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Political Climate And Consumer Preferences Align With
Environmental And Energy Efficient Values Of Alternative Construction Technologies’
To Establish New Standard For Fast Growing Future Of Technology Driven Construction
Materials
Manufacturing
Construction-Commercial, Government & Residential
ACCY.OB (AMEX Application made, proposed symbol: SIP)
Alternative Construction Technologies, Inc.
2910 Bush Drive
Melbourne, FL 32935
Phone: 800 859 8813
A.J. Francel
Chief Operating Officer
Interview conducted by:
Lynn Fosse, Senior Editor
CEOCFOinterviews.com
Published - September 14, 2007
BIO:
A. J. Francel
Chief Operating Officer, Alternative Construction Technologies, Inc.
A.J. Francel is the Chief Operating Officer and the
Corporate Communications Officer for Alternative Construction Technologies, Inc. Mr.
Francel has a financial, administrative, sales and communications background with publicly
traded companies. He also has marketing and sales, operations and manufacturing experience
in the field of alternative materials and environmentally friendly and socially
responsible products. He has served as a Senior Advisor at an Advisory and Intermediary
firm where he analyzed businesses to determine value and/or remedy efficiency and costing
issues. Mr. Francel was bonded and licensed in the U.S. Securities and Insurance
Industries for 12 years as a retail and institutional broker. He has held Series 7, Series
63, Life and Health, and Fixed and Variable Annuity licenses and has served at
various capacities within the industry. Mr. Francel resigned from A.G. Edwards and Sons in
1997. Since, Mr. Francel helped to successfully grow an environmentally friendly
alternative materials company to over $500 million in projects under development and an
$820 million dollar market cap. Mr. Francel has served as an employee or a consultant to
several companies providing Investor Relations, Public Relations, Media Relations, Funding
and Sales & Marketing expertise. He has considerable experience with the
"Environmentally Friendly", Organic, Sustainable and United Nations communities.
His experience with and relationships in the United Nations, federal and state
governments, Securities Industry and business are invaluable resources and are helping to
position the company globally and politically.
Company Profile:
Alternative
Construction Technologies, Inc. (ACCY) possesses a unique and patented construction
technology called the ACTech® Panel System that is used in the design and production of
state of the art buildings in commercial, residential, industrial and modular building
applications. Generically known as structural insulated panels (SIPs), ACCY’s
revolutionary and efficient construction solution utilizes an inherently better galvanized
steel “skin” SIP system to complete energy efficient, stronger, safer, faster,
and more economical structure than conventional wood and brick based building products.
The patented ACTech® SIP system is environmentally-friendly and easier to construct with
– not only saving labor cost and cutting construction time, but also reducing
recurring monthly heating and cooling energy bills by 30-50% and often
more. Most importantly, the ACTech® Panel System possesses disaster tolerant
strength and has tested stronger than conventional concrete block or wood frame
construction. In hurricane projectile tests, the ACTech® Panel System has proved to meet
or surpass the most stringent wind, projectile and uplift codes in the nation levied by
the 2006 Florida Building Code. The ACTech® Panel System offers builders and
consumers many competitive and comparative advantages of use due to its wide range of
features and benefits. As this new construction technology gains awareness or hurricane-
and tornado-prone states establish new energy efficient and disaster tolerant building
codes and rebuild from recent weather disasters, ACCY believes its’ products will be
in greater demand.
CEOCFO: Mr. Francel, what is
your vision as you have become a public company?
Mr. Francel: “Hi, and thank you for having us. We
envision becoming a global supplier of e-friendly, energy efficient, safe and healthy
buildings and building materials that improve the economics of construction and home or
building ownership. We have changed our name to Alternative Construction Technologies in
order to address more widely the positive changes in the construction material world and
the ever-growing dynamics of earth friendly and energy efficient consumerism. Our vision
is to become a vertically integrated provider of alternative building materials and the
components that add up to a very safe, healthy, energy efficient and economical home. The
economics are designed to work NOT ONLY for the homeowner but also for the builders that
choose to use them. So we have changed our name and our disposition in order to more
directly pursue this vision.”
CEOCFO: Please tell us about
your unique technology.
Mr. Francel: “Our technology is generically known
as a structural insulated panel or SIP, but we call ours the ACTech Panel system.
There are hundreds of individual small cottage type businesses that are in the structural
insulated panel business, but we differ in a couple of important ways. One way is the
product and construction system itself. We produce a patented, structurally reinforced
galvanized steel skin that surrounds a rigid polyurethane insulating foam core. This
combines efficiently to provide excellent structural strength and high insulation value.
The combination gives builders and consumers a simple and easy to use material that is
strong, disaster resistant, mold/mildew and fungus resistant, as well as, termite
resistant. There is no food value, so termites and many other insects choose not to nest
in it. Most notably, it saves 30 to 50% and even more in some cases, on monthly energy
expenses, so it lowers the monthly budget. We also differ further with our material in how
we manufacture the material. With 9.6 acres of property that has a 154,000 square foot
manufacturing facility, we certainly have a lot of production capacity. Typically,
it’s considerably more than most others who make SIPs. How we produce is a
matter of our product and process patents. Our process patent allows us to make one very
large continuous panel and cut the panels to specified lengths to meet the customers’
needs. This differs significantly from other members of the SIP industry who must cut
their lengths first and then construct or glue the material together as a secondary
consideration. Conventional construction has to cut and configure raw materials in the
field with expensive labor. What that offers us is a comparable advantage and great
production leverage over competitors, and therefore the economic leverage almost always
works out better too.”
CEOCFO: Who is using your
materials now?
Mr. Francel: “We are a pretty attractive solution
to most aspects of the construction market including residential, modular, commercial, and
industrial applications. The material works very well in “big box” type
applications. Those include anything from warehouses, larger restaurants and/or retailers
that have lots of space and high ceilings that desire energy efficiency. Builder
developers that want to build residential communities fast and economically are also prime
candidates. Generally, they want to throw buildings up rather fast and time and labor
savings translate to higher profits for builders. These are all great applications for us.
In most residential applications, we are cost effective. Geographically, we have a growing
foothold across the entire South East and Gulf Coast regions. Desert regions are also
seeing activity. We address the gamut in the housing market…. everything from the
hurricane replacement market to the state housing initiative programs, which is government
money, allocated through state and local governments for low-cost housing, right on
through affordable and/or custom jobs. Single story, multi-story, multi-family or housing
tracts are all areas that we work. We also provide materials or complete buildings
relative to modular. For example in the state of Florida, we are generally suppliers for
between 70 and 130 portable, modular, or scalable classrooms per month. We have one
customer that can completely finish 8 portable classrooms per day using our
panels.”
CEOCFO: How do you generate new
business?
Mr. Francel: “In general, it’s kind of like
‘viral’ marketing. People see it and they want if for themselves or tell
someone. Like Kevin Costner says, ‘Build it and they will come.’ The website
videos and media hits have also been very effective. For the most part, we have been
suppliers to the modular builders and classroom market for several years and it has been
the primary component of our business. We have diverged from that recently and more
aggressively begun to pursue the residential and commercial side of the business just in
the last several months. In the company’s history, we never did much advertising and
marketing, it sort of sold itself. But now we are in the midst of launching a major
campaign that is pretty much targeting the coastal communities one hundred miles inland
from Texas all the way around the coastline of the Gulf of Mexico including all of
Florida, and some desert regions. Because these markets address the best cross section of
our product features and benefits- just about every feature and benefit that our material
has can be effectively utilized in those markets – so naturally, we have
targeted print and broadcast marketing efforts in those areas. The campaign begins this
month, be on the lookout.”
CEOCFO: Why is this the time
for the company to have gone public and to have put on this initiative?
Mr. Francel: “We feel like the time is right
because we have gone through years of prototyping and testing and as far as making our
claim, we feel that there is no other company that has the number of features and benefits
that our product has or the level of quality, at any cost. As a result of 9 years of
testing, prototyping, third party endorsement and those sorts of efforts, we also feel
that we have positioned the company and gotten efficient internally. We know of no company
that has expensed the amount of product testing or approvals that Actech panels have,
it’s over $7 million spent. We have also set up our document flow, our supply chain
requirements, our finance requirements, and all the things that are necessary to have
customer satisfaction. We have even applied for the American Stock Exchange. Separately,
we had a business revelation and changed how we view ourselves and our customers. Our
revelation was that we have two customers: the consumer AND the builder. In a way, we felt
we are very much like Intel. To advertise a chip to consumers will not necessarily
generate a chip sale. But, to co-market or co-develop computers, or companies that utilize
the best chip in it, probably will generate more sales. So we now drive sales to
builders who want to build with our materials in their buildings and help to promote them
at the local level. This is now the basis of our sales and marketing efforts. In the end,
co-developing a market region and providing advertising and media attention with the
builder, should attract both the builder and consumer as satisfied customers. We also get
ACTech Panel recognition, which we then try to leverage into new markets and regions. All
of those ideals and alignments that bring a business together and position it properly for
success; we feel we have now accomplished those things, this is why it is the right
time.”
CEOCFO: How do you reach your
target customer?
Mr. Francel: “We have relied in the past heavily
on word-of-mouth, internet and the visual experience. Very often when people see the
material at work or someone building with it, they get quite inquisitive and want to know
about it, and that creates a buzz in the community. It also helps that we usually provide
on-site projectile testing comparing against other materials and invite the media. We take
every opportunity we can to build on that opportunity.
We also reach out to our target customer through mailings,
salespersons, manufacturers reps., referrals, broadcast media, etc. When somebody develops
interest and wants to learn more, we concentrate our efforts to try to bring that builder
or consumer to a level of interest that they want to take action. Once either one of them
takes action, we either go to work to put a builder in their hands, use one of our
internal companies to build for them or we develop the builder in that community that is
interested in differentiating his business from traditional builders by incorporating
alternative materials into his business. There is a reason we feel that that builder
should want to do this; the market in any given builders’ geographic area there is
generally a me-too type of mentality. Each builder is building with the same set of
materials from generally the same set of suppliers in the area. The benefits that that
builder may have are relative to reputation, speed, and cost-not necessarily inherent
features and benefits. Ultimately, we are a selling and manufacturing organization and our
company sees ourselves as customer development specialists in the end. We are trying to
support these builders and bring them forward in a way where they have the opportunity to
lower their labor costs, and differentiate themselves from the other builders in their
market and provide a better-finished product. They can also satisfy the growing and
changing needs of consumers who want the energy efficient, environmentally friendly homes
with indoor air quality improvements and acoustical value improvements, termite
resistance, low maintenance costs and things of that nature. While providing what
consumers want, the builders basically improve their profits, their speed of build, and
lower their cost of labor. Ultimately, they should fare better than their competitors.
Therefore, they get a competitive edge. Anytime that a builder or a consumer can buy
something that has somewhat of a hedge against rising energy prices and you can document
those economic values, I think that they will probably take that choice and say
yeah!”
CEOCFO: What makes you feel
people are ready?
Mr. Francel: “I think that now is the time. First
is the ‘policy’ climate. Whether it is the United Nations; UNEP and their
Climate Conferences; the continued work of: Dr. Noel Brown, the Governor of Florida
Charlie Crist or Governor Arnold Schwarzneger of California; the New Millennium
goals; State e-Friendly and energy efficiency bills that are beginning to pass across the
nation; growing severe weather phenomena; rising temperature and utility costs; insurance
company losses; solar initiatives; and many other things of that nature-- world leaders,
policy makers and businessmen are beginning to connect all the dots. There are plenty of
political initiatives out there that suggest that these changes must take place soon. The
whole topic of global warming is very evident when we look at temperatures of 95 to 100
degrees at seven o’clock at night. Most people you talk to agree that this summer is
hotter than last year, wherever they live. Secondly, is the issue of consumer
sophistication and activism. Consumers are beginning to see the consequences of depleting
the ozone and rising energy and insurance costs hitting them in their pocketbooks.
Evidence of storm damage is on the news everywhere. All of these things come together for
the sophisticated consumer on how to look at costs and their budgets. It used to be that
the consumer would just itemize each expense individually. Now they tend to take a more
sophisticated view of how they treat their money. Maybe the cost of buying a home is not
just a function of what the mortgage payment is; maybe their cost of living is more a
function of the mortgage payment vs. a reduced energy cost and lower insurance expenses.
Collateral expenses are also important considerations. All in all it is a monthly budget
and if they have a way to blend the components of that monthly budget and lower their
monthly cost, then they will consider purchasing a home made w/ ACTech Panels. This is one
of the things we try to stress when we are discussing the sales of our materials, how the
economic benefits really work.”
CEOCFO: What is the financial
picture of the company?
Mr. Francel: “We are measured in quarters….
and in years and we are in this for the long haul. We have been running at about $10
million in annual sales. We have the capacity for about six times that volume. Our
financial picture is that we have become profitable so far this year. This in part because
we have continued to find efficiencies within our business to offset the inflationary
prices of materials and downturn in the industry and still remain profitable. The
construction market has had a difficult period of time post real estate ‘bubble’
and we are a part of that overall industry. Many of our customers have suffered and yet,
interestingly, many others haven’t. Although we do have current challenges, our sales
pipeline remains very robust and active and still grows despite the difficult timetables
and delays inherent in construction. Timing can be unpredictable. Nonetheless, we are
encouraged about our past, our future and we are always working hard to manage the
challenges of now.”
CEOCFO: Acquisitions have been
part of your growth; will that continue?
Mr. Francel: “Yes, we have a growth plan that is
organic growth as well as acquired growth. Our acquired growth plan targets materials and
products or construction related services that compliment our core business strategy
and/or lower our overall cost to build. Our philosophy here is that many builders and/or
consumers want to shop building material prices and they want to buy these materials
basically as a commodity; that is typically how the lumber and brick industry is. They are
commodity businesses driven primarily by price. We are constantly asked to quote materials
on a material versus material basis. However, it is not an effective comparison, because
the ACTech panel system offers so much more. For a more realistic comparison it is better
to ask the question: ‘If I could sell you a building material for $1.00 per square
foot or I could offer you a building material that was $19.00 per square foot, but when
you are all said and done your cost to build was actually $100.00 per square foot with the
$1.00 material, and the cost to build was $95.00 per square foot with the $19.00 material,
which material would you choose to buy? Invariably people will take the $19.00 and $95.00
choice, but getting people to understand that the efficiencies of our materials go well
beyond the cost of the material itself on the surface, that is our challenge. In short,
our acquisition strategy will continue to encompass whatever offers a safer, faster, more
efficient e-friendly home or building without increasing, or even reducing, the cost to
build by delivering upon these efficiencies. Our organic growth involves expanding each of
our current and new markets while continuing to support and develop existing customers
with product sales.”
CEOCFO: In closing, why should
investors be interested in Alternative Construction Technologies and what might they miss
about the company that should jump off the page?
Mr. Francel: “Great question! From an
investor’s standpoint, I think that history has typically shown that successful
investing can usually fall into a revolutionary economic theme. As an example, there was
the independent transportation theme at one point, a.k.a. the advent of the automobile, it
didn’t necessarily matter what component of the automotive theme you bought. It was
revolutionary in nature. You could have bought companies in petroleum products,
streetlight signals, tires, automobiles, paving equipment, insurance, it didn’t
matter. If it was something connected to the automobile that general industry or
sub-industry thrived under an overall economic theme and the same is true for many other
investment cycles. The advent of the computer industry and the subsequent technology
advances and efficiency gains caused by that industry also provided many investment
winners. The same of the medical industry and biotech; first it was pharmaceutical then
came the advent of the biotech industry once traditional plant and peptide based research
had become exhausted. All were investment themes and if you invested in one of those
themes and chose wisely within, your investment success was pretty much assured. At this
point in time I do not believe that we are at the stage where space travel and galactic
farming is an investment theme yet. However, I do believe e-friendly or earth-friendly and
energy efficient construction on earth to protect the earth is a theme that is rapidly
developing and we are now starting to see the policy changes and political positioning
about global warming and conscientious consumerism that are shaping a prolonged trend. The
evidence is out there to support this. The United Nation projects a multi-million home
shortage and 3 billion people living in slums over the next 10-12 years. That sounds like
a worldwide housing shortage to me. Their proclamation: We must get smarter about how we
build, what we build with and how to make it last without depleting Earth’s trees.
Something that also supports this is the severe weather patterns that are developing and
expected to happen for the next forty years and the many consequences thereof. As an
example, the hurricanes that hit Mississippi, Louisiana, and Texas recently- most people
think the damage is usually one-time damage, but the ongoing damage that nobody has
figured out how to quantify until well after the fact is the mold and mildew damage caused
by flooding and moisture. Typically, more homes have been renovated, condemned, or damaged
due to mold toxicity caused by flooding than the actual storm damage itself. I believe
that there is going to be a next trend of activity where insurance companies want to be
protected from or will offer discounts for homes that have moisture tolerant or moisture
resistant features to them, anything that avoids the mold or mildew toxicity situation.
Meanwhile, Florida has already mandated insurance companies offer a discount for those who
build with wind mitigating construction materials. This is the theme that we see
developing and we want to be positioned for when it begins to accelerate and gets major
traction. Then, we would expect to become a global enterprise within that theme.”
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