Real Wood Decking: Lower Environmental Impact Than Wood Plastic Composite Alternatives

Keith Harris, Cox VP Marketing

This month, AquAeTer, as part of the cradle-to-grave life cycle assessment (LCA) entitled “Life Cycle Assessment Procedures and Findings for ACQ-Treated Lumber”, published their findings regarding the LCA of copper azole type C (CA-C) and micronized copper azole type C (μCA-C). These treatment technologies are produced by Arch Chemical and used by Cox Industries to produce the DuraPine brand of outdoor wood. We will get the full LCA and the “Executive Summary” up on www.coxwood.com  very soon, but below you will find some excerpts from the study.

The Wood Products industry as a whole seems to be very slow to promote the fact they have the most sustainable and renewable building material on the planet.  In fact Southern Yellow Pine Plantations replant at a rate more than 28% above their harvest on a yearly basis. More than one billion seedlings are planted annually. Southern Pine forests are more plentiful and healthier today than they were 100 years ago.

For generations wood has been prized for its workability and natural beauty, but today we are finally publicizing the positive environmental impact of using sustainable wood products. Wood is an insulator, a net carbon sink, a locally grown product and it is a natural choice that protects Earth’s finite resources.

To take the positive environmental impact of wood a step further, wood treatment technologies extend the service life of wood products in outdoor spaces. This further reduces the impact on forests and plantations. Often wood products are painted in a negative light or with the broad brush of deforestation in South America and Asia, but American forestry has always gone to great pains to make sure forests and plantations are a sustainable resource. Programs include the American Tree Farm System, the Forest Stewardship Council and the Sustainable Forestry Initiative to name just a few.

Check out some of the data below from the LCA and visit www.southernpine.com, http://woodworks.org and www.realoutdoorliving.com before making your decisions about which building materials are truly renewable and sustainable. There are a lot of claims out there and some are purely “green washing”, but “Wood is Real”.

Lumber treated with CA-C and μCA-C preservatives for above ground, exterior exposure have, on a life cycle cradle-to-grave basis, lower environmental impact indicators than wood plastic composite (WPC) decking.

Compared to CA-C-treated lumber, WPC requires approximately 15 times more fossil fuel and 2.4 times more water, and results in emissions with potential to cause 2.9 times more GHG, five times more acid rain, 2.6 times more smog, 1.7 times more ecological toxicity, and 1.5 times more eutrophication impact, than CA-C-treated lumber. In addition, 8.8 times more total energy is required during the life of WPC compared to CA-C-treated lumber.

Compared to μCA-C-treated lumber, WPC requires approximately 17 times more fossil fuel and 2.4 times more water, and results in emissions with potential to cause three times more GHG, 6.5 times more acid rain, 2.6 times more smog, 1.7 times more ecological toxicity, and 3.3 times more eutrophication impact, than μCA-C-treated lumber. In addition, 9.3 times more total energy is required during the life of WPC compared to μCA-C-treated lumber.

Iberdrola USA’s New Utility Pole Contract: Buy a Pole, Plant a Seedling

Innovative Arrangement by Cox Industries Will Plant More Than 40,000 Seedlings in Three Years

More Than 40,000 Trees Will Be Planted

 

For every pole Iberdrola USA subsidiaries Central Maine Power (CMP), New York State Electric & Gas (NYSEG) and Rochester Gas and Electric (RG&E) buys, Cox Industries plants a Southern Yellow Pine seedling.

In 2010, under this contract, Cox planted 10,000 seedlings in the southeastern U.S. where the poles originate. Over the course of Iberdrola USA’s three-year contract with Cox, the more than 40,000 seedlings that will be planted have the potential to remove approximately 8,000 tons of carbon dioxide (CO2) from the atmosphere. This is the equivalent of removing 1,600 cars from our highways for a year.

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Cox looks to new developments for 2011

Message from Mikee Johnson, Cox CEO

There are literally thousands of quotes regarding both the positives and negatives of change; however, I have found many fewer on what to do about it. In essence, most pundits simply aver that we accept change as an inevitable force in the universe. Many tout the only way to live and grow is through change and others characterize change as a destructive force usually leading to constructive results. While these insights are all acceptable, may I suggest that as business people, we refer to the great business authority Peter Drucker who once said of change, “We now accept the fact that learning is a lifelong process of keeping abreast of change. And the most pressing task is to teach people how to learn.” I could not agree more. Whatever change brings we are better for it if we are prepared and adaptable enough to address it.

In 2009, our Cox Industries team decided to take action in regards to dealing with the ever rapidly evolving change in our industry. We wanted to provide more than just a high-quality treated wood product to our customers; we wanted to add value to our relationship. Now, in today’s advertising world, the statement may sound cliche, but we approached this effort from the marketing prospective and instituted market-based action as our insight for learning. Our first step was a focused customer survey on each market channel we service. We learned that change was not the issue concerning most of us, but rather the rate of change. With this real-time market-based information we began developing an outreach program to help our customers and ourselves with the learning process of our now rapidly changing industry. This outreach effort has a three-pronged approach including education outreach, core strategic partnerships and internal development.

Much in the fashion of the famous United States Air Force Colonel John Boyd (I recommend the biography Boyd by Robert Koram and the analysis, Certain to Win by Chet Richards), we recognized the importance of developing a decision-making framework of rapid response actions based on our observations and subsequent orientation. Boyd called this the OODA Loop (Observe, Orient, Decide, Act). Our first action was to develop a comprehensive outreach program to not only provide market information to our customers, but also learn from our customers what they were experiencing in the marketplace. You provided actionable feedback that laid the groundwork for our architect education programs, our safety programs and our customer event programs. As these programs were maturing in 2010, we began our second phase of our outreach effort – strategic partnerships. (If you would like to learn more about these efforts, and our results, contact Keith Harris at kharris@coxwood.com or go to our website at http://www.coxwood.com.)

Our second phase involved the development of a new level of strategic partnership. While we have long maintained partnerships with our traditional core suppliers (wood and chemical) we first elevated these relationships by calling a meeting of our core suppliers and sharing your concerns and outlook for the future. Since then, we have been able to institute some significant risk-reducing initiatives that have quietly benefitted all parties involved. We also expanded our definition of strategic partnerships to include collaborative efforts beyond the norm. Most notably, we have recently partnered with Simpson Strong Tie to not only better understand the rapidly changing world of fasteners, but to also begin development of improved products as well as bringing their knowledge into our outreach programs. (If you would like to learn more about these efforts, and our results, contact Matt Yaun at myaun@coxwood.com or go to our website at http://www.coxwood.com.)

Finally, with an eye on the future, in 2011, we are beginning a formal leadership development program for our own team members. We are currently selecting eight team members for our first class to begin in March of 2011 and eight team members for our second class to begin in early 2012. (Should you know one of the Cox team members selected, congratulate them on this honor). This program will include Cox team members at all levels and provide an intensive curriculum on building better leaders. The 18 month program will be intensive and provide a vast exposure to leadership models of all types and expanded knowledge about a broader prospective of our industry. While you may be wondering what this has to do with you as customers, vendors or stakeholders, I have two responses. First, the long-term view and planning of our business should provide you with an added measure of insurance of our commitment to you, our industry and our communities. Second, upon the successful development of this program, we hope to offer you access to the program for your respective teams. There will be more information about this program as it develops, but I am most excited about its infancy and wanted to share it with you.

Finally, in closing, 2010 has again challenged our industry, but again we have all survived on our own terms. I have not once ceased to be amazed by the resiliency of our industry. As many of us are family businesses, I should not be surprised. With that, I wish you, your teams and your families, a successful New Year.

SC foresters say they’re planting 5 billionth tree

COLUMBIA, S.C. — Forestry officials in South Carolina are about to plant a special tree to mark Arbor Day.
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Industry Update

From Mikee Johnson, Cox CEO

The wood treating industry has been viciously beset by the economic climate of the last three years. We recognize most of our customers have experienced the same catastrophic impact in one area or another. As housing plunged approximately 68% in the Southeastern market, this hit residential and industrial customers alike. At each of our quarterly Board meetings over the past three years, we have spoken most often and most admirably about our extensive customer base, our devoted vendor base and our committed shareholder base. Please indulge me while I boast on these three groups for the remainder of my time.

While we are extremely blessed to have a broadly diversified geographic customer base, this economy has left no part of our Nation unscathed by its wrath. However, we have celebrated the strength of our customers in each and every area of the country we serve. From Maine to Miami to Texas on to Taiwan, China and Europe to Mexico and the many Caribbean nations, we have been rewarded by investing in businesses that invest in themselves. In our 56 years, Cox has never had a year where we experienced more than 1/10th of 1% of our receivables defaulting. In fact – YES – IN FACT – the last three years have been no different. Our current Board continues to applaud you from the Boardroom. As I speak regularly with past Board members, they continue to remark in amazement at the strength of our receivables. Actually, what they are saying is our customer base is a strong one. We recognize your strength and know our competitors recognize it as well. If we are not delivering the value of a deserving customer, I hope you will let me know. I say to each of you, whether you are an electric cooperative, a retail building supply, an investor-owned utility, a marine contractor, an OEM manufacturer or one of our ultimate end-users, THANK YOU.

As important to our success are the many vendors that allow our quality to exceed the expectations of our customers. We must remain competitive as the margins in our industry compress in the face of the massive economic deleveraging. You continue to recognize the conditions and furtively estimate our requirements. We are rarely disappointed by any of vendors. Whether we are sourcing, a particular wood preservative, forklift tires, technology services, lumber or timber, we value our partnerships equally. We continue to be pleased as our vendor partnerships evolve over time adjusting to more erratic markets and new industry demands. To all of our vendors, THANK YOU.

Finally, behind all of our efforts are the many employees of Cox Industries and our investors. We have experienced quite a shock to our system over the past few years. We have mothballed two facilities due to technology and capacity improvements, we have discontinued products when the market has passed them by and we have reconciled each and every business unit to prepare for the uncertainty ahead. I expect few of our customers and vendors have noticed the assault on our company as we have improved service levels and grown volumes with our vendors. We have been blessed to have held the level of our business after the initial shock of the massive economic implosion. This year has seen a return to top-line growth and will mark our 56th year of profitable returns for our investors. While we do utilize an operating line of credit from our bank, our shareholders have redeemed less than 1% of their ownership in the past three years. Our team remains a committed team. THANK YOU.

We look forward to 56 more good years. Thank you to our customers, vendors and stakeholders. See you soon.

New Technology emerges for the Utility Pole Industry; allows customers complete, real time tracking of pole-related assets by using RFID technology.

CITY OF ORANGEBURG SELECTS SMS FOR ASSET INSPECTION & MAINTENANCE

Sustainable Management Systems (SMS) announced today that the City of Orangeburg’s Department of Public Utilities (DPU), located in Orangeburg, South Carolina is the latest customer to select PIMS to help manage the public utility’s pole inspection and maintenance program.  PIMS, a patent-pending pole information and management software system developed by SMS, allows customers complete, real time tracking of pole-related assets by using RFID technology.  Orangeburg plans to utilize PIMS “to help monitor, service and maintain its entire pole distribution network,” according to John Bagwell, Director of the Electric Division for the Orangeburg Dept. of Public Utilities (DPU) 

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Times & Democrat: Despite economy, companies continue donations

Orangeburg industry representatives say corporate giving is a mixed bag in today’s challenging economy. Some companies have seen donations decrease, others say their donations have remained steady and at least one corporation has experienced stronger donations after a drop in giving a few years ago. At Cox Industries, corporate- and plant-level donations peaked in 2007 and then dropped in 2008 and 2009 before rising this year, President Mike Johnson said.

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When the Right Decisions are the Most Difficult

As I am writing this article, a neighboring manufacturer is facing an imminent union strike. Without any inside information, I am assuming the reasons for the strike involve frozen pay, suspended benefits or some combination thereof. Last week, I noticed a sign in an Orangeburg fast food restaurant notifying would-be patrons that tomatoes were no longer included on their sandwiches. The tomatoes were now an extra fifty cents. Even the nation of Greece is being asked to cut government spending by ten percent. Everywhere we turn, it seems as if individuals, companies and even nations have heard the loud message of the global economic meltdown and are cutting back.

Over the past two years, no industry was assailed worse than that of the construction and building supply industry. In fact, I am sure everyone reading this article was required to take significant cost saving measures. I am sure these decisions rarely presented easy conclusions. You may be thinking most of the decisions were obvious in light of what was necessary to survive. Notice in my previous sentence, I did not say “obvious;” I said “easy.” Freezing salaries, eliminating benefits and reducing one’s workforce are obvious steps in response to an economic crisis, but they are not easy responses. Like you, Cox tackled many of these obvious but difficult decisions over the past two years. While this feels somewhat revealing, I would like to share with you our decisions and the mindset behind our decision making criteria.

Let me start by saying, all of the equipment, machinery and inventory have almost no meaning and little value without our customers. Secondly, without a reliable supply chain of vendors, we would be powerless to effectively service our customers. So in essence, we realize we are simply a “value-add” proposition between our vendors and our customers. So needless to say, when faced with these most difficult economic times, we knew it was of paramount importance to not only support our customers and vendors, but somehow provide them with additional firepower to combat these difficult times.

On the vendor front, we gathered our most responsive vendors and began the process of consolidating our purchases to those that consistently did what they promised and did it when they promised. In fact, we gathered a group of those vendors in February to further determine what we could do to further strengthen their positions in the difficult market. We received substantial feedback and we continue to focus on making sure the best vendors in the industry will be here for many years to come.

We have always been a customer-focused company, but what else could we do as we found ourselves mired in the economic malaise of the “Great Recession”? Our incredibly successful education program emerged from the redeployment of some of our most valuable resources – people. A group of our best personnel were organized to provide a national outreach program to educate our customers’ customer. To service and support our customers, we decided to expand programs like this one and we did that by finding efficiencies in productions, logistics and purchasing administration. Now as we begin to emerge from the recession, we have established a program that will continue to benefit our customers and help them build a customer community around their stores.

Like you, we made many difficult decisions in 2008, 2009 and 2010, but we made them with our customers, vendors and employees in mind. Thank you for your continued support. We look forward to brighter days ahead. —Mikee

www.coxwood.com

DuraPine by Cox; NAHB Green Approved

We are pleased to announce that DuraPine treated wood products protected by the Wolmanized process are now listed as a NAHB Green Approved product. 

Our brand was already eligible for points in homes rated according to the National Green Building Standard™, but this certification makes getting those points automatic and we are now listed among the Green Approved Products. The NAHB Green Approved logo is well-recognized by homebuilders throughout the United States.

Cox is a supporter of the NAHB Green Build initiative and we suggest you visit NAHBGreen for more details.

www.coxwood.com

R. Michael Johnson on the Impact of New Heathcare Legislation

Risk: Tax Increase On Unearned Income (from BusinessWeek “How Health-Care Reform Will Affect Small Business” by Karen Klien)

“In the past three years, my health costs have increased each year by double digits. That cuts right into the profit margins of my company,” Hay says. “For any small business, whether it has 10 or 500 employees, it’s a challenge having enough working capital. But to be competitive and attract the same employees as the bigger guys, we have to offer the same benefits package they do.”

Another worry plagues R. Michael Johnson, president and CEO of Cox Industries, a midsized lumber company in Orangeberg, S.C. He provides a generous benefit package for his 400 employees, but the company relies on family shareholders and outside investors, some of whom will be affected by the tax increase on unearned income for wealthy individuals.

“The 3.8% tax on unearned income will increase the earnings requirements on [subchapter S corporations] such as Cox to satisfy the risk our shareholders take by investing in small businesses like ours,” Johnson wrote in an e-mail. “This small percentage seems benign, due to the small number and putting it on ‘unearned income,’ but this income is earned. In fact, our team works hard every week to earn this income and reward the shareholders that patiently leave their capital in the business.”

Another thing that worries Johnson is his calculation that he might save up to $2 million if he were to drop his employee benefits and instead pay the $2,000 per-head penalty. “We are not even remotely considering this option, but I hate to think that new legislation would actually make dropping our plan more appealing to businesses like ours,” Johnson says.

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