Huntsman, Icynene-Lapolla building a global force in spray foam

Since Huntsman completed the acquisition of spray polyurethane foam specialist Icynene-Lapolla in February 2020, the coronavirus has made the world a very different place. Yet despite the challenging landscape, the integration of the two businesses has progressed rapidly.

"We were, essentially, bringing together two companies, and three of the largest spray foam brands in the world," said Doug Kramer, who now works for Huntsman, but previously served as CEO and president of Icynene-Lapolla before the acquisition.

Kramer founded Lapolla Industries in Houston back in 2005, and it was acquired by Missisauga, Ontario-based Icynene in 2018. This was the same year that Huntsman made its first big move into downstream SPF insulation, with the acquisition of Demilec.

The newly combined business was rebranded as Huntsman Building Solutions, or HBS, in May. Unusually, it has two presidents: Kramer, who is leading the U.S. business, and Simon Baker, formerly of Demilec, who is looking after Canada and international business.

"We really felt we needed to move quickly," Kramer said. "It all started just before coronavirus began to kick in, and we had to adjust very quickly. It certainly has had an impact on the way we went about the integration, but it didn't really slow us down, and I think overall the merger and the integration has gone extremely well. We had good people at the table, and moved very quickly to make decisions about the structure of the company."

He cites culture as being particularly important when integrating multiple companies.

"It becomes more difficult when you can't sit in rooms together," he said.

Online meeting platforms were a savior, and the team finally is able to have some face-to-face meetings.

"We have been working in our offices at Huntsman's corporate headquarters in The Woodlands, Texas, for a couple of months now, with social distancing, wearing masks, and taking all necessary precautions," he said.

With so much legacy capacity, Kramer said, continuing to service SPF customers throughout the pandemic has been no problem.

"We saw a brief downturn in the second quarter, but a swift recovery after that," he said.

Although there was an overall downturn in April and May, he said, there was a very swift recovery in the residential construction market after that.

"Residential construction in North America has remained strong, and is driving the business," he said. "The commercial side has been more choppy, but it's there, if a little less reliable."

He does, however, believe that a streamlining of its manufacturing will eventually occur.

"In the meantime, not only did we have the tank capacity to ensure we could take care of our customers, we took steps in our manufacturing processes to ensure we had reliable and sustainable practices to ensure consistency and availability of product," he said.

As an example, he said, splitting shifts was an effective way to hedge against coronavirus among the operators; if someone came down with the disease and there were only one shift, manufacturing would have to shut down.

Business drivers

Residential is really driving business at the moment, and now is even reaching pre-coronavirus expectations, Kramer said. While some of the demand is for retrofitting insulation projects, it is largely being driven by new construction.

"Consumers have changed their perspective a bit; they now want more space," he said. "They don't want to be in confined spaces, or with such a large concentration of people. It is going to drive better technology. And, frankly, people have made a very swift adjustment to working at home, and realizing you can be as efficient there. I think this will change things for business going forward."

On the commercial side, he said, a lot of government work remains strong because the funding remains, but privately funded work remains spotty.

"If a project was out of the ground, many of them continue to progress, but if they were at a point where there had not been so much investment, many have been put on hold or canceled," he said. "People are re-evaluating their commercial space and its intended use. Is this something that is going to go back to normal as we come through the pandemic, or is it going to be a permanent change from (the) coronavirus?"

There are particular concerns around office space, he said.

"One of the pre-coronavirus trends was common spaces, with people going into a flex-office and using centralized services, rather than having their own space,' Kramer said. "That had a lot of value to small, independent businesses. But the question now is, are people going to want to go into a concentrated area with strangers now? I think coronavirus will have an impact on the perception of these types of services in the future. I think there will be a shift to a 'new normal', and we will return to previous levels of growth in construction and sustainability. But I do think there will be a relatively swift recovery."

Huntsman believes that both insulation and roofing will continue to strengthen. On the insulation side, Kramer said, continued concerns about efficiency and sustainability, the cost controls and maintenance controls that spray foam provides in the building envelope is second to none.

"We believe those things are still top of consumers' minds, and they will continue to be so," he said. "Changes are occurring around these things, but they will still be fundamental in construction going forward because there is no question that people are looking to reduce their carbon impact, reduce their environmental impact, and gain cost controls and greater comfort."

The drive to sustainability

The SPF industry has faced sustainability concerns for many years, he said, but believes this is changing.

"In the 30 years I've been in the business, we have seen significant transitions in blowing agent requirements and greenhouse gases," he said. "We have led that charge. Among our legacy brands, we were the first to roll out an HFO spray foam system five or six years ago, and we are expanding the technology globally."

New parent company Huntsman also has recycling technology, with a proprietary process to turn post-consumer PET water bottles into polyols used for spray foam.

"We are using plastic that has been taken out of landfill and the oceans," he said. "This is significant. I believe that they have now recycled more than a billion bottles."

But this is just the start of the SPF value chain, he said.

"We sell spray foam to contractors, who install it into structures to reduce their carbon footprint, create better air quality, provide greater comfort to consumers, and reduce greenhouse gases," he said. "This value chain is something I am proud to be part of. We are giving value to the environment, to consumers, and to the future of the industry."

At the end of a building's life, there has also been development around the foam. For example, it can be ground up and used to soak up oil spills.

"But the thing about spray foam is that its life cycle is essentially that of the structure itself, provided it has been installed properly," he said. "Over time, I think there will be continued development around the elimination of waste as buildings are demolished."

Kramer is excited about the potential for the business as part of the larger Huntsman group.

"It is one of the large global players in polyurethane, and we intend to use those resources to advance our opportunities with technology," he said. "It has been part of the culture of the legacy companies to focus on innovation, and I currently participate in global laboratory meetings to talk about technology, and share the experience that we have globally to drive opportunities with spray foam. Over time, I believe we will continue to lead in innovation and technology."

And he remains optimistic for the future.

"The design of the organization is largely in play, and we were quick to act upon the integration," he said. "There is a tremendous amount of resource available to us at HBS. It is now a matter of continuing to build a culture that is customer-centric, maintain the strengths and values that have got us to where we are today, and ensure our culture and our efficiencies reflect that going forward."