298 - Bringing the Greenest Decking Business to Arkansas with Adam Zambanini of Trex

It's fantastic. It is a beautiful day out and a nice day to be walking around Fayetteville.

It is my first visit. I went down to Hugo's and had a good burger.

They kind of ordered up for me.

Yeah, I just said to the guy at the table, whatever you think. I heard, this is what you're doing.

Yeah, they've been doing that for a while. They know what they're doing. I figured I'm not the expert at the burgers. It's all good.

So Trex has been around for 25 years. Trex is alternative decking material. We are probably one of the greenest companies in the world. We've never cut down a tree to make Trex. We take reclaimed wood, wood that can come from cabinet manufacturers, pallet manufacturers, all their scraps. We take that wood, we bring it back to our facilities. We also take plastic, like recycled. We're the largest recycler of plastic bags in the United States. The largest part of our plastic stream would be like shrink wrap, stretch film, so your Kellogg's Corn Flakes, your Campbell's Soups that come to Walmart or your local grocery store. We collect all that stuff and we bring it into Trex. I always take it back to when you're a kid and you had your Play-Doh sets. We take it, we mix it up, we heat it, we put it in a mixer, and we push it through just like you would your Play-Doh through the die, and out at the other end comes Trex. It's a great alternative to traditional wood decking, long life and all that. The beauty of it is the product line has really evolved. There have been several different generations, but in the last 10 years we were really on the forefront of some newer technology. The product is co-extruded, so there's a cap or shell that we put on top of our decking product, and what that does is it gives it scratch, stain, fade, and mold resistance. So it really is low maintenance. If you look at what's going on out there, people are looking for more green products in the environment. People also want to spend more time on vacation, less time working around the house. I grew up working with my parents around the house doing different things. These days, people want to go out there, they want to enjoy their life, so they're not doing as much of that maintenance around the house. They want as low maintenance products as possible. So we kind of line up with some really good trends, and we've seen some very good growth over the last decade.

Yeah, you could, but you're right, you don't need to do that. It's easy to clean. It is very aesthetically appealing. You can do different things on a Trex deck that you can on traditional decks. You can bend it, you can curve it, so it kind of creates a different aesthetic. Trex also doesn't just manufacture decking, but we also manufacture railing. We have a composite rail system similar to what the decking is, and we also have an aluminum rail system. A lot of the products that we design or we make, we like to have some green in our DNA. Even the aluminum material has upwards of 50% recycled material in there. We also have a line of chairs, furniture. We have furniture, we have pergolas, we have deck lighting. What we're trying to do is create an outdoor living experience. We don't want to be just a decking and railing manufacturer. We want to be the solution to that threshold to your back door. When you look at the cheapest way to invest in your home, you're going to get the most square footage outside your house. When you start comparing how much you're spending indoors to the time you come outdoors, you can build that outdoor living room that you've always wanted for a lot less money than you can for some of the stuff you can spend inside your home.

So I originally graduated from Pennsylvania, from Penn State. Yes, the University of Arkansas beat us up pretty bad in the Outback Bowl.

I was there, and I took it. Hopefully there's... It is good to see Arkansas back. It was a fun game. But I graduated from Penn State. I was actually a mechanical engineering graduate. When I graduated from college, I knew one thing: I didn't necessarily want to be a mechanical engineer, but I wasn't sure what I wanted. Eventually, I started up with a company called Flambeau. They did decoys, tackle boxes, outdoor hunting, fishing, those sorts of things. From there, I moved on to Rubbermaid. I worked for Rubbermaid for several different years, but I worked for their commercial division in Winchester, Virginia. Winchester, Virginia is also the headquarters of Trex. When I was younger, I was working at Rubbermaid, seeing this young company kind of grow up before my eyes named Trex. Honestly, it really intrigued me because I looked at it like a blank slate with so much opportunity. Eventually, over time, I got hired onto Trex. I moved from a product development marketing role into Vice President of Marketing. Then in 2018, I moved to President of the Residential Division for Trex. I've been at Trex now for 17 years. Best move of my life. I think you're going to find out working at Trex, there's a great family environment atmosphere. There's an entrepreneurial spirit within the walls of Trex, and there's a lot of opportunity with this type of company. If we take a look at the market three or four years ago, the total lineal feet of wood in this market was about 84%. Now it's about 76-77%, and a lot of that has been because the alternative, like Trex, is taking market share away from wood. Trex is the number one manufacturer worldwide, but it also owns 50% market share in the alternative decking market. When we look at that pie, we say there's 76-77% share in wood in lineal feet. We think there's a tremendous opportunity to take share from wood to continue our growth.

We're just going through some final things on the development code, but I would guess in the next 30 to 45 days we will be breaking ground in the Port of Little Rock. The timeframe is we want to break ground in the next 30 to 45 days. Then, as we move into this fall, we start working on utilities and everything. By next summer, that's when we start looking at putting in some of those lines. We'll be prepared in 2024, sometime in early 2024, that's kind of the timeframe we're looking at. We do this based on our supply and demand, our supply chain, and how we monitor that on a month-to-month basis. On the hiring front, we're already starting. We've already hired someone for HR. We've also hired a person that's really going to be the face of Trex in Arkansas. His name is James Reddish, and he's going to be Director of Economic Development within Arkansas. He's been here for many different years and he's very excited. We have a plan of probably about 40 engineers over the next six to 12 months that we're going to be looking at: mechanical, industrial, electrical, maybe some chemical engineers too. By next summer, we'll be looking at the workforce: operators, how are you going to run these lines, people on packaging, forklift operators. We'll probably want a six-month window next year where we're kind of ramping up for a startup. We'll even be bringing on engineers later this summer into the fall that we'll be bringing back to our headquarters in Winchester, Virginia that we want to hire on for Arkansas so they can start learning our process. We teach them so that when we get to those next phases, they're prepared for a plant startup. As part of that, we also want to transplant the Trex culture, the DNA from the business.

The culture of Trex, like I said, that entrepreneurial spirit. I always tell people if there's something you can't accomplish at Trex, it's kind of on you. The way we've built this company, there have been a lot of very smart people, a lot of ideas, and a lot of collaboration throughout the walls of Trex. No idea is a bad idea, that's kind of our culture. There's a lot of support across the organization. We go through a three, five, and ten-year strategic plan. We do that to kind of look at our vision, engineering what's next. We look at that vision in everything we do. Where do we want to go? Do we want to just be a building product on the side of a home, or do we want to create an experience? My example would be you go to Disney World. The reason people want to pay that money is the experience. I remember the first time my kids were in the elevator, they hit the button and they could smell the campfire, but there wasn't a campfire within a mile of where we were. They were just pumping it in that elevator. That's what we are. We want to create that experience with people. That permeates through the culture when we design our products and build our products. Is this going to be a gateway to a conversation for somebody in the future with their friends or family, have a beer, a glass of wine, whatever that is? There's also an accountability piece to our culture. Part of our success is dates and deadlines. We're very good at implementing things because we're very good in process engineering, project engineering. That's just a strength we've built off our bench over the years. We also have this culture of embracing new people that are coming within the organization. We understand they don't know a lot from day one, but let's get to know who the players are within the organization and then slowly ramp them up along the way. In our corporate headquarters, we have a 10,000 square foot facility called Trex University. Trex University is where somebody comes in. We bring in our distributors, our dealers, our contractors, and our employees. We'll be bringing in people from Arkansas into Trex University. You go through the foundational things on how Trex was started. You walk through that, then we go into the branding room. Here's how we sell Trex. There's a map on the wall that shows all the locations of Trex worldwide. We're in about 50 different countries worldwide. Then we go on the TV screen and there's a presentation on the brand. Here's what our website looks like, here's what our traffic looks like on the website. Then we go into an experience center where it's all hands-on. If you're a contractor, here are some new products you might want to work on, here are the new techniques of installing this type of product. From there, there's a whole outdoor living experience. It's huge. I think it's the only place in the world that really shows off all of our products in one room. Even for people that have been with us for many years, they walk into that room and there's always something new. It's a very exciting time. That's also part of the culture as we bring on new people, to make sure that they have the experience, understand who we are, how we sell, how we make things, why those things are important. We love to get consumer feedback and contractor feedback because we don't exist without that consumer or that contractor. For a lot of our products, they are thoroughly researched. We might go out before we launch a new product four or five different times with focus groups across the country, just understanding what the drivers are. How important is green to your aspects of life? What about the aesthetics? What about the performance? What type of scratch are you looking for? Are you looking for the type of scratch that your dogs can walk through, your 100-pound dog can go across it, or are you trying to ice skate across this thing? These are things that are ingrained in our culture and we try to teach them in the first several months that you onboard.

It's very insightful. We're finding more and more of the challenge is the supply chain right now. How Trex has evolved is more and more companies want to go green. Where Trex is going is, let's say that film or those bags that we used to collect five years ago might have had 5% contamination in it. Now maybe there's 15-20% more contamination in there because there's more of this stuff being used. In the future, five to ten years from now, that could be 40, 50, 60% contamination. We have to keep up with the processing of this material and how it goes in there. There's really an art and science about how you process Trex, taking all these different types of plastics which have different melt indexes and dropping them in along with these wood species in order to make Trex. There are all these different recipes that these operators have to learn along the way as they extrude and make it. As I see the future evolve, there are going to be more challenges ahead on the chemistry side of the business in order to keep up with that amount of growth. The amount of different materials and types of materials we have to process means we're going to have to go further and wider across the spectrum of raw materials that we can collect and figure out ways that we can use them. That's been a part of Trex over the years, figuring out our funnels and materials keep getting wider and wider as we grow. That's just going to continue to be more challenging for us moving forward.

It is very exciting. I also think on the engineering front, what a challenge. When I look at some other things, automation is going to be something in the future. If you look at process engineering, that's another form of engineering. Project engineering and management, as we keep growing, there are going to be more buildings, more facilities, you'll have to make investments in there. Then research and development. Yes, it's a very exciting time. I think it's also a very challenging time. If you're one of these people that want to look at something that's going to be challenging, definitely that's where Trex fits in your life. We can meet that challenge. But it's very rewarding. When you look at the growth, we did $1.2 billion last year. It was only a couple years ago we were half that size. There's been rapid growth within the organization, and we still think that there's plenty of room to grow here moving forward. With that, you can grow a career.

We have a bunch of 3D printers. There are two different sides of the business. There's the R&D side. A lot of times we want to test out and develop concepts. We use 3D printers, and we have different types and sizes of 3D printers that we use. Even in the manufacturing front, when they're trying to figure out parts and pieces on equipment machinery, some of that stuff is adapted to the Trex process. We even 3D print parts that could be used temporarily in manufacturing. I think that's something that people don't talk about often. You see the supply chain constraints, and you can't find the part piece. Are you supposed to stay shut down, or do you find a way to keep it running? We've even used the 3D printers to kind of keep the operation going. It's only a temporary thing. If you're using the right materials, in some cases you can use that 3D printed part just for a little bit of time to keep the operation going before you get the part that comes in from the supply chain. Absolutely, if you're into that, you're into additives, you're into automation. I just think that there are going to be more and more challenges out there. While we're looking at hiring upwards of 500 to 550 people in Arkansas as we continue to ramp up, there are still parts of our process that we have to automate in addition to hiring all those people. You just look at the growth and trajectory of our business. Somebody that likes to deal with robots or automating different processes, we're the place for you as well. Computer vision, using AI and computer vision for inspection and quality, monitoring systems, all that stuff. I think that's where every business is going. We're kind of in the infancy stage now. You can see it coming on board. Even Tesla right now is looking at those robots that he's building out in his spare time when he's not running Twitter. With the challenge of rapid growth like that, there are definitely parts of the operation when you have to start looking at some of those things. It's amazing how much things have changed since the pandemic. We've had to adapt as an organization, and there are all new things that are kind of propping up. Those are definitely areas that are going to grow within Trex in the next three to five years.

Of course. Like I said, we got down to four states. Everybody kind of does a certain form of a dog and pony show. They want to show you the area and put you up at the nice place and all that stuff. So that's kind of a level playing field. But I said to people, and I wasn't kidding, the people really made the difference. The seamless nature that we saw between the local government and the state government was remarkable to us. It wasn't even a close second, if I'm being honest with you. They really made it easy. When we wanted to see, we had our vision, we shared our growth and where we wanted to go, and they didn't know who we were by the way. They had no clue it was Trex. At the time, we called it Project Treehouse. Them listening to us and then providing feedback, the rapid feedback and rapid response, we were reaching out to all these other governments across the US, but the response that we got back from them, professionalism, working together, we really believe that when we go into Little Rock, we have somebody that's working with us side by side and it's going to make it easier. For example, we're going to have an office in the port here, and that office is going to be coming online here this summer and the fall. They're helping us with that piece of it. We're leasing, but at least they found a space for us, and that's something that's going to help us as we grow and we get in. We kind of foundationally need something, and they did it. The technical trade schools within the area, that was one of the things that was a concern to us. We saw at the professional level the engineering talent throughout the state. What about the trades talent? Honestly, I would tell you pound for pound, one of the best trades around. The trade school was very impressive. Was that Pulaski Tech? Yes, it's a great operation. It was very good when we compared it to some of the other facilities that were out there. We felt like that was something that we could partner up with and find some people in the technical trades. Maintenance is really hard in any type of manufacturing, finding talented people in those areas because a maintenance person is kind of a jack-of-all-trades. You're mechanical, you're electrical, and we have pretty heavy-duty equipment that has to be worked on. You really have to have the fundamentals down. Finding people that are really good in maintenance is critical to our operation. When we looked at Pulaski Tech, we felt like we could work with them on a program for Trex over time and help develop it out. They brought it to us, saying we'd be working with you on whether it's welding or electrical and all that stuff, we can help you with some of those classes and how you build that out. It made us feel more comfortable. All those things, you're coming into a new area, a greenfield where you just have nothing but the land, and you're trying to think like, where do I start? It just made it very easy for us. Here's where you're going to go for trades, here's where you're going to go for engineering, here's how many people live in the area. By the way, there are more people living in the area of Arkansas that we have in our facility in Nevada and our facility in Virginia. Part of the reason why we're going to Arkansas is we have no facility in the central region. When you look at our two facilities and expansion, it's more difficult at this point being landlocked in some of those areas. This plant here in Arkansas will help relieve some of that volume that's needed on the East Coast and West Coast to expand, and this will service the center part of the country. We're the only manufacturer that has a plant on the East Coast, central, and the West Coast part of the country.

The other part of our strategy is growing to take share away from wood. If you look to the southern part of the United States, it's Southern Yellow Pine. As you go over all the way into Alabama, Georgia, all that, we think there's a tremendous opportunity to expand there. When you look at where this facility is at, close sources of wood, there's also plastic within the area. This is a good hub for us to expand that wood market share, being located here in Arkansas.

They really rolled out the red carpet. By the way, the press event was great. The turnout throughout the state for that event was phenomenal. We even made a United States flag made out of Trex. Really cool for the Chamber. We like that location there in the port. As you mentioned, whether it's rail, trucking, all that, easy access from this location to anywhere in the country.

We see a couple of different new channels. One channel for us, for example, our deck board that goes horizontally, you can go vertically. Some major mass merchants out there, some Starbucks that are out there, we're starting to put alternative decking on the sides of them. We think one channel is instead of going horizontal, we can go vertical. That's a different aesthetic for the building, and we're highly competitive in those commercial spaces. That's an area where we'd be competing with Hardie Board and other materials. It's more like a stone or brick, it's just an aesthetic play. We're also seeing it residentially, a lot of times used to just break up the look or the design on the side of the building. That's one of the areas we want to grow. Another area we want to grow is international. In 2009, 2010, I went over and started up the international business. That was our fastest growing business up until the pandemic. We had capacity constraints, but it's been a very good business for us over time. Like I mentioned, we're in 50 different countries. As I look at expanding facilities and all that other stuff, there's a tremendous opportunity internationally. We also sell a lot in the northern territories up in Canada. That's been around with Trex for 20-25 years. There's tremendous growth in that area. There are also new products that we're looking at that would be adjacencies to what we do in outdoor living. Some of these new products you can do in 6 to 12 months, but if you're looking for foundational new products that will be game changers, there are products we spend years on. From an R&D perspective, we're a very patient organization. We don't want to just launch new products for the sake of new products. We want to launch the right product that the consumer wants. We spend a lot of time and energy on those new products, and there are some of those things in the pipeline that we're working on.

That's Pittsburgh versus Billy. Apologize. And would beat them at football too.

That's a great question. First thing, I would say I was pretty blessed in terms of how things have unfolded over my career. As I look back, if I think about who I am today, what I've become, it's more about mentorship. In my role today, the most excitement to me may not necessarily be the next product. It may not be growing in a new market. To me, it's watching somebody younger develop. That's kind of the position that I'm at today, and I probably get some of the most enjoyment out of that. When I look back at that, it was to have patience. I was a driver, Type A, love to get things done. Sometimes, and I explain this a lot in our organization, there are tremendous amounts of opportunities out there. When you're in your 20s, you push really hard, and sometimes you don't get the job. Somebody looks at your position today and they assume that you've always gotten the job right, but there were several different times in my life where I didn't get the job, and those were blows at the time for me. But when I look back, I had the right mentor that was putting me in the position to learn more. What I tell people today is that, for example, in sales, there was somebody that was looking to go out on the West Coast, and I told them if you're not going to have your heart in it, people will notice that, and then you won't do such a good job because people won't want to follow you, and then you're not going to be up for the next job. No matter what you do, immerse yourself in it and have that patience and try to build out your career. Fundamentally, make sure you do a really good job and you really know before you want to go do the next thing. I think a lot of people, including myself, you look really forward and you want to move up into that corner office or you want to run a company, but you also have to understand there are some foundational things you have to learn. For me, the things that I had to learn were different parts of the business. I was in a technical sales role, I was in marketing, I've had operations experience, supply chain. Now I'm running a company. A lot of times everybody wants to go vertical. I want to stay in marketing, I want to do this. Once in a while that definitely occurs, but if you want to grow within a company or you want to run a company, even if it's a startup, you need to learn different disciplines throughout an organization, whether it's HR, marketing, sales, manufacturing. I always tell people, don't just be sold on this one way, this vertical direction up, because a lot of times it leads to a dead end. You have to be very adaptable, especially these days, to think outside of the box. What am I good at? You said 3D printing and all that stuff. I'm a very creative person. What else can I do with my creative skill set outside engineering? Maybe I'm not in R&D anymore. Maybe I go to supply chain, maybe I go to manufacturing for a couple years. But if I get noticed in more than one part of the organization, all of a sudden that makes me more valuable because now I essentially have people fighting for me. They're like, hey, I want to have him in my department. That provides an opportunity for growth. For me, it's hard because when you're youngest, you wouldn't even have more patience, but it's have more patience and try to learn as much as possible. Try to learn different disciplines, try to get to know other people. A lot of people come on board, I said you know what you need to do the first nine days? Get to know everybody, have them know who you are, and just learn about what they do so that you never know when that could lead to your next experience.

That's a great question. If you go to Trex.com, you'll see a part at the bottom of our web page for careers where you can go there. There's also a spot there for Arkansas, and you'll see what positions are out there that we're hiring for. We're still looking for a plant manager right now, process engineering manager, project engineering manager. We just hired somebody in maintenance to run maintenance. We have somebody we've hired for HR. You're going to see the jobs will continue to expand over the next 6 to 18 months, and more and more will continue to be posted as we need them. But expect by next summer, there's going to be a major ramp up. There will definitely be a team here in the port, and at that point it'll be full bore as we're heading into 2024.

Absolutely.