Think of it as a bargain-bin strategy.
Serious Materials, the well-funded manufacturer of green building products, has signed agreements to purchase Kensington Windows and Republic Windows and Doors, both of which are currently involved in bankruptcy proceedings.
Under these deals, Serious will get additional factory capacity for a lower price, ideally, than it could build it in today's credit constrained environment. The factories will be converted to make the company's energy efficient windows.
"We have to put in some additional equipment and training, but they are 80 percent to 90 percent there," said Kevin Surace, CEO of Serious, in an interview. "It is great because we really need the capacity. The demand is spectacular for these windows."
Kensington, based in Pennsylvania, employed 150 people before it was shut down in October. Serious hopes to reopen the plant in 30 days. Kensington's parent company had filed for bankruptcy. Republic, meanwhile, shut down fairly suddenly late last year prompting a sit-down strike by workers. The Kensington deal was announced today and Serious confirmed the Republic deal last week.
The acquisitions, along with other actions taken by the company, will increase Serious' window manufacturing capacity by ten times the current level. Serious has acquired the assets of Kensington but the Republic acquisition needs to get the approval of the bankruptcy court.
Serious began to make waves on the greentech scene in early 2007 with EcoRock, an environmentally friendly version of drywall. Traditional drywall requires baking gypsum in ovens at high temperatures. EcoRock is more like instant pudding: materials and catalysts are put into a pan, some energy is added and, voilà, you get drywall. The process is so energy-efficient that Serious largely runs its factories on solar panels. EcoRock started going into production last year. Serious has raised over $50 million in venture capital funds.
It began to move into windows last year with the acquisition of Alpen Windows. CEO Kevin Surace has also said that the company is eyeing insulation. (Marc Porat, a former IT entrepreneur who now incubates green building material startups, founded Serious Materials.) Construction accounts for around 13 percent of the total energy consumed in the U.S. and operating buildings accounts for around 39 percent. Thus, in all, buildings and the computers and appliances inside of them gobble up over half of the energy in America and Surace, Porat and others have noted that construction and building operations are not terribly energy efficient.
"There is a renewed focus on energy efficiency," he said.
Along the way, Surace has also become something of a prominent spokesperson for the idea that green technology can mean more U.S. jobs. Drywall weighs quite a bit and thus it is often uneconomical to ship it long distances. Dragging drywall across the ocean also means consuming lots of diesel, which erodes the benefit of green manufacturing processes.
Will more companies seek out a retrofit strategy? Jim Pettit, a partner at Navitas Capital, a green building VC firm, thinks so. The downturn will likely mean there will be a number of old factories going on the block. Federal, state and local legislators may ultimately sweeten these kinds of deals with training and employment grants, Pettit speculated.