strong enough on the international scale. That's the global approach. As far as North America is concerned, we had two organizations marketing two distinctly different brands. In the U.S., Wirsbo brand is the industry leader. Plasco is a more basic, plumbing-oriented offering. Our determination was that our customers would be better served if we consolidated under one management team. Uponor corporate brand gains the recognition. That's the important part for us, that there is a heavy brand equity associated with Uponor, the corporate name.
Q: With the divestiture of the ETI business, Uponor no longer participates in the PVC pipe market in North America. What were some of the challenges in that market compared to others the company serves?
A: It's a very interesting, very volatile business; nothing we have really seen in other markets we operate in. It was a different type of worry compared to others. Certainly we had a good team running that business, there's no question of that.
Q: What major factors will have the most impact on Uponor's business in North America in the year ahead?
A: Doing business in North America, we've been more cautious. Because we're a publicly held company, it's difficult to get more specific. Our radiant floor heating and plumbing are strongest in new residential construction, which appears to remain healthy in the U.S. and Canada.
Q: With the housing solutions approach, does the company have any plans for acquisitions?
A: In the recent past, we have not done any acquisitions in North America, which may or may not be indicative of the future. We, as a public company, can't really give comment on that.
Q: What other issues do you see at the forefront?
A: There are the penetration issues concerning plastic vs. traditional materials. For instance, we see that there are many European countries that are way ahead of North America. That means there's tremendous potential for expansion of plastic plumbing systems.
Q: Speaking of penetration issues, Uponor has been one of the PEX extrusion firms leading the building code battles in the United States. Are there any certain areas in the United States on which Uponor is focused?
A: For the state of Minnesota, we expect the plumbing code approval to come into effect later this year. Massachusetts will be the only state that doesn't have it in its code. But my understanding is that there has been progress, and that Massachusetts is moving in the right direction. There are still some code barriers, but certainly the long-term work has been carried out.
Q: Where do you see Uponor in five years in the North American market?
A: Uponor has a unique market position, which is just starting to gather momentum. In all of these areas Uponor products offer significant advantages over more traditional alternatives, such as forced air heating and copper plumbing, so we're very optimistic about the future.