Winchester, Va.-based Trex is a $350 million, publicly-held company that manufactures wood-plastic composite decking, railing, fencing and trim. It started as a division of Mobil Oil in 1992, went public in 1999, and currently has two operating facilities in Virginia and Nevada. The products are made from a wood-plastic composite blend between recycled polyethylene and wood fiber. President and CEO Ronald Kaplan discusses his view on the growing market.

CEO Ronald Kaplan of Winchester, Va.-based Trex discusses his view on the growing infrastructure market.

CEO Ronald Kaplan of Winchester, Va.-based Trex discusses his view on the growing infrastructure market.

Why did Mobil focus into decking?

From my understanding, Mobil had developed an application for recycled polyethylene (PE) and based on the behavior characteristics of the product – it doesn’t warp, splinter, or rot – it seemed like a perfect application for an outdoor material used to make decks. Wooden decks normally start to rot after six to seven years, but this material enables us to give a 25-year guarantee. There are 40 million wooden decks that are all going to rot, which dissatisfies homeowners, and that’s our market.

What is the market share of composites?

In terms of dollars, about 25 percent of the total decking market. Every year, it goes up a couple of percentage points.

How has the green movement affected business?

We use focus groups to determine what’s important to customers. The green issue used to be number seven or eight in the list of priorities, and now it’s number three behind aesthetics and maintenance. It’s moving up, and our advertising reflects that. All of our competition uses virgin polyethylene, and we use a recycled product. No trees are cut down, and no oil is purchased from the Middle East, which is becoming more of a buying decision factor for the public.

How are those focus groups conducted?

We did it on both coasts. We hire an outside independent agency that tests homeowners who are likely to buy a deck. We videotape the focus groups and collate their answers and so on.

What questions do you get about the product?

People wonder if it will rot, splinter, or fade. Another big concern is price. They primarily want to know the difference between composite and wood and why it’s worth the additional price. We tell them it’s worth it because it requires no additional maintenance (sanding and staining) and their kids won’t come in with splinters in their foot. I say, if you want to spend your weekends enjoying/working on your deck, how you spend your time will determine how you spend your money.

What are some obstacles to expanding composites?

Primarily cost. It is more expensive than wood, so it appeals to people at the higher-income level and people who put more of an emphasis on aesthetics with low maintenance. On a standalone basis, board versus board, it’s probably about triple the cost if you were going to do it yourself. If you had it installed, it’s about a 25 percent differential. Most of the money is in the labor. Decks can go anywhere from $15,000 to $250,000, but the average is in the $35,000 to $40,000 range.

How does the manufacturing of these decks differ from wood?

Wood just grows, and all you have to do is saw it. We buy the sawdust and make it into wood flour then combine the two, heat it, and extrude it. For composite on the other hand, we buy the recycled PE and chop it up, sort it and densify it. One of the beauties of the product is that it’s as workable as wood to install.

What is your research and development like?

We have about 15 engineers in the department. Our R&D is driven by our marketing research and we determine where there are niches in the marketplace for unmet demand. We give a specification to the R&D department. We have periodic meetings to assess whether or not the project goes to the next phase. The senior manager makes decisions on progressing projects, and ultimately if we do decide to go through, we’ll develop the product and launch it.

What applications are growing?

Our decking has always been the most popular product, but the fastest-growing product is our railing. People want decks that create an “envy factor.” They want to individualize their decks, which includes matching railing. We have developed many different color schemes and options, so each deck can look different from others.