Foam finds new life

Music

Male Speaker: We're a little unusual. We're not

organic, we're inorganic. We use inorganic

chemical-based products and turn them into a resin and

glue at an industrial level, at a very high level of

sales capacity. And we go everywhere. We go --

building materials, OSB board, plywood, MDF and so

forth, to the possibility of rubber using recycled

rubber. And this is a very interesting market we're

looking at now. So we call it MPU or eco-MPU --

micronized polyurethane. It's about 200 microns or

less, okay? And we discovered that this form of gold

dust -- actually comes in different colors, but this is

the color we've got right now -- provides a glue that is

capable of matching and beating in some interesting ways

the highest performing glues in the business, glues

referred to as PMDI, and MDIs. So the feed stock comes

from flexible PU and rigid PU. There's approximately

500,000 MTs available to us in the total market space of

raw material feed. A million of that is -- I'm sorry,

the 500,000 that goes now into underlay carpet,

packaging, and sound insulation, of which 400,000 of

that is used now for your carpet backing. And the price

for that is $200 per metric ton, but that price varies.

It's very volatile. So we actually acquire this with

long-term contracts and suppliers love us for that,

because some days that will be zero value. In terms of

the rigid foam, 300,000 metric tons, of which 250 comes

from insulation panels, automobile headliners, about 12

pounds her car is waste industrial PU. And there's no

application for rigid PU. So in Europe, for instance,

right now you have to pay to have this stuff hauled

away. There's a lot of restrictions on even hauling PU

in a truck. In the U.S., obviously, this stuff goes

where. It goes in a dump and it stays there for 5,000

years, maybe, before it changes into something

different, all right? So the first application that

Dean Bundy Assumed spelling our CEO, by the way if you

speak French or German say hello to him afterwards.

He's the gentleman with the beautiful tie in the first

row there. Dean had the insight when he came on in '06

-- the company has been around since '98. And the

initial model didn't work. So Dean comes in after three

start-up engagements in China, Europe, and the U.S.,

going from scratch to about 10 or $11 million in each

one with small teams. Very effective management.

Another turn-around prior to that. He does the most

beautiful thing I think any great CEO does. He turns to

the chemists that are left from the days of the bad

business model and he says gentlemen, what can I do with

this powder. Very simple question. And you wait two or

three beats, and a chemist has never been asked that

question before say, well, it's a resin, Dean. It's a

glue. So in '06, two-and-a-half years later, it took

that long to convince the German firm that we're with

now, that we're selling to, that this powder actually

replaces the best, most expensive, the Bentley of glues

in the OSB board manufacturing industry. It took

two-and-a-half years. And they tested it, and they

tested it, and they tested it. So, do we have a patent?

Yes, we have a patent. It's a composite patent. For

those of you who know about composite patents, they're

very difficult to obtain. The reason this is beautiful

is that you can see the actual MPU material right there.

So we can go to Lowe's or Home Depot, cut a board, put

it under a magnifying class, and if it's not us making

it -- well, we'll know. That's a plant in Germany that

Dean worked at two-and-a-half years with the engineers.

They have -- every enterprise in this industry has at

least three or more plants. So each plant, essentially,

is a cascade with one plant buying first, and then

therefore we go to France and then we go to Poland with

this particular customer. That's obviously an OSB line,

and it's going into press. Right now the temperature

that our resin needs to react -- it's a chemical, it

reacts under heat and pressure, okay? It's not a

filler, it's a binder. So at 170 degrees centigrade

this recycled PU reacts, and it binds just like a glue.

So that's a cooling board, OSB. OSB is everywhere,

folks. I mean, sheathing, floors, roofs, furniture.

And the irony is the chair you sit on at home to watch

TV is foam rubber, right? Which is the raw material.

And the frame of the chair is probably OSB. So the

application in the marketplace. Right now 30-plus

percent of the total manufacturing costs for material

products such as wood, and we're not just in the wood

business, engineered wood. We're looking at rubber,

possibly plastics. We have a chemical, right? 40, 50%

Inaudible of the cost is the resin itself, and that

increases proportional to the petrochemical index at any

given time. So we replace 40 to 50% -- actually, we're

replacing 60%, okay, as of March, February -- 60% of the

Bentley of glues is getting replaced by recycled trims

and waste polyurethane. So here it is. Now you say

well, how do you get it to the plant, does the plant

have to change its culture to accept you, is there a lot

of friction. There is no friction. This costs them

maybe 150 to $200,000. This is a bag of MPU. It's just

conveyed via this PVC pipe into this big tumbler. And

that's it. They already use particulates in

manufacturing this particular product type. So there's

no big cultural shift, no big acceptance transition that

needs to occur. All you do is you get the CEO to say

after you do a bunch of tests, they save a lot of money,

he goes yes, let's do it. And you go from plant to

plant to plant to plant.

Music