Betting Big on Spray Foam in Coastal Carolina ~

When corporate executive John Guffey left his job as Vice President of Goodrich Corporation, a Fortune 500 aerospace technology firm, and moved to his retirement home in Bluffton, S.C., he found out that the attic in his new house got hotter than 140°F on sunny summer days. So he hired Energy One Foam, an insulation firm out of Claxton, Ga., to insulate his attic with Sealection spray polyurethane from Demilec. Guffey liked the results so much, he bought the company. It’s a little more complicated than that, of course — but not much. Trained with a degree in mechanical engineering, Guffey had been the CEO and President of Coltec, a $300-million-a-year aircraft components firm. After managing Coltec’s sale to Goodrich in 1999, Guffey stepped into a director’s and VP’s slot at Goodrich, then retired from the larger company after the transition was complete. So when the insulators arrived to work on his house in the summer of 2008, the retired CEO and engineer took a look inside their rig. “I’m a boater,” he told Coastal Connection — “an ocean sailor. And we have generators on boats, so I was looking at their generator. And one of my companies was an air compressor company, so I was looking at their compressor.” By coincidence, Guffey’s grandson chose that moment to call Guffey on the phone. “He graduated in construction science from North Carolina State,” explains Guffey, “and he told me that he had just been laid off by a big builder up in Raleigh, because of the housing crash. I asked him if he knew anything about spray foam, and yeah, he knew a little.” Guffey went to visit Demilec’s production plant, and he says, “I knew a lot about chemical plants, and I was very impressed with their quality control and their mixing equipment.” By September of 2008, Guffey had bought two insulation rigs from Demilec — truck, generator, compressor, and all — and set his grandson up in the spray foam business in Charlotte, N.C. Guffey hired Energy One Foam, the original contractor on his own house, to work as a consultant helping the Charlotte enterprise learn the ropes; before long, Guffey had purchased Energy One also. Next, he acquired a Charleston, S.C. spray foam contractor named U.S. Home Protect. All three companies now operate under one umbrella: “We formed a holding company, Energy One America,” says Guffey, “and folded all three companies under one name. We completed that in March of this year.” When a Fortune 500 executive gets into the home energy market, he comes on shore as a big roller. Guffey’s experience and financial strength are helping to make Energy One into a top contender: “I think we’re the largest spray foam insulation company on the east coast,” says Guffey. The strong financing helps build legitimacy, he explains: “I financed it myself, so we don’t have any loans. We have all the insurance, we’re heavily bonded, we have workman’s comp, we follow all the laws, we’re trained in OSHA safety practices … all those things add to our marketability. But they also add to cost, so we’re not the cheapest guy on the block.” But if Energy One’s not cheap, they are reliable, says Guffey. “We operate a total of 12 rigs. Now what does that mean? Well, good builders have a tight schedule, but rigs can get temperamental at times. Normally drywall people come in behind us. So if you only have one rig and it breaks down, and you hold up the job for four or five days, the builders aren’t happy. Same with existing homes - if you go into a home and your one rig breaks down, you have to shut everything down. The people are shut out of their house or disturbed for a period of days. But we can immediately replace a rig on a job if it’s having trouble. Or on a big new house, we can take two or three rigs onto the job and get in and out in one day, so the builder’s drywall guy can come in after one day rather than four days. Time is money to the builders. So that gives us a market advantage.” Energy One recommends open-cell spray foam for roof decks and walls, and closed cell spray foam for crawlspaces. In the upper end of his market (the firm targets homes valued at $400,000 and up), builders take foam insulation as a given, Guffey reports: “Builders building high-value, quality homes today don’t even consider fiberglass. Foam is almost automatic in both the roof deck and in the walls. Homeowners expect it, at least in our market - Kiowah Island, all the plantations around Hilton Head Island, all the homes in Charlotte. We’re not really selling against fiberglass. The builders have already crossed that bridge. If anything, we’re going out and selling the virtues of our company versus some other spray foam company.” Energy One recommends closed cell, high-density 2-pound foam under floors (top) and half-pound, open-cell foam in roofs and walls (bottom) in the coastal Carolina climate (photos courtesy of Energy One America). Even for a seasoned top exec with money to invest, growing a construction business during the slump of the century is a serious accomplishment. One reason for Energy One’s growth may be the focus on retrofit work. “When I bought the company, they were doing practically zero in retrofits,” says Guffey, “and with the decrease in new building, that obviously was a concern to me. And because I got interested in the company because I was a retrofit customer, i knew the value of it. So we started advertising it and contacting existing homeowners.” The pitch is persuasive: “We can cut the utility bill by 30 or 35 percent, plus we give them a lot more comfortable home, and it adds to the resale value. It makes the attic usable, where before it probably wasn’t usable at all. It protects the air handlers and so forth, and the water heaters up in the attics.” Word of mouth has been a big factor, says Guffey: “When we go into a high-priced neighborhood and do a retrofit, the homeowners will talk. It is very common for us to be getting calls from neighbors [who say] ‘come give us an estimate on our house.’ And that’s an unlimited market. There are tens of thousands of high-priced homes that were built when times were roaring, and usually the people there have the economic means to do this.” In the Bluffton area and in Hilton Head, says Guffey, the company’s volume is about 40 percent new construction and 60 percent retrofits. In Charleston, 40 percent is retrofit work; much of the new construction, he reports, is commercial work. If Guffey’s right, his new company is catching the right wave at the right time. “Fiberglass is cheaper, but there is no comparison in the insulation quality between the two,” he argues. “I think in ten years fiberglass will be largely replaced by foam or other types of insulations.” For now, however, the proof is in the pudding: “Evidently we’re doing something right,” says Guffey, “because we’re being very successful. We’re keeping all our rigs busy in these economic times, and we employ 49 people.”