It is not often that you will see a company expand into new product arenas before its first product establishes a strong foothold.
But that is exactly what Peter Kotiadis is doing with the Wood 2.0 technology behind Tech-Plank siding, which Tech-Wood North America introduced just one year ago. He's moving it quickly into fences and window sashes and frames.
'We are moving into two new segments of the market, said Kotiadis, president and CEO of the Greenwood, S.C.-based company. We think windows might be the next big market for us. It is time to start moving forward with what is the next new technology in windows. We want to compete with Andersen [Windows Inc.] on high-end windows.
It's a pretty bold move by the former Royal Group Inc. executive, given that Tech-Wood has just gotten the kinks out of its manufacturing process and only now is getting into full siding production at its 120,000-square-foot Greenwood plant.
But Kotiadis whose firm has invested more than $10 million in the technology doesn't see it that way.
Everyone has realized that there is no volume to support making money on the commodity side [in windows] as everyone has eroded prices down, Kotiadis said in an interview at the International Builders Show, held Jan. 12-15 in Orlando. Everyone who has survived ... will be moving into high-end sales where you can differentiate yourself and make respectable margins.
And he believes he has the technology to back up his forays into new product areas.
Tech-Wood claims that its Tech-Plank polymer-enhanced wood is twice as strong as fiber cement and 35 percent lighter. The products are made by encapsulating resin-free, bone-dry oriented long-strand pine-wood fibers with liquefied polypropylene through a continuous extrusion process, with fibers making up roughly 75 percent of the product, and PP the rest.
The firm is already developing window frames and sashes. We are cutting the tooling for sashes and frames with several large window companies, Kotiadis said. The firm expects to introduce the products sometime between June and September.
With fabrication, Tech-Wood's technology can make a product similar to Andersen's Renewal windows, which are made from a composite vinyl material with the strength and stability of wood, he said.
Our material is stronger and stiffer, has a higher thermal rating and is more cost-efficient than Anderson technology for windows, Kotiadis claimed.
He added that Tech-Wood products can be made in hundreds of colors at no premium cost compared with vinyl, which is limited to colors already in stock, or fiber cement, which has a flat look. To create the colors, the company recently inked a partnership with Sherwin-Williams Co., he said. You can't do that with vinyl and you pay a two to three times premium with fiber cement.
However, fencing not windows will be the first new product to emerge on the heels of siding, with those products shown for the first time in March, he said. Although the firm is investing in tooling for fencing, windows and doors, it has already signed an agreement for new fencing products and arranged for tooling and equipment, he said. Fencing has a unique distribution model. These products may have to have their own separate distribution footprint, he said.
Tech-Wood learned a number of lessons during its transition to full production at its plant in Greenwood, Kotiadis said. We learned some lessons about packaging and shipping. We found out that a product leaving [our] doors is judged on how it arrives at the job site, so we had to focus more attention on packaging and logistics.
After a few growing pains, all the equipment is in place, the plant is fully developed and built, the distributors chosen and signed up, he said.
This will be the year that we turn from startup to commercial, Kotiadis said. We are preparing for business and converting orders for distributors. We are seeing traction with dealers who want to differentiate themselves. Our product is not a commodity product.
He noted the importance of partnerships to get into markets a fact that became evident to the firm last year. Now it is working with distributors, and on getting the word out to home builders and architects. That is the way it has to be if you are going to succeed and sell today. You have no choice but to work in close synchronization. Approaching the marketplace is now a combined effort, he said.
You can spend $5-$10 million to develop a product, but you better be prepared to let the world know. You can have the greatest product in a category, but if no one else knows about, you won't succeed. Those who succeed are the ones who can offer it in the most locations or the ones who tell the most number of people.
Tech-Wood's goals are to grow and to profit by year's end, and to reinvest in its technology at least for the next five years, he said.
I believe that someday I can build an entire house out of Tech-Wood and, other than pure wood, I don't think you can do that with any other material, he said.
Tech-Wood holds exclusive rights to the product through a license from Tech-Wood International Ltd. of Birmingham, England. Tech-Wood North America is a 3-year-old independent company with financial backing from a U.S.-owned and -controlled investor group that has no connection with Tech-Wood International BV of Rotterdam, Netherlands, which filed for bankruptcy a year ago, Kotiadis said.