SSM: Is more solid surface being specified for commercial work?
Owens: Absolutely. We measure it monthly and quarterly. Commercial is smaller than residential, but the upside opportunity is significant. The market space available to us is obviously much bigger as we develop new applications.
There are reasons on a couple of levels for the growth in commercial. The macroeconomic conditions have fully recovered for commercial construction over the last couple of years. The level of activity has increased and it is expected to continue to increase.
On a local level, the laminate industry has done a great job of creating opportunity for its product. I think solid surface manufacturers, to a great extent, missed the opportunity to learn how the laminate industry grew its category by using commercial as a growth vehicle. Laminate is still much more prevalent in commercial than residential.
We've been trying to determine what it takes to win commercial, but unless you are creating more specifications and doing more educating, you are going to be fighting for the same share of pie that you had historically. So, for the past four years, we have had more than 50 distributor specialists and DuPont people focused full time on architects and designers. We are constantly educating and updating through continued education units (CEUs) and other educational vehicles, as well as sponsoring major architectural collaborative-type projects in which we try to do something that wasn't done before with solid surface. We are doing the same with Zodiaq on the commercial side and are getting a lot of good response.
We didn't have a focused effort to get at the opportunity. The architect and design community tend to think of solid surface as a residential-type product, but we've been able to educate them on its other uses, such as for furniture, exterior facades, flooring, walls and for all horizontal and vertical surfaces. The applications are just exploding, and while not all of them will take hold and become commonplace, they all serve one end purpose: to define opportunities through a material definition rather than an application definition. Too many people think of solid surface as a countertop and that's just one application for our material. In some ways our success in countertops has been our Achilles heel.
SSM: There is a lot of talk about solid surface as a commodity; what are your thoughts on that?
Owens: To a great extent, in the commercial construction marketplace, there are very few products that aren't commodities. What sets a product apart are the intangibles delivered with it.
We have found our customers are living with the same issues that all other businesses are living with: They have fewer resources to do more work. If you can make it easy to do business with you and your product fills an unmet need, you are creating value. A commodity, in the strictest sense, doesn't do any of these things.
I believe the difference going forward will not be with the material, but with the people and companies representing it and how they create the value going into it. That's a critical distinction.