A remnant of Trus Joist rises in Boise
The Idaho Statesman published a feature article on RedBuilt™ in today's Business Insider. Below is the text from the original article.
By LENNON S. REID — SPECIAL TO BUSINESS INSIDER
Just off Boise’s East ParkCenter Boulevard stands a low-slung, nondescript office building. It houses the corporate descendant and core of what was one of the city’s premier homegrown business success stories — a company that saw annual sales reach nearly a billion dollars.
But this story is not about Albertsons, located just a few blocks away. It’s about RedBuilt LLC, a building products and engineering company descended from Trus Joist, which rocked the North American construction industry in the 1970s, ’80s and ’90s with new ideas and building products that industry titans struggled to compete against.
Today’s RedBuilt is a smaller, more focused company in a narrowly defined niche. It is also the central part of the business success story that wood products goliath Weyerhaeuser fought to buy in the 1990s. A decade later Weyerhaeuser decided to split up the company, allowing RedBuilt to come full circle back to Boise.
“We have deep roots here in Boise,” says RedBuilt President and CEO Kurt Liebich. “We like it here.”
RedBuilt’s products — manufactured at its plants in Oregon, California and Ohio — are used throughout the U.S. and in Japan and Australia. They help support notable Idaho structures, including the University of Idaho’s Kibbie Dome, Boise’s Barbacoa restaurant and Boise’s Riverstone International School, where Liebich is chairman.
BORN IN A BARN IN 1960
Boise inventor, architect and engineer Art Troutner had an idea for a new building product, and local lumber salesman Harold “Red” Thomas was impressed. Thomas pitched Troutner’s product to industry giants Boise Cascade, Potlatch and Weyerhaeuser, but they weren’t interested.
So Thomas provided $8,000, and Troutner supplied the technology, tools and ideas to launch Trussdeck Corp. The company created new products and a new category of materials — engineered wood products — that still dominate much of the world’s light-commercial and wood-framed residential construction.
Thomas and Troutner perfected new roof-beam designs and ways to process smaller, raw timber into composite boards, structural pieces and solid beams that could replace and often outperform traditional lumber. Natural wood veneers, strands, chips or particles are aligned, compressed and glued together to achieve structural integrity and performance characteristics not found in natural wood.
The first product, the one initially dismissed by the big corporations, was an open-web truss — a roof beam marrying a W-shaped tubular steel web and relatively small wood beams. As an alternative to all-steel trusses and heavier laminated beams, the open-web truss eventually was adopted for commercial construction projects ranging from office complexes, restaurants and convenience stores to apartments and warehouses.
As Trussdeck grew, Thomas and Troutner tried franchising. They found the business structure unwieldy. In 1969 the company merged its franchise operations into one company, renamed Trus Joist Corp. Thomas and Troutner each retained 20 percent of the business. Franchise investors and new investors claimed the rest.
EXPANSION AND COMPETITION
By 1970, with revenues reaching $11 million and a sales force of 155, Trus Joist introduced another product: the engineered-wood I-joist. It was strong for its weight and used up to 50 percent less wood than traditional lumber floor joists.
The company also marketed laminated-veneer lumber, or LVL. While plywood had been commercially manufactured for decades, Trus Joist’s LVL was the first to replace traditional lumber in structural uses such as beams and doorway headers.
The company went public in 1973, enjoyed consistent sales increases through the 1970s but declined in the early 1980s. An attempt to diversify into energy-management systems in the mid-’80s failed. Acquisition of two window manufacturers helped buoy sales.
The company reorganized. In the ’80s and ’90s, it faced stiffening competition in engineered wood products from lumber makers like Boise Cascade and Weyerhaeuser. The recession of the early 1990s brought the company its first annual loss in 1991: nearly $11 million.
One large competitor — Vancouver, British Columbia-based MacMillan Bloedel — considered buying Trus Joist but was rebuffed by the Boise company’s management.
A DAVID AND GOLIATH PARTNERSHIP
“MacMillan Bloedel was the largest integrated forest products company in Canada,” says Walt Minnick, Trus Joist president and CEO until 1995. “They developed a copycat product using a different way of making engineered lumber out of strands of lumber. They built a $100 million plant in Vancouver.”
Trus Joist remained on top, Minnick says, “because we had an established product and an established customer base. They [MacMillan Bloedel] lost a lot of money on their product — several hundred million dollars. But they caused us marketing problems, too.”
MacMillan Bloedel’s CEO called Minnick, suggesting “it would make more sense to combine our products than to continue knocking each other out in the market,” Minnick says. After about a year and half of negotiations, they formed a joint venture company in 1991 that merged Trus Joist with the Canadian firm’s engineered-wood group.
“We had a management agreement where they owned 49 percent and we owned 51 percent, and we were the managing partner,” Minnick says. “That was the way we, as David, partnered with them as Goliath, and we kept control of a piece of the business.”
The joint venture was named Trus Joist MacMillan. Each company’s CEO joined the other’s board of directors.
“We provided the marketing that allowed their product to get through its learning curve and find its place in the market,” Minnick says. “They provided the heft so we could build another plant.
“We thought that with our marketing and our know-how, and their money and new technology, we could substantially expand the market.”
Trus Joist MacMillan became the world’s leading maker and marketer of engineered lumber products.
NINE YEARS INSIDE WEYERHAEUSER
By the late 1990s, the Trus Joist board decided to sell the company, recalls Minnick, who was no longer running Trus Joist but remained close to the company by virtue of his seat on the MacMillan Bloedel board and the ongoing joint venture.
Minnick, a Democrat, was elected to the U.S. House in 2008 to represent western Idaho but lost his bid for a second term to Republican Raul Labrador in 2010. Minnick is now a partner in a Washington, D.C., lobbying firm that he co-founded in 2011.
“We had great technologies, and every forest products company in the United States and a lot of them from overseas tried to buy us,” he says. “Everyone wanted to buy us for about 15 years. Weyerhaeuser was quite persistent.”
Persistence — and lots of cash — paid off. In 2000 Weyerhaeuser paid $720 million to buy Trus Joist, still a 51 percent owner and managing partner of Trus Joist MacMillan. By this time Weyerhaeuser already owned 49 percent of Trus Joist MacMillan, by way of its $2.45 billion acquisition of MacMillan Bloedel.
EQUITY FIRM, PARTNERS BUY THE BUSINESS
Nine years later, Weyerhaeuser decided the commercial-building unit of Trus Joist no longer fit the corporation.
“Theirs is a production and distribution system that delivers an array of relatively standard engineered wood products to dealers who then sell to residential builders and contractors,” says Liebich, who was vice president of Weyerhaeuser’s Trus Joist division. “Success in this [commercial] arena demands a high degree of consultative, personal service and technical engineering skills coupled with state-of-the-art manufacturing and distribution facilities.”
In August 2009, a Connecticut private equity investment firm, Atlas Holdings, and a small group of operating partners — including Thomas, Liebich and RedBuilt Chairman Tom Denig — bought the commercial-building unit from Weyerhaeuser. RedBuilt won’t say what the buyers paid.
Atlas, which still owns RedBuilt, is a partnership that describes itself as “a diversified group of manufacturing, distribution, service and trading businesses.” Some financial experts describe Atlas as a company keen on scooping up distressed businesses or companies in distressed industries.
“The Atlas folks got together a team of individuals who had worked in this business,” says Denig, the former president of Weyerhaeuser’s Trus Joist division. “So when Atlas came to me and said they wanted to look at the acquisition of the commercial division of Trus Joist, it was a piece of the business that was near and dear to my heart.”
Weyerhaeuser kept the Trus Joist name and still sells Trus Joist engineered wood products.
The RedBuilt name is “a tip of the old hard hat” to original founder Thomas, Liebich says.
Liebich has worked in the building materials, construction and distribution industries for more than 15 years.
SALES, LIKE ECONOMY, ARE PICKING UP AGAIN
“We’ve got to be there just when the idea [of a new building project] is beginning to happen,” Liebich says. “We need to sit down with the architects to convince them that they should be thinking about a wood building versus a steel building. As soon as they decide to build a steel building, we’re done.
“So we’re in there really early with the architects. Once they decide it’s a wood building, we’re in there working with the structural engineer. After all that upfront effort, we’re hoping to have a set of plans that specifies RedBuilt products. We do sell products, but we think about our business more as providing solutions for customer projects. Those solutions tend to be project by project.”
The terms of the 2009 sale prevented RedBuilt from competing directly with Weyerhaeuser in the residential market for three years — a dark period that didn’t see much residential construction anyway.
Now RedBuilt has several national and international competitors, including Weyerhaeuser, though RedBuilt’s focus is still commercial and Weyerhaeuser’s isn’t.
Only now, with residential and commercial construction showing signs of rebounding from the recent recession, is RedBuilt business picking up again.
“In the good times, [sales] were north of $100 million,” Liebich says. Annual sales fell to about $40 million by 2009.
“We bought the company pretty close to the low point” of its market value, he says. “The business had been decimated.”
Now sales top $50 million.
“Our business was cut in half during the Great Recession, and now we’re recovering,” he says.
Says Denig: “Now we’ve got a great management team, and the commercial construction business is beginning to pick up a bit, so we’re seeing steady growth in the number of projects we’re working on. I feel very good about the team we have assembled and the prospects for the future.”