Rain brings business for Seal Sprayed Solutions
Published:Wednesday | October 20, 2010 | 12:00 AM
Avia Collinder, Business Writer
A prolonged drought which depressed demand for water-proofing services by 25-30 per cent last year, back to back, double-digit wage increases, rising energy and raw material costs have taken their toll on Seal Sprayed Solutions Limited.
But, the private Kingston-based operation involved in water-proofing and insulation, has now seen significantly improved prospects with the stabilisation of the dollar and the return of the rains.
Director and shareholder William Tavares-Finson says recovery is in sight for the company, which had turned to the energy-saving sector in search of business during the drought when demand for water-proofing dried up.
"We will make no progress without some risk-taking," Tavares-Finson said on Friday in an interview with Wednesday Business.
In one downtown company, a government agency, Tavares-Finson estimates that Seal Sprayed saved the operation some J$1.3 million per annum in energy charges.
"The building, with a roof area of 29,000 square feet had sprayed polyurethane foam (SPF) applied over two floors, with the result that it saved energy charges of US$14,784 or J$1,271,424 for the year," he said.
Reduces temperature fluctuations
SPF reduces temperature fluctuations, which, in turn, cuts cooling costs.
Seal Sprayed Solutions was formed in December of 2002 and went into full operation in January 2003 with one mobile plant and five full-time employees.
The company has three shareholders - Vaughn Morris, Robert Silvera and Tavares-Finson - each holding a one-third equity stake.
Its head office is in New Kingston, but its production base is on Hagley Park Road.
By April 2005, the company expanded to three mobile plants, 18 full-time employees and several temporary staff, including preparation crews and warranty crews.
The original intent, Tavares-Finson said, was to serve the Portmore and other residential communities nationwide where waterproofing and insulation would add to comfort and structural integrity.
But rising raw material costs, based upon international market conditions, forced the company to target, primarily, the commercial sector instead - which it now does from four plants, three of which are mobile.
In setting up the mobile plants for the application of SPF, the partners relied on equity capital to avoid heavy interest expenses being an early burden; further supplemented by leases.
Expansion was gradual and mostly funded from internal resources.
"The goal was to meet the demand of the market while, at the same time, having some amount of redundancy to facilitate any unforeseen breakdowns," Tavares Finson said.
The company's main challenge was convincing raw material suppliers from overseas that "we were a company they could offer a line of credit even though they didn't know who we were," he said.
"The raw material is costly and was an early strain on cash flow. However, by complying with the terms of the suppliers in the short term, we were able to develop their confidence to enable us to secure what we consider favourable lines of credit."
To date, the company has applied SPF to over four million square feet of surfaces across the Caribbean.
It now employs more than 40 persons full time and upwards of 70 when projects demand it.
In late 2006, Seal Sprayed Solutions opened up operations in Trinidad, undertaking projects in that country and Grenada.
At peak capacity in Jamaica, the three mobile plants can apply 24,000 square feet of SPF daily with cost estimates ranging between J$270 and J$320 per square foot.
"We are, by far, the largest company of its kind in the English-speaking Caribbean," Tavares-Finson claims.
The signs of the recession began to show in a fall off in demand towards late 2008 and later the drought pushed the market further into retreat.
Revenues fell by between 25 to 30 per cent in 2009 over 2008.
The company cut staff by 15 per cent in response.
"We were able to weather the storm by rationalising operations and trimming some of our work crews to essential workers only," he said.
"The focus of the company moved away from leaking roofs to energy saving in the heat."
Promising interior-applied insulation which would significantly impact energy costs and which also cost as much as one third less than waterproofing from the roof, the company secured new sales, which amounted to 10 per cent of business done in 2009.
It continues to market this line.
Director of special projects for Seal Sprayed, Vaughn Morris, says notwithstanding construction industry labour awards of 18 and 17 per cent respectively in 2009 and 2010, material costs rising between seven and eight per cent, fuel costs increasing and the dollar losing value earlier this year, charges to clients have only been increased by seven per cent in 2009 and five per cent in 2010.
With the revaluation of the JMD - which pulled from J$90 per US dollar to around J$85-86 - some gains were realised, but Morris said real resurgence of the water-proofing market only began with the return of the rains.
Requests for estimates improved by some 50 per cent in the third quarter of 2010 relative to 2009 and the company continues to benefit as well from the advantage of providing a product which reduces energy costs, compared to other re-roofing options.
Seal Sprayed Solutions is the sole licensed contractor/distributor for liquid rubber membrane systems in Jamaica and Trinidad.
The company was among nominees for this year's NCB Nation Builder Awards, a winner for which was to be announced last night.
But Tavares-Finson notes that Seal Sprayed has earned other accolades in the past, including the award for Best New Manufacturer for 2005 and 2006 from the Jamaica Manufacturers Association (JMA); and the Private Sector Organisation of Jamaica Small Business Award 2004; and the JMA Product Group Award 2006.
"Seal Sprayed Solutions recognised early that innovation was not enough. We have placed emphasis on our line crews to understand what equipment they are working with and how to utilise the tools we have given them to deliver to our clients the best job that they can," said Tavares-Finson.
"On the other hand, we have to educate the public that this new technology, although new to us, has been around for over 60 years in the US in one form or another."
Business is currently split 70 per cent commercial and 30 per cent residential.