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Sourcing Strategies
How Zetian Systems Uses Overseas Supplier Channels for Las Vegas Projects and Beyond
by Megan Headley

In 2005, Greg Olin, then director of sales at Super Sky, found himself in China at the invitation of architect Veldon Simpson. Olin was searching for new suppliers to enhance the company’s supplier network both for aluminum and glass.

“We had been involved with [Simpson] on a potential project and it was at the end of that project he said ‘I’d like to introduce you to some of the suppliers we found,’” Olin recalls.

At the time, Weina Zhang was also working for Simpson doing the prequalification of suppliers.

“She was, let’s say, the master of the database,” Olin says. “We started talking about what was available, what the potential was for sourcing materials in China.”

Olin recognized that, after 15 years with Super Sky, he was ready to take on new opportunities. At just the same time, Zhang was coming to the end of a project that wasn’t going forward. “We very quickly discussed the idea of using my glass knowledge and her information about the China suppliers and creating a business that could do it a little bit better, a little bit more efficiently than we were doing currently,” Olin says. “Within a couple months we decided to form the company with that goal in mind.”

Early Models
The early form of what is now Zetian Systems Inc. was called World Source, and joined Zhang as chief executive officer and Olin as president. The company’s goal was to supply building materials, with an emphasis on glass, from suppliers around the world to projects in the United States. “We realized very quickly that most of the advantageous sourcing was out of China,” Olin says.

Las Vegas was chosen as the company’s home. Zhang already was supplying architectural materials to the developer of the city’s Panorama Towers 1 and 2.

Plus, Olin adds, “It’s a very pro-business city, pro-business state, so it was an easy choice to decide to expand here.”

In developing the business’ mission, Olin looked back to his time at Super Sky. “What I really admired about them is they have very strong customer service business and model,” he says. “The basic customer service model was very much following the way that Super Sky organized its business.”

Today, the Las Vegas office of Zetian Systems includes approximately 15 people who make up the company’s sales and project management teams, as well as accounting and related administrative activities. In addition, Las Vegas is the base of Z Glass, a union glazing contractor formed by Zetian in 2009. Olin explains that Z Glass was formed to complete the glass installation of the Fontainebleau Las Vegas.

“The Z Glass personnel varies depending on the job,” Olin adds. “Right now we’re manning the job at Smith Center downtown with about 25 Z Glass employees, and that will vary up and down, depending on the job schedule.”

In addition, Zetian owns Zetian Curtainwall Design Ltd., a wholly-owned subsidiary in Shenzhen, China, where the company’s engineering and design work is primarily done. Olin considers those structural engineers to be in-house employees as well. “That office is running at about 35 people consistently, with the engineering department being the largest of those departments,” he says.

Olin notes that having an overseas engineering firm allows the company to have a nearly 24-hour operation. “Because of the time difference a lot of times we’ll go to a meeting, we’ll decide on changes, we’ll send those changes, we’ll get them updated and then the next day we can turn them.”

Olin calls the overseas office “a support, an extension of Zetian. The focus is, whether it’s China or anywhere else in the world, the customer is going to be able to speak in their language and work with people that they are comfortable with,” he adds.

An International Company
Despite the fact that the company’s engineering department resides in China, both Zhang and Olin are firm on one point.

“We are not a Chinese company,” Olin says. “We don’t work in China. We’ve never done a job in China. We don’t plan to work in China. But we do see a great deal of opportunity in other markets.”

“In the international market what we do different is we’re marketing as a U.S. company,” Zhang says. “Even in China, or any developing country, [if] you’re a U.S. company they pay you premium … because they know what they’re going to get.”

“For example, in Thailand there’s a developer who wants to do a very tall condominium and he does not want to use local suppliers. He wants to use a different standard,” Olin says. “The projects in Abu Dhabi, for example, are very much like City Center [in Las Vegas]; you have an array of world class architects who are demanding the highest quality standards.”

He adds, “Where we get involved is if there’s an advantage from a quality standpoint, if it’s a developer who’s looking for the highest standards; we can say ‘U.S. standards,’ almost.”

Zetian’s focus on glass is a result of market demand. “It’s very much market-driven, but I would say it’s an architectural products business more than a glass business,” Olin says.

The First Project
The company’s first project was doing aluminum trellis in the Cayman Islands. “We did the job there basically because no one else could supply an aluminum die as large as what they were requiring for that job,” Olin recalls.

Additional custom stainless steel work was to follow, although the company also has done its share of structural glass projects, both point- and glass fin-supported.

“I would say 75 to 90 percent of the work has been focused on glass but we’re just as easy to go to stainless or aluminum extrusions or that type of product,” Olin says. “By chance, we ended up with the Fontainebleau project, which very much threw us into the big leagues with a million-square-foot project.” (Not by chance, court documents indicate that Zetian still is involved in legal matters following a lien placed on that since-bankrupt 63-story glass tower.)

For Zetian’s structure to work, the company must offer products that are both cost-effective and high quality, and for that the executives must select carefully the suppliers that they work with.

“That really is the key to success: a good supply network,” Olin says.

Zhang says she works to develop long-term relationship with the vendors.

“When you talk about China, there are 100 glass companies, and we only work with three major glass suppliers,” she says.

Zhang notes that the company does not work exclusively with China-based fabricators, and currently is looking to partner with a company based on the East Coast of the United States for a local project. At this time, though, the company primarily supplies products from CSG Holding Co., Shanghai Pilkington and, “for special glass,” Sanxin Glass.

“In the early stage, those were the only three companies that had the ASTM certification for the U.S. market,” Zhang says.

Answering Concerns
For many U.S. companies, concern over using products fabricated in China has come from the fact that U.S. fabricators are held to rigorous standards, such as those issued by ASTM.

“For our suppliers it is standard that they do 100-percent manual quality control [checks] on the glass. They check each piece,” Zhang says.

As Zhang points out, using poor quality glass can be disastrous for a company like hers, which relies on overseas shipping. She explains, “In the factory they do the quality control check per piece, because we cannot afford [changes]. Once the glass arrives to our shop, then you see a defect—now you’ve lost four weeks or you have to air freight, in our case. So we have actually three precision quality control checks, the final being in our factory, to avoid losing time.”

Once out of the factory, Olin says the company works with one of two testing facilities to test a mock-up for every project.

“There are a number of good options,” Olin says. “There’s a testing facility in southern China in a beautiful town named Foshan that is the largest curtainwall testing facility in the world. Most of the large curtainwall companies of the world use that test facility from time to time. They’re independent and they’re fully certified, and they’re associated with Hong Kong. Hong Kong had this long history of world certification based on the British standard and then the American standard. So there’s that facility, especially for very large mock-ups.

“There’s a smaller facility in Hong Kong that we use and we’ve used both for projects here. Every project we’ve built we’ve actually had a mock-up done at one of the two facilities. More recently,” he adds, “we’ve established our own facility here in our warehouse for small punch windows and smaller units. That’s also certified by an independent agency.”

The other challenge in working with overseas suppliers is, of course, bringing those products to their final destination.

“In the beginning, there was a lot “In the beginning, there was a lot more fear of the unknown,” Olin says. “I always remember people would say ‘well, what happens if the container sinks?’ And I’d say ‘if you were to check the news there’s probably not many records of ships sinking...’”

However, Olin adds, “In reality, we’re a relatively small business, and we have benefited tremendously from the world market in the sense of companies like Home Depot and Wal-Mart that have perfected the science of the logistics and shipping information, whether it’s China or elsewhere. As an example, when we were doing Fontainebleau we were bringing in approximately 25 containers a week through Long Beach, Calif. That went on for more than six months and there was never a missed container. Customs may pull a container aside from time to time for a spot check but it just works like clockwork.”

Growth for the Future
Zetian’s executives try to look at the current economic conditions with optimism, despite downward trending revenue.

“In 2009 we had revenues of that surpassed $40 million,” Olin says. “2010 was not as good.”

Zhang is quick to point out, “Compared with other people, 2010 is actually not too bad.”

The year’s revenue between $12 and $15 million was profitable, Olin says. “We still have a healthy backlog, and this is why we don’t feel any desperation to buy jobs.”

“In this market, people get desperate; you pick up the job because you’re desperate, and then you create a problem and you’re losing money and you end up closing your door. That’s not our style,” Zhang says. “Each job we pick we know we can make some profit—it’s not just to survive. We have a good management model.”

Las Vegas locals are quick to point to the skyscrapers that dot the city, remains of projects stalled until further notice. Although Zhang says “Vegas is our home,” the company is branching out.

Construction growth now, Olin says, is in “New York, it’s East Coast, there’s no doubt about it. In fact, we’ve opened an office just recently in New York to service that market because that is where it’s at right now.”

One of the company’s current notable projects, One World Trade Center, is in New York (see Trade Center Challenges, below).

But it’s the international market that Zetian has its sights fixed on now.

“The international market is really going to be the key to our growth, and to the growth of the industry really,” Olin says.

“Our business is pretty much 30 percent in the domestic United States and 70 percent we’re looking at the international market,” Zhang says. While the ability to work internationally has been a boon, recent strife in the Middle East has slowed down projects. Still, Zhang says, “If the Middle East is smooth, then in the next six months we’re looking at some decent jobs there.”

Overall, Olin says there are a lot of positive indicators.

For now, Zetian Systems executives are aiming to prepare the company for the next boom.

“Really it’s a matter of managing the business well through the downturns,” Olin says. “I think you see that the successful companies, especially the ones that have been around for decades, they’ve gone through these cycles. I was with Super Sky through a very difficult cycle in the ’90s. It’s really a matter of do you manage your business so you’re prepared for it, and then, can you weather it? Usually the ones who are around on the upside do quite well. So that’s our expectation. Watch out for 2012,” Olin says.

Megan Headley is the editor of USGlass.

Trade Center Challenges

Zetian has overcome some challenges in the short time since its founding; among those challenges, finding itself in 2009 the subject of outrage for supplying products from China for a symbol of America, the World Trade Center in Manhattan (see April 2009 USGlass, page 30).

It’s a significant project for any company, and Zetian’s employees are proud to supply the glass that will clad the podium wall system, covering the lower 20 stories of Tower One*.

Zetian Systems was formally contracted by Solera/DCM in early 2009 to perform design-assist services, fabrication and delivery of the unique glass and bird screen components for the podium at One World Trade Center.

Looking back to the initial decision in 2009 to suggest to the project architect a product from CSG Holding Co., Olin recalls, “On a relative basis for a float glass manufacturer, it’s not a big job; it’s 100,000 square feet of surface glass … but to be associated with the project … So [CSG was] very aggressive in trying to sell their product and we were very happy to help that process and to submit the samples. But when it came right down to it, it’s a subjective decision and that’s where the architect takes over.”

After a review of available materials, PPG’s Starphire® ultra-clear, low-iron glass ultimately was selected (see December 2010 USGlass, page 10).

“When we put the options on the table and the architect says ‘I want that one,’ I don’t ask why,” Olin continues. “The combination was just perfect. Once [the architect] saw that it was available, and there was some inventory available immediately to do the trials that we needed in order to keep the contract schedule, it became a no-brainer.”

Zetian awarded PPG the glass order for the podium in October 2010. PPG will supply the glass to Zetian, which has contracted Sanxin Glass in Shenzhen, China, as fabricator.

“We’re very happy with the final decisions,” Olin says. “We’re working with PPG Glass now. In fact, we’ve just gone through two months of trials.”

Although PPG representatives said they were surprised that the contract had returned to them last fall, Olin comments that it’s not unusual to go through a long period of sampling.

“What made [the glass selection] even more difficult on the prism glass is you’re looking at two things: you’re looking at the color of the glass, which of course is a low-iron glass, and between the, say, four suppliers of the world that produce low-iron glass, only two of them produce the glass in the size that is required,” Olin says.

From there it was a matter of working out logistical details. “Zetian was not a customer of PPG previously so that made it a little more complicated. But in the end it all got smoothed out,” Olin says.

Zetian representatives are working closely with all parties involved on this complex project.

“We have a great relationship with Solera/DCM, which is the steel erector for the entire tower,” Olin says. “It’s really a true partnership where everything is decided for the best benefit from the fabrication side and the installation side. No one aspect is ignored over the other. Everything we do with design and fabrication ultimately has to work in installation. And it is an installation challenge,” Olin adds.

The challenge begins, Olin says, with the logistics of moving units from the New Jersey storage area to the construction site in New York, where there’s little to no staging area. In addition, he says, the glass units are unusually heavy.

“You start off with 1 ½-inch thick glass to begin with, then it’s unitized to an aluminum birdscreen. On part of the building there’s a small area that actually goes to stainless steel birdscreen, so the weight doubles. [DCM/Solera] developed a gantry system that is not in place yet but will basically lift the units and drop them into place. Then they’re hung pretty much like standard curtainwall,” Olin says.

He adds, “The other sort of unusual part of this is the cleaning mechanism. Obviously the glass is such a highlight of that podium that they want to keep it clean. Developing a tracking system that will both keep the glass clean and protect it from breakage has been, and continues to be, quite a challenge. It’s not complete yet; there will be additional testing on the cleaning mechanism in the next couple of months.”

*At press time, the project contract was in jeapordy. Visit www.usgnn.com for updates as they are available.

USG
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