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e2e Materials (Private) |
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January 7, 2012 Issue |
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The Most Powerful Name In Corporate News and Information |
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CURRENT ISSUE | COVER ARCHIVES | INDEX | CONTACT | FINANCIALS | SERVICES | HOME PAGE |
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With their Proprietary Biocomposites for the Furniture, Cabinetry and Wood Products Markets made from Soy Flour and Natural Grass Fibers, e2e Materials is Solving a Problem for Customers with a Whole New Basis from Which They Can Do Business – Providing Better Products with Higher Gross Margins |
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e2e Materials, based in Ithaca, NY, develops, designs, engineers and produces proprietary biocomposites for the furniture, cabinetry and wood product markets. e2e’s proprietary composites, the result of over 15 years research at Cornell University, are made from soy flour and natural grass fibers such as jute, flax and kenaf. Products made from e2e’s biocomposite are stronger, lighter, safer and cheaper than those made from formaldehyde-laden wood composites today. |
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Interview
conducted by: Lynn Fosse, Senior Editor, CEOCFO Magazine, Published - June
4, 2012 Mr. Govang: e2e Materials is an innovation company. We are leveraging some discoveries based on research at Cornell University over a number of years to recreate how we make wood products today. We actually do it without using wood at all. We use soy flour and grass fibers and our technology allows us to bring these two products together to create a composite material that is much stronger and higher performing than the wood composites that go into our office, home, furniture and cabinetry.
Mr. Govang: Wood composites today are made from woodchips and resin systems that contain formaldehyde, which is a known carcinogen and is being legislated out of use. We replace that two-part system starting with soy flour as the basis for the glue that binds together our composite material. Soy flour was used ubiquitously in the 1920s and 1930s, as a resin system. In fact, Henry Ford had a car made up with entirely soy product at that time. In the early 1930s urea formaldehyde was introduced on the market and that was higher performing and lower cost at the time. The discoveries that Cornell gave us was the ability to use that soy flour and create a bond system that is stronger than what is out there today. The second part of our system are rapidly renewable grass fibers, known as bast fibers. Bast fiber plants are known as flax, kenaf, jute, and hemp. We can use up to twenty types of these fiber sources from around the world that enables us to have globally scale the technology and supply of products.
Mr. Govang: Yes. Primarily because our process is different than the way wood composites are manufactured today. Today, manufacturers receive wood composites in 4x8 flat sheets. These manufacturers make the furniture products or cabinetry, take these sheets and cut, route, saw and sand it and assemble them together into products. Our material can be uniquely formed into complex three dimensional shapes. From a “look” perspective, they look a little bit different, a little more modern with new features. We are creating the next generation of these products that have a specific look, a strength and natural durability to them. That is because of our ability to form it in new ways – it really gives the product designers a new frontier.
Mr. Govang: This is where e2e really shines. When you take into account that our higher strength means lower weight and less material combined with our efficient manufacturing processes – we only have 19% of the embodied energy of wood composites - we are able to come to the market with a very competitive solution. When we manufacture by three dimensionally forming materials we not only replace the production of the material, we replace a number of process steps of today’s manufacturing. Regionalizing our fiber sources around the production facility, as we are doing with our Geneva, NY facility in cooperation with the USDA and Cornell University provides an additional competitive advantage. The combination of this results in an innovative company that can compete globally with American manufactured solution. Our impact goes beyond just the manufacturing base in that model. For every single manufacturing job we create, we create five agricultural jobs and grow the flax for us. Living in upstate NY where the economy has been depressed for years, we’re equally motivated to have a significant economic impact as well as provide products at competitive prices.
Mr. Govang: We’re introducing a line of office products that we started shipping to select customers last year. To date we have done a number of highly rated sustainable facility installations. LEED certified buildings and homes where platinum level has been desired - our material uniquely contributes LEED points across three different topics within the LEED rating system. Our office products include our award winning TransFORM workstation and a series of privacy panels and, staying with our sustainable them, refurbished/reused leg systems. We are formally introducing e2e Office this June at NEOCON, the key tradeshow for the office furniture industry. Our product team has a number of new office products in the pipeline and we look forward to introducing those through out the year.
Mr. Govang: We listened to our customers. There is a growing base of companies who figured out that there is a relationship between workplace productivity and Sick Building Syndrome – our growing knowledge around the impact of toxic materials in the workplace. Eliminating an entire list of these toxins, called the ‘red list’, is the focus of this effort. Our product solutions are very unique in that they contain none of these red list chemicals and are cost effective. The entire industry has embraced sustainability and e2e couldn’t be a better leader in reinventing safer, sustainable, American made, higher-performing cost effective solutions. We recently achieved the highest rating in the Living Building Challenge and Pharos Project evaluation frameworks which considers both the sustainability and the product as well as the lack of toxic chemicals in the products. This leadership also benefits our other customers, all Fortune 100 companies where we are in various stages of product development for products in a number of markets that will be introduced over the next couple of years.
Mr. Govang: As an innovation company, the patent process has been ingrained in the culture from the start. The original technology had been under research for 15 years when we exclusively licensed it from Cornell University. The company has focused on building a full patent portfolio to cover the production of the resin, the use of the resin and applications and process by which we make it.
Mr. Govang: There is a growing surge now for new technology, these wood products that do not off gas formaldehyde. This being a short-term need for this market. On the long-term front, very simply, we have seven billion people on the planet now. As economies like China and India progress with a desire to furnish their homes, schools, office buildings, and hospitals the way we do in the western world, that demand outstrips the planet’s wood resources. Three hundred million Americans today consume seventy percent of the wood products produced; if the world started consuming wood products at the rate we do, we would run out of trees very quickly. Therefore, there needs to be alternative resources to be able to contribute towards that problem. In the near-term, what is driving the market is the fact that the formaldehyde is being legislated out of use for these products. While the near-term need to meet formaldehyde legislation can be met with alternatives. They more expensive and it do not perform as well as the product that it replaces. That really has people in this industry seeking other alternatives and seeing what else is out there. Our approach solves our customer’s problems with a solution that is not just an incremental change, but essentially a new basis on which they can do business that offers better products with higher gross margins than what’s being done today.
Mr. Govang: e2e is backed financially by venture capital, a number of angel investors and corporate strategic partners.
Mr. Govang: Bringing forward a new idea – something different- where established market forces inherently resist change, is not a simple task. Third party recognition demonstrates that other folks have looked at what we are doing and say this is unique and different. This is very powerful in this marketplace. While it is not something we actively pursue, we are always very honored when we are notified of a new award and we just see that as reinforcement that we are on the right path.
Mr. Govang: Our total focus now satisfying the demand for our products in the marketplace. Last December we announced our first major production facility in Geneva, New York and we are in the process of expanding our capacity to meet growing demand while simultaneously producing and shipping to our current customers. We have a team of very talented people that ensure all of this happens on time.
Mr. Govang:
e2e truly is a disruptive company positioned to change the way over $100B of
products are manufactured today. Our revolution results in very positive
changes for our economy via leading products and manufacturing. The
excitement behind the company and our growth plan represents one lowest risk
opportunities for such a large upside. We like to see companies like
Ecosynthetics, who last year went public on the Toronto Stock Exchange. They
have some overlap with our business model in that they save a tremendous
amount of energy in the production of their latex product and use a bio
based feedstock to replace an oil based feedstock. They generated $100
million on their IPO with $11 million in annual sales and have a market cap
above $200 million today. We’re looking forward to the growing trend of the
market valuing the sustainable aspects of business and their power to change
big industries! |
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Our approach solves our customer’s problems with a solution that is not just an incremental change, but essentially a new basis on which they can do business that offers better products with higher gross margins than what’s being done today. - Patrick Govang |
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