October 31, 2005
Solution oriented | Maine makers of new building products hope they'll find success with distributors and buyers
By Jeff Pike
According to Ken Simonson, the general outlook for the construction industry across the nation is strong. "For the last year and a half, construction has been advancing very strongly ˆ not just in housing, but also in the hotel, manufacturing and health care sectors," said Simonson, chief economist for the Arlington, Va.-based Associated General Contractors of America.
Simonson added that the construction industry has faced more rapid cost increases in 2005 compared to the rest of the economy ˆ particularly with the price of fuel impacting travel costs, along with the rising cost of materials manufactured using oil and natural gas as energy sources. "Given those cost pressures, the construction industry is very open to products that can reduce cost," Simonson said. "Contractors don't want to pass along costs, and they are very interested in saving on materials and the labor to install those materials. It's a favorable environment for products that deliver those kinds of savings."
Two Maine companies and a research center at the University of Maine hope to capitalize on those trends with new products for the building industry. They've spent years, in some cases, working on their products, but all three products ˆ a solar hot water heater, hurricane-resistant panels and self-finishing nails ˆ are relatively close to market. The companies profiled below are six to 12 months away, they hope, from getting their products into the hands of builders, and then into homes across the country. Details on their launches follow.
Purist Energy, Portland
Product: Solar hot water heater
Cost of development: $50,000
Anticipated launch: Spring 2006
Purist Energy has developed a solar hot-water heater that CEO Dana Fisher says is easier to install than traditional solar units. "Most solar hot water heaters require plumbers to solder many joints," Fisher said. "But our product is much simpler ˆ we've pre-soldered 35 connections within the unit."
The Purist Energy unit comes in a shoe-box-size container that includes heat exchangers, pumps, valves, a controller and a power supply. A plumber only needs to make a run of copper pipe to a thermal solar-light collector on a customer's roof and then attach two copper lines to a standard electric hot-water heater. The unit can then be plugged into a nearby wall, and also can be retrofitted to any existing electric heating system. "Homeowners still need a conventional hot-water heater to back up the solar heating system," Fisher said. "But it works on its own during sunny weather and can do the heavy lifting during the winter. It won't freeze because it's a closed-loop system that uses the same fluid as baseboard heating."
Pre-soldering the components is the main difference between Purist Energy's product and those of its competitors, "but the dual pump system with a differential controller is also unique," Fisher said. "It allows the system to heat water with less sun than a solar water heater with one pump."
The idea for the solar hot water heater was hatched in May of 2004 by Fisher and Mike Metcalf, the company's engineering manager. "We worked together in the past, and have always been interested in renewable energy sources," Fisher said. The duo received a $10,000 seed grant from the Maine Technology Institute last year, which they used to build and test prototype units. Fisher's business experience includes managing a brewery, where, he says, fluid and heat transfer systems are critical, while Metcalf brings 10 years of CAD experience in the semiconductor industry, where he designed systems for fluid and gas flow.
The partners spent a significant amount of time presenting their product at industry conferences over the last 18 months; as a result, they say, the buzz about the company is beginning to spread. "We're already getting calls from all over the U.S. and Canada," Fisher said.
The company plans to focus on manufacturing in the short term, and hopes to set up a plant in the Portland area by the end of the year. "We want to create manufacturing efficiencies so that we'll be the low-cost leader and secure market share," Fisher said. "Once we have the manufacturing process down, we will primarily work through distributors to market our product. We hope to have our first units installed by next spring."
Fisher estimates that, over the course of a year, an average home owner will save 70%-80% percent in hot-water heating costs while reducing carbon dioxide pollution by the same percentage. Because the Purist Energy System is designed primarily for colder climates, Fisher plans to target Canada and northern U.S. markets. "We have people ready to distribute in Toronto, Philadelphia, Michigan, Wisconsin," he said.
The unit retails for $1,195. Based on market research, Fisher projects sales of $5 million for the first year. "There are more than a million electric hot water heaters replaced in the U.S. every year," Fisher said. "With the rising cost of oil, and the fact that homeowners receive tax breaks when they install solar hot-water heaters, we feel the 5,000-unit target is reasonable."
Khameleon Nails, Carrabasset
Product: Self-filling finish nails
Cost of development: $225,000 to date; expects to invest close to $500,000 more
Anticipated launch: November 2006
The idea for Khameleon Nails came to Jeff Strunk about three years ago, when he was staring at his office ceiling. "I was amazed by all the holes created by the finish nails and how poorly it looked," he says. "It made me wonder why someone hadn't created a self-filling finish nail."
Strunk, a career inventor who has also patented a cribbage board and a process for creating a directory of cell phone numbers, is the chairman of the board for Khameleon Nails. "I'm a big fan of products that meet some sort of high-volume need or help calm people's frustrations," Strunk said.
It was this approach that led Strunk to invent self-filling finishing nails, which employ putty embedded on the nail head to cover and fill the nail hole. It didn't matter to him that he had no experience with the building products industry. "Through the other products I had brought to market, I had an understanding of the process it takes to sell a product through distributors to the retail market," Strunk said.
Thus Strunk began researching the nail market and found that nobody offered a self-filling finish nail. He experimented by manually applying different putties to nails and trying them out in his home workshop. Strunk also analyzed the components of air guns and developed a prototype for a self-filling-nail air gun.
"Two-and-half years later, my partners and I received patents for the nail and improvements to the air gun," Strunk said. "We wanted to wait and make sure they were viable before we put too much money into the company." (Strunk's partners include company president Tom Tanner, who runs the day-to-day operations. Tanner comes to Khameleon Nails after owning a painting company.)
After receiving the patents, Strunk next researched how to manufacture the nails and the air gun with the help of a $10,000 seed grant from the Maine Technology Institute. He has since applied for another grant from MTI to match the $200,000-$250,000 being raised by a team of investors who he says have experience bringing new products to market. (Strunk declined to disclose the investors' identities.) These funds will go toward Khameleon Nails' first manufacturing prototype run, scheduled for February of 2006.
To build demand, Strunk plans to provide 150 contractors across the country with air guns next April, when he expects to be ready to distribute the product. "Word of mouth will be the best way to get our name and the benefits of our nails out to the contractors," Strunk said. "After this initial field test, we will formally launch the product in November of 2006 at one of the major industry trade shows."
If successful, the nails will greatly benefit carpenters, painters and homeowners, according to Strunk. "For a 2,500-square-foot house, a carpenter usually leaves holes for the painter to fill that take 45-50 hours of putty time," Strunk said. "Large homes might require two or three weeks of putty time for the exterior. But with our process, the wood comes out smooth right away so the carpenter and the painter look good and finish the job sooner while the homeowner saves money."
The Khamelon nails will cost 20%-30% more than regular finish nails, while the air gun will run about the same as air guns on the lower end of the price scale. "We need to keep the cost of the air gun around $180 so carpenters will readily consider it," Strunk said. "This will help us penetrate the nail market, which is where we expect to make most of our profit."
Strunk projects his revenues to be $3 million in the first full year and close to $20 million after three years. He bases his projections on research he has done with industry experts. "There are more than a billion finish nails sold per year, so where we end up revenue-wise could even be higher," he said.
University of Maine Advanced Engineered Wood Composites Center, Orono
Product: Hurricane-resistant panels and joints
Cost of development: Did not disclose
Anticipated launch: Fourth quarter, 2006
The abundant hurricane activity this year has added to the emphasis that the building industry and the federal government began putting on hurricane-resistant products in 1992 when Hurricane Andrew hit Florida.
"The extensive damage from Andrew made the industry realize how important it was to make buildings more resistant to hurricanes and other forces of nature," said Habib Dagher, director of the University of Maine's Advanced Engineered Wood Composites Center in Orono. "During the past 20 years, the country has incurred an average of $50 billion per year in damages from these types of occurrences."
Funded by grants from federal agencies, such as the U.S. Department of Agriculture , Dagher and his research team began working on hurricane-resistant products in the early 1990s. Their research efforts were bolstered by the creation of the Wood Composites Center, launched under Dagher's guidance in 1996 and now employing 125 people in a 48,000-square-foot lab.
The AEWC's most recent developments include two patents for hurricane-resistant products that help buildings withstand winds up to 170 mph. The National Science Foundation. One patent is for a building panel with an inserted layer of composite that prevents nails from being ripped out in high winds. The other patented product is made up of a strip of composite applied to the panel joints of a roof. Both patents were completed over the course of the past three years. "Damage to wood construction under high wind-loads is related to the connections between panels and the frames," explained Dagher. "That's where buildings come apart, so we developed these two products that double the strength of the joints."
Product development for the panels has advanced to the point where Dagher is now working with Tacoma, Wash.-based APA- The Engineered Wood Association, which represents North American manufacturers of plywood and other engineered wood products. "APA will help get our products code-approved," Dagher said. "Commercial companies can then license our patent and our technology through the APA for their panel products."
If all goes well, Dagher expects that the center's technology will appear in products that hit the market in the fourth quarter of 2006. "It takes years to bring new products like these to market," Dagher said. "Development-to-implementation averages 10 years because the industry is so fragmented. It takes a long time to get new codes and standards implemented."
Dagher would like to see New Orleans and other areas recently hit by hurricanes rebuilt with the center's technology. "But people want to rebuild their homes and resume living right away, so we may end up rebuilding those areas with the same panel technology," he said.
Another problem that the industry faces, according to Dagher, is that builders don't always construct buildings according to spec. "Even with the proper technology, if it's not implemented properly it won't work," Dagher said. "For example, carpenters may not use as many nails per panel as they are supposed to. Building a hurricane-resistant structure is not just a matter of developing the technology. Builders also need to deploy it properly. We've tried to develop our joint technology so that it's practical for builders to implement."
Simonson added that the construction industry has faced more rapid cost increases in 2005 compared to the rest of the economy ˆ particularly with the price of fuel impacting travel costs, along with the rising cost of materials manufactured using oil and natural gas as energy sources. "Given those cost pressures, the construction industry is very open to products that can reduce cost," Simonson said. "Contractors don't want to pass along costs, and they are very interested in saving on materials and the labor to install those materials. It's a favorable environment for products that deliver those kinds of savings."
Two Maine companies and a research center at the University of Maine hope to capitalize on those trends with new products for the building industry. They've spent years, in some cases, working on their products, but all three products ˆ a solar hot water heater, hurricane-resistant panels and self-finishing nails ˆ are relatively close to market. The companies profiled below are six to 12 months away, they hope, from getting their products into the hands of builders, and then into homes across the country. Details on their launches follow.
Purist Energy, Portland
Product: Solar hot water heater
Cost of development: $50,000
Anticipated launch: Spring 2006
Purist Energy has developed a solar hot-water heater that CEO Dana Fisher says is easier to install than traditional solar units. "Most solar hot water heaters require plumbers to solder many joints," Fisher said. "But our product is much simpler ˆ we've pre-soldered 35 connections within the unit."
The Purist Energy unit comes in a shoe-box-size container that includes heat exchangers, pumps, valves, a controller and a power supply. A plumber only needs to make a run of copper pipe to a thermal solar-light collector on a customer's roof and then attach two copper lines to a standard electric hot-water heater. The unit can then be plugged into a nearby wall, and also can be retrofitted to any existing electric heating system. "Homeowners still need a conventional hot-water heater to back up the solar heating system," Fisher said. "But it works on its own during sunny weather and can do the heavy lifting during the winter. It won't freeze because it's a closed-loop system that uses the same fluid as baseboard heating."
Pre-soldering the components is the main difference between Purist Energy's product and those of its competitors, "but the dual pump system with a differential controller is also unique," Fisher said. "It allows the system to heat water with less sun than a solar water heater with one pump."
The idea for the solar hot water heater was hatched in May of 2004 by Fisher and Mike Metcalf, the company's engineering manager. "We worked together in the past, and have always been interested in renewable energy sources," Fisher said. The duo received a $10,000 seed grant from the Maine Technology Institute last year, which they used to build and test prototype units. Fisher's business experience includes managing a brewery, where, he says, fluid and heat transfer systems are critical, while Metcalf brings 10 years of CAD experience in the semiconductor industry, where he designed systems for fluid and gas flow.
The partners spent a significant amount of time presenting their product at industry conferences over the last 18 months; as a result, they say, the buzz about the company is beginning to spread. "We're already getting calls from all over the U.S. and Canada," Fisher said.
The company plans to focus on manufacturing in the short term, and hopes to set up a plant in the Portland area by the end of the year. "We want to create manufacturing efficiencies so that we'll be the low-cost leader and secure market share," Fisher said. "Once we have the manufacturing process down, we will primarily work through distributors to market our product. We hope to have our first units installed by next spring."
Fisher estimates that, over the course of a year, an average home owner will save 70%-80% percent in hot-water heating costs while reducing carbon dioxide pollution by the same percentage. Because the Purist Energy System is designed primarily for colder climates, Fisher plans to target Canada and northern U.S. markets. "We have people ready to distribute in Toronto, Philadelphia, Michigan, Wisconsin," he said.
The unit retails for $1,195. Based on market research, Fisher projects sales of $5 million for the first year. "There are more than a million electric hot water heaters replaced in the U.S. every year," Fisher said. "With the rising cost of oil, and the fact that homeowners receive tax breaks when they install solar hot-water heaters, we feel the 5,000-unit target is reasonable."
Khameleon Nails, Carrabasset
Product: Self-filling finish nails
Cost of development: $225,000 to date; expects to invest close to $500,000 more
Anticipated launch: November 2006
The idea for Khameleon Nails came to Jeff Strunk about three years ago, when he was staring at his office ceiling. "I was amazed by all the holes created by the finish nails and how poorly it looked," he says. "It made me wonder why someone hadn't created a self-filling finish nail."
Strunk, a career inventor who has also patented a cribbage board and a process for creating a directory of cell phone numbers, is the chairman of the board for Khameleon Nails. "I'm a big fan of products that meet some sort of high-volume need or help calm people's frustrations," Strunk said.
It was this approach that led Strunk to invent self-filling finishing nails, which employ putty embedded on the nail head to cover and fill the nail hole. It didn't matter to him that he had no experience with the building products industry. "Through the other products I had brought to market, I had an understanding of the process it takes to sell a product through distributors to the retail market," Strunk said.
Thus Strunk began researching the nail market and found that nobody offered a self-filling finish nail. He experimented by manually applying different putties to nails and trying them out in his home workshop. Strunk also analyzed the components of air guns and developed a prototype for a self-filling-nail air gun.
"Two-and-half years later, my partners and I received patents for the nail and improvements to the air gun," Strunk said. "We wanted to wait and make sure they were viable before we put too much money into the company." (Strunk's partners include company president Tom Tanner, who runs the day-to-day operations. Tanner comes to Khameleon Nails after owning a painting company.)
After receiving the patents, Strunk next researched how to manufacture the nails and the air gun with the help of a $10,000 seed grant from the Maine Technology Institute. He has since applied for another grant from MTI to match the $200,000-$250,000 being raised by a team of investors who he says have experience bringing new products to market. (Strunk declined to disclose the investors' identities.) These funds will go toward Khameleon Nails' first manufacturing prototype run, scheduled for February of 2006.
To build demand, Strunk plans to provide 150 contractors across the country with air guns next April, when he expects to be ready to distribute the product. "Word of mouth will be the best way to get our name and the benefits of our nails out to the contractors," Strunk said. "After this initial field test, we will formally launch the product in November of 2006 at one of the major industry trade shows."
If successful, the nails will greatly benefit carpenters, painters and homeowners, according to Strunk. "For a 2,500-square-foot house, a carpenter usually leaves holes for the painter to fill that take 45-50 hours of putty time," Strunk said. "Large homes might require two or three weeks of putty time for the exterior. But with our process, the wood comes out smooth right away so the carpenter and the painter look good and finish the job sooner while the homeowner saves money."
The Khamelon nails will cost 20%-30% more than regular finish nails, while the air gun will run about the same as air guns on the lower end of the price scale. "We need to keep the cost of the air gun around $180 so carpenters will readily consider it," Strunk said. "This will help us penetrate the nail market, which is where we expect to make most of our profit."
Strunk projects his revenues to be $3 million in the first full year and close to $20 million after three years. He bases his projections on research he has done with industry experts. "There are more than a billion finish nails sold per year, so where we end up revenue-wise could even be higher," he said.
University of Maine Advanced Engineered Wood Composites Center, Orono
Product: Hurricane-resistant panels and joints
Cost of development: Did not disclose
Anticipated launch: Fourth quarter, 2006
The abundant hurricane activity this year has added to the emphasis that the building industry and the federal government began putting on hurricane-resistant products in 1992 when Hurricane Andrew hit Florida.
"The extensive damage from Andrew made the industry realize how important it was to make buildings more resistant to hurricanes and other forces of nature," said Habib Dagher, director of the University of Maine's Advanced Engineered Wood Composites Center in Orono. "During the past 20 years, the country has incurred an average of $50 billion per year in damages from these types of occurrences."
Funded by grants from federal agencies, such as the U.S. Department of Agriculture , Dagher and his research team began working on hurricane-resistant products in the early 1990s. Their research efforts were bolstered by the creation of the Wood Composites Center, launched under Dagher's guidance in 1996 and now employing 125 people in a 48,000-square-foot lab.
The AEWC's most recent developments include two patents for hurricane-resistant products that help buildings withstand winds up to 170 mph. The National Science Foundation. One patent is for a building panel with an inserted layer of composite that prevents nails from being ripped out in high winds. The other patented product is made up of a strip of composite applied to the panel joints of a roof. Both patents were completed over the course of the past three years. "Damage to wood construction under high wind-loads is related to the connections between panels and the frames," explained Dagher. "That's where buildings come apart, so we developed these two products that double the strength of the joints."
Product development for the panels has advanced to the point where Dagher is now working with Tacoma, Wash.-based APA- The Engineered Wood Association, which represents North American manufacturers of plywood and other engineered wood products. "APA will help get our products code-approved," Dagher said. "Commercial companies can then license our patent and our technology through the APA for their panel products."
If all goes well, Dagher expects that the center's technology will appear in products that hit the market in the fourth quarter of 2006. "It takes years to bring new products like these to market," Dagher said. "Development-to-implementation averages 10 years because the industry is so fragmented. It takes a long time to get new codes and standards implemented."
Dagher would like to see New Orleans and other areas recently hit by hurricanes rebuilt with the center's technology. "But people want to rebuild their homes and resume living right away, so we may end up rebuilding those areas with the same panel technology," he said.
Another problem that the industry faces, according to Dagher, is that builders don't always construct buildings according to spec. "Even with the proper technology, if it's not implemented properly it won't work," Dagher said. "For example, carpenters may not use as many nails per panel as they are supposed to. Building a hurricane-resistant structure is not just a matter of developing the technology. Builders also need to deploy it properly. We've tried to develop our joint technology so that it's practical for builders to implement."
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