Bob Miodonski 2016-01-07 23:49:31
GROWTH OPPORTUNITIES Legend Valve to unveil potable water plastic pipe this month at AHR Expo. Supply House Times in November interviewed Legend Valve Co. President and CEO David Hickman and Executive Vice President Walter Jann in their offices in Auburn Hills, Mich. In the article below, they discuss HyperPure, a potable water plastic pipe the company is launching this month at the AHR Expo in Orlando, Fla., and look ahead to market opportunities for plumbing contractors, wholesalers and engineers in 2016. J. Robb Baubie and Hickman founded Legend Valve in 1988. Jann was Legend Valve’s director of operations from 1996 to 2003 before taking an ownership position as Hickman’s business partner in 2004. WHAT BUSINESS STRATEGY LED YOU TO INTRODUCE HYPERPURE TO THE MARKET FOR POTABLE WATER SYSTEMS? DH: Legend has been building the foundation to launch our tubing initiative for several years. We had evaluated several different options before deciding on Dow Hypertherm 2399, or PE-RT [polyethylene of raised-temperature resistance] as it is better known. This is the resin we use to make HyperPure water tube. The catalyst for the decision was the introduction of a comparable PE-RT resin (2388), which Dow introduced in Europe eight to 10 years ago. We watched 2388 secure almost one-third of the market for potable piping systems throughout Europe during that time. Although it is growing exponentially throughout Europe, 2388 will not pass the more rigorous testing standards for U.S. plumbing systems. That’s why Dow developed the high-density polyethylene resin Hypertherm 2399 specifically for the U.S. potable water market. We believe this is the future pipe for potable water systems in the United States, and we wanted to be on the leading edge of this innovation. With the evolution of plastics, Legend did not want to be perceived as another me-too. WJ: We saw a once in a 20- or 30-year opportunity when pipe technology changes and there is a tipping point in the marketplace. We observed the tipping point in Europe and believe a similar shift will take place in the United States. We do not anticipate traditional piping systems such as copper and PEX to go away, but we do believe that through evolution this technology will secure a significant portion of the U.S. market. CAN YOU DESCRIBE THE KEY ATTRIBUTES OF PE-RT? DH: Legend HyperPure does not have to go through a cross-linking process, unlike PEX, in order to achieve strength and flexibility because the resin features tie chains that increase the entanglement of the crystalline structure linking high- and low-molecular weight PE molecules. Dow’s bimodal reactor used to make the PE-RT resin optimizes the weight and distribution of highand low-density PE molecules to achieve incredible strength, flexibility, purity and longevity of the tubing. As a result, we can achieve production speeds that are not possible with PEX while producing a pure tube that is 100% recyclable without the use of chemicals, radiation or additional processes required to crosslink PE molecules. WILL YOU BE MARKETING HYPERPURE SEPARATELY FROM OTHER LEGEND VALVE PRODUCTS? DH: HyperPure is being manufactured by our newest division: American Legend Manufacturing. Although ALM will also be producing tube for our OEM customers, HyperPure will be marketed, sold and distributed under the Legend brand. WJ: From a marketing perspective, the power of the product is the power of the overall Legend brand. With 80 product categories and 9,000 existing products ranging from low-pressure plumbing to radiant, water service, heating and cooling, and pump and well, we have so many products that the potable water pipe is the final link to bring all those products together. Other companies manufacturing PEX or similar pipe do not have the range of products Legend offers. WILL YOU USE THE SAME DISTRIBUTION PARTNERS YOU NOW USE FOR LEGEND VALVE? DH: Yes. Our customers will be able to leverage our broad range of products. They will be able to realize transactional cost reductions, guaranteed performance, and product and vendor consolidation opportunities. Easyto- achieve freight minimums should enable them to realize a greater return on their inventory investments while potentially increasing their serviceability to their customers and reducing their inventory investment requirement. So, they will see greater return on investment with a lower inventory investment by relying on us to service their customers. It’s a huge advantage that Legend offers. WHAT KIND OF FEEDBACK HAVE YOU RECEIVED ABOUT HYPERPURE FROM YOUR CUSTOMERS? DH: I was surprised at the level of excitement when people learned we were extruding the pipe here in Auburn Hills. Their excitement comes from the fact that it is being made in the United States. Our local customers are thrilled we chose to make the pipe here. WHAT CHARACTERISTICS OF PE-RT TUBING WILL APPEAL MOST TO PLUMBING CONTRACTORS? DH: HyperPure is very flexible. It doesn’t have the memory of traditional PEX. So, ease of use is an important attribute for our contractor customers. It’s also compatible with most fitting systems on the market today so no special tools are necessary. As we move into the future and more fusible fitting options become available, PE-RT has the unique ability to be fused. The fusion system essentially creates a continuous piece of pipe. In addition, HyperPure doesn’t need to be flushed to remove odor or foul taste, which is important for a host of reasons including water conservation. Since it is 100% recyclable, you will never find HyperPure in a landfill and it carries an industry-leading 100-year warranty. HOW DO HYPERPURE PLUMBING SYSTEMS MEET THE DEMANDS OF BUILDING OWNERS FOR GREEN BUILDING MATERIALS? DH: PEX is an excellent product but it cannot be recycled. Therefore, without question, it is HyperPure’s recyclability that makes it unique to the green building initiative. Adding recycled HyperPure to other polyethylenes will actually strengthen them and create a superior end product. The resin is so high quality that it actually can improve the end product when integrated into someone else’s product that they’re manufacturing, which really is remarkable. WJ: HyperPure’s native polyethylene material does not require crosslinking. The crosslinking process fundamentally changes the nature of the pipe, preventing it from being recycled. We believe long-term that is a huge advantage for this product. As we move forward, recyclability of plastics in particular will become more important to more of our customers. We believe by introducing this pipe technology now we’re capturing early on a trend that will become inevitable, which is green building and recyclability. If this trend doesn’t affect a customer’s buying decision today, it will in the future. HOW DO PE-RT TUBING’S PRICE AND APPLICATIONS COMPARE WITH OTHER MATERIALS SUCH AS COPPER AND PEX? DO YOU FACE ANY PLUMBING CODE ISSUES? DH: PE-RT is comparable in price to PEX. Even though it is not going through the cross-linking processes, the resin itself is more expensive. PE-RT can be used in any application where PEX is used within local codes. PE-RT is in the 2012 International Plumbing Code and Uniform Plumbing Code, which coincidently is the same year when Dow patented the Hypertherm 2399 resin, which we use to extrude HyperPure. Our only code challenge has been with those states that have not yet adopted the 2012 and 2009 codes. We’ve been aggressively lobbying these entities and we’ve met with little resistance. IN WHAT MARKET SECTORS DO YOU SEE THE MOST BUSINESS OPPORTUNITIES FOR PLUMBING CONTRACTORS, WHOLESALERS AND ENGINEERS IN 2016? DH: The industrial PVF sector will likely not recover until the price of oil reaches $100 a barrel and is sustained long enough to encourage the drilling of additional fracking wells. Infrastructure projects such as updating aging water distribution systems should see continued growth far into the future, but we are assuming monies will be allocated to support those initiatives. Commercial markets should see steady growth but in single digits, and residential construction should continue to grow in the same range. I don’t profess to have a crystal ball but all the indicators seem to point to a GDP of 2% to 2.8% for 2016. So, I would say wholesalers need to align with highperforming vendors that enable them to service their customers while achieving greater inventory turns. Everyone in the channel should continue to focus on efficiencies and be nimble enough to respond to changing market conditions. HOW WILL LEGEND VALVE HELP INDUSTRY PROFESSIONALS TAKE ADVANTAGE OF TODAY’S BUSINESS OPPORTUNITIES? DH: Legend continues to look at our customers’ businesses and tries to understand them at least as well as we understand our own. Legend guarantees we ship every order in 24 hours. We are looking to improve that. Legend guarantees 100% fill rates. Although we aren’t at 100% all the time, we’ve averaged better than 99% year-to-date. That’s a true line-item fill rate, which is the harshest measurement. Legend truly believes we provide value to our customers by lowering their costs of doing business with us. Our accuracy rates are at 99.7% year to date for everything we do. That’s an incredible statistic, and we are very proud of our people’s commitment to our customers. WJ: Potable water pipe is one of those products that a wholesaler or contractor always must have. The wholesaler needs to have that product in various colors, coil lengths, and sticks and have that product available 100% of the time. By allowing our customers to combine the hundreds of other items they currently are buying from us with their pipe order, Legend will help our customers to be even more successful. IF YOU HAD ONE PIECE OF BUSINESS ADVICE TO GIVE TO PLUMBING WHOLESALERS, WHAT WOULD IT BE? DH: No one can control the economy or the external environment where we find ourselves. So at Legend, our advice for people throughout the channel would be to control your costs, stay nimble, keep your overhead down and be as efficient as you possibly can. WJ: Independent wholesalers need to be able to add as much value as they can in the supply chain. Just having the product in distribution is not enough. Having the expertise, knowledge and support behind these products is even more important. Products are getting more complicated with more electronics and technology, and we need to know how to install them. For more with David Hickman and Walter Jann, visit www.supplyht.com.
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