St. Joseph, Mich.-based Green Tree Composites has entered into an agreement with Veblen, S.D.-based Premium Composites LLC to make Premium the exclusive manufacturer of Monarch-brand wood-plastic composite decking.
Green Tree announced recently that it would stop manufacturing the product in-house. The company plans to sell its 12 extrusion lines and a palletizing line at auction Jan. 28.
Hilco Industrial LLC of Farmington Hills, Mich., will conduct the sale.
Green Tree will continue to operate as the sales and marketing arm of Monarch deck and railing products, but will cease to be a manufacturer, said Bill Schlottman, Green Tree's national sales manager, in a Jan. 3 telephone interview.
``This will help us evolve the line and find new, innovative products to put in the marketplace,'' Schlottman said.
Customers should notice no change at all, he said.
The firm hopes to grow its distribution network to become a larger-volume player within the industry, he said.
``Our main focus is to produce high-quality products,'' he said. ``We want to stay ahead of the curve, be innovators. That should hopefully increase sales for us.''
Premium already manufactures its own line of composite deck and railing products, called PC Ultima.
The company has more than enough capacity to handle bringing on Monarch, Schlottman said.
Both the PC Ultima and Monarch-brand decking are made with virgin, rather than recycled, polyethylene, which is atypical in the industry.
Green Tree is regarded as an innovator in the industry. The company was the first to market with a tropical hardwood look-alike board, which kick-started the predominant industry trend of 2006-07. Green Tree was also among the first to introduce coextruded white composite railing.
The firm plans to join other composite decking manufacturers in launching an upper-price-point cellular PVC decking line to expand its portfolio.
The company's focus on growing its distribution is the right strategy, said Steve Van Kouteren, a principal with Exton, Pa.-based building products consulting firm Principia Partners.
``That's the whole key - distribution,'' Van Kouteren said in a Dec. 26 telephone interview. ``If you don't get it, you get stuck in a certain size range and your margins get squeezed.''
Green Tree has less than $20 million in annual sales. Comparatively, market leader Trex Co. Inc. in Winchester, Va., will sell about $320 million worth of goods in 2007.
``For a little company, they've had some nice innovations, and were leaders in a sense,'' Van Kouteren said.
The industry should expect further downsizing in 2008.
``More companies will be under duress,'' he said. ``I won't be surprised to see more consolidation.''
