Volume 12, Issue 4 - July/August 2008
WHERE IN THE WORLD IS…SUN-GARD®?
“It was an experience I hope to never go through again,” says Bill Stewart who served as national sales manager for Film Technologies International Inc. (FTI) for nine years. Like many, he was an optimist. But he says the St. Petersburg-based manufacturer’s slow decline was inevitable.
“We got to such a critical point that we were having production meetings basically every day, because it got to where we could not afford to mess one [roll of film] up,” he explains. “We got our backs against the wall so close that that’s the position we were in. And that’s why our consistency was actually better in the end. We had nowhere else to go. If we blew a roll, we were done.”
For FTI, the effort was too little, too late. Wednesday, January 26, 2008, Bill Stewart’s slow train wreck finally ended when the company officially closed its doors.
Stewart says seeing it coming doesn’t decrease the sting or make the situation any easier.
“I had dealers calling me who were extremely upset with the situation,” he says. “I don’t think they realized they were talking to someone who was facing unemployment in an industry that simply was not hiring.”
But Stewart was fortunate; he was only out of work for four days. Soon after FTI closed its doors, Novamatrix of Singapore acquired its old assets through Solamatrix Inc., a new, affiliated company designed to continue the old SUN-GARD® and GLASSGARD ® brand names. The newly formed company contacted Stewart immediately.
“I’ve known of Andrew Kwan, the owner of Novamatrix, for some time now,” Stewart says. “When I found out that’s who the bidder was, I didn’t know they were going to call me back, but they did in about a week [after winning the bid].”
Unlike many of FTI’s former employees, Stewart had a new job. But this endeavor would present its own challenges. When Solamatrix acquired FTI’s assets, it acquired the brand names, the facility and equipment. What it didn’t acquire were the company’s liabilities. For this reason, Solamatrix isn’t warranting products created by its predecessor.
“The message to the street is very convoluted,” Stewart says. “People have a hard time understanding that Solamatrix did not assume the liabilities of FTI. No company would have.”
“Solamatrix did not purchase liabilities when they purchased FTI and the brands SUN-GARD and GLASS-GARD. Solamatrix will not honor FTI’s warranties,” Stewart explains. He admits, this message has its sting. “This spans all the way down to the vendors,” he says. “The installers are hurt. The homeowners are hurt. Everyone gets pinched in this kind of trickle-down effect. This includes everyone from the company that supplied FTI’s phone system to the raw material suppliers. That’s part of a business going bankrupt. And it’s very rare in any situation that a company would buy liability.”
So why would Solamatrix decide to pick up FTI’s brand names, knowing that many have been left with a bad taste? Stewart says you have to look at it from a global perspective.
“The rest of the world, outside of the [United States], doesn’t have factory-backed warranties,” he says. So, when you look at a worldwide snapshot, these brands are still very strong.”
Stewart says his company knows there will be fallout, but he believes, in the end, the numbers will add up.
“I know what percentage of the market share we had [with FTI],” he says. “There’s plenty of open territory to get, even under the assumption that we got none of our repeat business back. There are going to be some people with animosity who will refuse to do business with us, and they’ll never do business with us again. And that’s their prerogative.”
A lot of that animosity comes from dealers and distributors who weren’t forewarned and perhaps didn’t see it coming.
“You know, people say, ‘Why didn’t you call and warn us? If you knew, why didn’t you tell us?’” he explains. “But, look at what happened recently with four major airlines that went bankrupt. I was flying at the time and I was standing there as 500 flights a day were being canceled out of Dallas. They weren’t giving tickets back. They didn’t call all of their customers and say, ‘Oh, if you’re flying on such and such airline, you don’t need to show up today.’”
He says the company did offer a solution to the warranty issue by selling leftover stock at a severely discounted price. The idea was that dealers could stock up and offer these products as replacements, should one of their customers return for warranty work.
“To help them, we did a liquidation,” he says. “We offered it at 20 percent over our manufacturing cost. So we suggested that they buy some of this stuff, stack it in a corner and use it for warranties.”
Stewart says his company doesn’t want to be viewed as the “new FTI.”
“FTI is dead,” he explains. “That’s why I didn’t bring back any of my old sales guys and why my branch management and branch staff are different. It has to have a new look and a new attitude. The only things that are going to be the same are the brand names and logos. It’s a different company. It really is.”
So why would Solamatrix want to acquire the same equipment and facility that FTI operated, when according to its former chief executive officer, Don Wheeler, the company struggled to offer consistent product and eventually failed? (See related article on page 16 of WINDOW FILM’S March-April 2008 issue.) Stewart says the facility and equipment were never at fault.
He says consistency is the key to long-term success in the film industry. He also says every manufacturer struggles with it at some point.
“In manufacturing, one of the most important things to strive for is truly consistent quality,” Stewart says. “You’re never going to hit that mark by 100 percent— nobody does. CPFilms has the most consistent product out of the gate. And, looking back over the years, if you look at that model, that’s why they are where they are.”
Beyond consistency, Stewart says a company needs to invest capital in research and development—something he says FTI also couldn’t afford.
“We were selling the same brand stuff, but technologically we weren’t growing at all,” he says.
He says Solamatrix will have a slight advantage in this department, in spite of being a startup company. While it is a brand-new window film manufacturer, its parent company, Novamatrix, also owns window film brands VKool and Hüper Optik. While Stewart says only the SUN-GARD and GLASS-GARD brands will be manufactured in St. Petersburg, his company will be able to draw on many of the same resources as its sister brands.
“Utilizing the merged abilities between Novamatrix and Solamatrix and taking into account the fact that they have rights to other technologies, I would say there are going to be a number of new offerings coming from Solamatrix,” he says. “In other words, we have access to the same technology and R&D now that V-Kool and Hüper have. Because we’re able to get that, we can have ceramic and IR technology now that FTI wasn’t even close to.”
BRING IT IN-HOUSE
“This was an opportunity for us to re-evaluate who our business partners would be,” he says, “which is a rare opportunity.” The new company didn’t prescribe to the same distribution philosophy. “We knew that our best models utilized factory-owned distribution centers,” Stewart says. “In the U.S. market we decided to go with company-owned distribution centers in all areas but one. That one center is out of Ohio and we gave it to our Canadian partners who cover all of Canada and five states around the Great Lakes.”
Stewart admits he and his company have a hard road ahead. Past relationships, product associations and general start-up pains will be plentiful. The experiences many associate with FTI’s final days may never be forgotten. On the flip side, he says the current economy is a perfect time to launch a business for those who are able. “If you can take a company and open it in this type of economic environment and be successful at it, watch out,” he says. “I mean, look at how it’s going to be when the economy turns.”
But he admits, it’s not for the faint of heart.
“Oh yeah, [it’s] a lot of very hard work,” he says. “But it’s fun work and it’s good work. It’s not like trying to hold the respirator in place like it was the past couple of years. It was very stressful. They were very trying times. Someone once told me—‘You learn more from shutting them down than you do from running them.’ And it’s true. It got to where there were two cars in the parking lot.”