Green construction fuels growth at Serious Materials

Sunnyvale, Calif.-based Serious Materials is preparing to open its fifth factory next month as it continues its aggressive growth despite the economic downturn.

CEO Kevin Surace told the Cleantech Group that the company has about 200 employees but could grow to nearly 900 if it reaches full capacity at its two newest production facilities.

“You know a certain percentage of projects are going to get postponed right now, so in effect you have to sell a lot more than you think you have to sell,” he said. “But aside from that we’re having record quarters and record years.”

McGraw-Hill Construction predicts a 7 percent decline in U.S. construction starts in 2009 to $515 billion, a slight improvement over 2008’s 12 percent decline.

But green building is comprising a growing segment of the shrinking building sector. The U.S green building market in 2005 was valued at $7.8 billion, or roughly 2 percent of the commercial building sector. McGraw-Hill projects it will grow to $60 billion, or 10 percent of the market, by 2010.

Serious was one of two or three of the 20 venture-backed green building materials companies already in production when the economic downturn began, Surace said. The company is at about 750,000 square feet of production capacity for its various building materials, including glass, windows, and drywall (see How green is your drywall?). That revenue allowed the company to eye expansion, and Serious has already purchased two struggling manufacturers.

Serious acquired the assets of Kensington Windows, a Vandergrift, Penn.-based producer of vinyl replacement windows and doors that shut down in October (see Investors keep eyes on water filtration). Kensington’s parent company Jancor lost its financing and filed for bankruptcy protection.

Serious re-opened the plant about six weeks ago, rehiring the workers and training them on the company’s glass technology for super-insulating windows and commercial glass. There are about 35 employees now, but Surace said he hopes to ramp the facility and expand the staff to 150 by year’s end.

And last month, Serious purchased Chicago-based Republic Windows and Doors for $1.45 million in bankruptcy court. Republic laid off 250 workers when closed last year, but Serious has promised the local union it would rehire the workers at the same rate of pay.

Surace said the 300,000-square-foot facility has the capacity to employ 600 workers, and he expects to have the facility fully ramped by the end of the year.

“If we were making a commodity product that wouldn’t be the case, or if we were making greenwashed products that wouldn’t be the case,” Surace said about the expansion. “But we’re making a truly new and unique product that other people don’t make. Clearly, LEED building is on fire.”

LEED, or Leadership in Energy and Environmental Design, is a rating system by the U.S. Green Building Council. There were about 10,000 LEED-registered projects at the end of 2007, but that number doubled to more than 20,000 by the end of January 2009. The square footage of LEED-certified construction grew 92 percent during that period from 148 million to 284 million square feet.

The USGBC issued the 2009 update to LEED requirements today, incorporating technical advancements to improve energy efficiency, reduce carbon emissions, and address other environmental and human health outcomes. Those standards go into effect April 27.

Surace said he expects LEED requirements to become increasingly stringent. Currently, recycled materials qualify for LEED points.

“The new LEED cares a lot less about recycled content and more about water and energy savings, as it should be,” he said. “Recycled content alone without further information is not necessarily considered green. Soon it will probably become a given. And there’s good recycling and bad recycling. It does not make any sense to recycle something if you’re going to generate more carbon doing so.”

Serious is producing its EcoRock drywall for beta testing by contractors but expects to make it broadly available for commercial purchase in the next several months.

San Francisco startup CleanBoard is trying to break into the green drywall sector with recycled materials (see CleanBoard plans gypsum drywall using solar thermal tech). Concrete block maker Integrity Block is also incorporating recycled materials in its energy efficient process.

Building construction accounts for 40 percent of the world’s raw materials, according to the Worldwatch Institute.

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