When clay tiles, popular since the 1800s, lost ground to an innovative product for draining farm fields in the 1970s, Advanced Drainage Systems Inc. and its thermoplastic corrugated pipe took root in the agricultural market.
Then, engineers at the company, which was founded in 1966, developed a way to make dual-wall high density polyethylene pipe with a corrugated exterior for strength and a smooth interior for hydraulics and flow capacity.
The Hilliard, Ohio-based business could compete against concrete and corrugated steel in the storm water management market after this product line (N-12) launched in 1987-88.
This year, ADS introduced a composite pipe with a triple-wall design in diameters of 30 to 60 inches to compete against concrete for storm and sanitary sewers. The pipe (HPXR75) is made of corrugated polypropylene with a smooth interior, ribbed structural core and a fiberglass exterior. The innovation gives it a pipe stiffness of 75 pii to resist deflection under heavy loads, allowing use of a broad range of backfill materials and a 100-year service life.
“What we've done is put an outer wall on it and infused it with fiberglass reinforcement,” ADS's outgoing CEO Joe Chlapaty said in a phone interview. “We believe this will really help us accelerate our conversion in large-diameter storm water.”
With sales of $1.3 billion for its 2017 fiscal year ended March 31, ADS has converted its way to being the third-largest pipe, profile and tubing extruder in North America, according to Plastics News' latest ranking. Chlapaty has witnessed much of it.
Hired in 1980 as the chief financial officer, when annual sales were about $50 million, Chlapaty has seen markets emerge, surge and fall and new plastic products take share from traditional materials. Now, at age 71, he is on the brink of a personal conversion — from a CEO of 13 years to a retiree.
The executive search firm of Korn Ferry is helping line up candidates to succeed Chlapaty, whose base salary is $710,000 but with stock awards and other compensation totals $3.69 million. The goal is to have ADS's next CEO hired and settling into the company by the end of the year.
In the meantime, Chlapaty and the board are figuring out his next role. It could be advisory or a board membership, but one thing is for sure: He will keep his fairly significant ownership — 18.3 percent of shares — of the company.
“It says symbolically to my colleagues that even as I'm no longer CEO, I support what is going on and I stand ready to help the new person and provide on-going expertise and advice,” Chlapaty said. “I don't plan to just go walk off into the sunset. I plan on making continued contributions in an appropriate way.”