Volume 12, Issue 2 - March/April 2008

From Barrel-Rolls to Business
Phillips Engineers Commonwealth’s Success
 by Drew Vass

“He’s not your typical window film CEO,” says Jennifer P. Shorr, vice president of domestic sales and marketing for Commonwealth Laminating and Coating Inc. of her boss, Steve Phillips, the company’s chief executive officer (CEO). Shorr can speak a little more freely about her company’s CEO than most. You see, the “P” is for “Phillips” and Shorr happens to be Phillips’ daughter.

“Did he talk about his fighter jet?” she asks.

Phillips has been described as “full of himself and full of his company,” meaning, he’s quite the character, but intensely serious about his business. He’s also known for taking the direct approach in almost any case. In March of 2002, Phillips launched an ad campaign for his company’s SunTek® brand window films that spoke directly to his competitors, “LLumar®, SolarGard®, Madico—beware … SunTek window film … has arrived.” Since then, he’s been well-known to continue urging his competitors to “watch out.”

“Sorry to beat you up,” Phillips says after a candid start to an interview.

He isn’t short on humor or interesting diversions either. Phillips does own a fighter jet, which he flies regularly.

“I’ve just always wanted to fly military jets,” he explains. “I’ve been a pilot since I was 15. I almost went into the military. I’m an instrument-rated pilot and I had to get special certification, not only to fly single-engine jets, but special FAA certification to fly military jets. No guns or missiles, though,” he says, adding a belated and well-timed laugh. “I haven’t had a call from the FAA in a few months now [laughs]. It’s been at least three months [laughs again].”

Phillips didn’t go into the military. Instead, he chose to get an undergraduate degree in engineering, then later added a master’s in business administration, a combination that’s proved well for the window film business.

From the Ground Up
In 1998 Phillips left CPFilms, where he had worked for eight years in sales and marketing. When he arrived at Commonwealth, also located in Martinsville, Va., and simply known as CLC at that time, it was a struggling start-up company that made some basic window film products. Phillips estimates the company produced approximately $150,000 in sales per year at that time. By 2008, Commonwealth expects to close out somewhere in the neighborhood of $55 million.

“I was recruited by a group of investors,” Phillips says. “My background is half research and development, manufacturing and engineering; the other half is marketing, sales and business management. Thank God I had a lot of experience in research and development and manufacturing, particularly in coating and laminating.”

Prior to CPFilms, Phillips worked for companies such as Dupont and Rexham (a toll coater of industrial coatings and laminates in Charlotte, N.C.). He has accrued a total of nearly 25 years in coating and laminating experience and approximately 17 years in film-specific experience to date. It’s a background he, in his expected style, gladly invites other film CEOs to match up against.

Phillips isn’t the only engineer on Commonwealth’s roster. His daughter Jennifer also has an undergraduate degree in engineering and Phillips says the same is true for most of his upper management team.

“Interestingly enough, that’s kind of the profile for most of our senior management—technical and business,” he explains. “We’re very technically-oriented and a very technically-intensive company. That’s one of the things that differentiates us.”

Phillips says this is what got Commonwealth off the ground so quickly as a window film manufacturer and he believes it gives his company an edge to this day.

“The first year was a tremendous challenge,” he explains. “At that time, we didn’t have any of the required know-how or people. That’s the bad news. The good news is—boy did I learn a lot.”

Phillips says the investors who recruited him for his sales and marketing experience received the fortunate bonus of his engineering experience. At that time, the company had one manufacturing machine—a single station that wasn’t designed for window film.

“The investors at that time did not understand what they had. Honestly,” he adds. “I wore a lot of hats then—all the hats. We had five people total. It forced me to learn how to do everything from the beginning. It was very difficult.”

Phillips says he immediately determined that window film was the way to go.

“I made that decision within the first month. Then I started assembling the right people,” he explains.And SunTek was born.

Growth Spurt
“In ten years, we went from five employees to, I’m estimating, [more than] 120,” he says.

Phillips says it took him two years to turn the company around. Since then, it has been growing at a rate of 30 to 50 percent per year. The company’s current ad campaign boasts a growth rate of 15 dealers per week. Phillips says that’s not ad fluff, but fact. He also says it’s conservative.

“We’re actually adding more like 20 a week for our domestic business,” he says. “That’s just our domestic business.”

So how does a company manage to find 20 new dealers a week? It’s simple—by stealing them.

“All factories are trying to gain customers from their competitors,” he says, “so you play your strengths.”

According to Phillips, shortly after making the decision to enter the window film market, he also developed a strategy to offer dealers a great bang for their buck.

“This is something I came in determined to do. When I left CPFilms, I thought there was an opportunity in the market for a better value for money offering,” Phillips says. “Not necessarily the lowest price, but a very good price and a very good value. In those few words lies our philosophy—value for money.”

Another part of his game plan called for allowing the company’s dealers and distributors total freedom.

“We truly believe if we help our customers to be successful, we will be successful. [We feel] telling our customers who they can and can’t buy from, or what they can and can’t do, is not the best way to support them,” he says. “I’m not running a prison here. We place less emphasis on exclusive programs. Those types of programs are clearly good for factories, but they’re not always necessarily good for the trade.”

Not For Newbies
Phillips says that by packaging a value proposition with non-exclusive agreements, his company attracts mostly seasoned tinters. Commonwealth follows this modus operandi so closely that Phillips consciously has avoided designing an infrastructure around training and development. He is content and open about Commonwealth’s strategy.

“I will be as honest about our weaknesses as I am about our strengths,” Phillips says. “One of our weaknesses is that we don’t have as much of an infrastructure in place to support new dealers as some of the other manufacturers, like Bekaert, for example. Bekaert is much better positioned to support someone entering the market,” he explains. “They just have the people and they’ve developed the training and the programs. Right now we have no plans of doing much of that,” he says. “We think companies like Bekaert are doing a superb job. We focus more on dealers and installers who have been in the business.”

So how can Phillips feel comfortable ignoring start-up dealers and setting his company on such an adamant path? He says all of his company’s decisions are based on feedback. Again, it comes back to freedom. Phillips says his company’s strategies come from the field. In a free market, he believes the best advice comes from the customer.

“We don’t try to direct or control the marketplace; rather, we try to support and give the trade what the trade needs—what the dealers and installers need to be successful,” he explains.

This strategy requires a hands-on approach. According to Phillips, following the numbers and conducting surveys simply does not cut it. You’ve got to roll up your sleeves and get in the field.

“I make a habit of visiting at least 50, and sometimes as many as around 100, dealers a year,” he says. “I do it regularly, so, I’m listening to my managers, but I’m not relying on them. I maintain direct contact. And after you talk to 50, 100, 1,000 dealers over the years, you start understanding what their needs are, what they want and what they’re looking for.”

Commonwealth throws an annual party for current and perspective dealers, employees and distributors at the SEMA show each year. Phillips says this is where his job becomes gratifying.

“One of the most exciting things for me is [that] every year at the SEMA show, we have a party and every year that party has between 20- and 30-percent more people than the previous year,” he explains. “It’s primarily our dealers, but it’s also a lot of dealers who are considering us. That’s one of the most fulfilling aspects of my job, frankly—attending that party every year and witnessing all of this. To see how we’re growing and how pleased our customers are—that’s the most fulfilling feeling I get.”

Spend Money to Make Money
Of course, once you’ve got them, you’ve got to keep them. Thirty percent annual growth and approximately 15 to 20 new dealers a week requires a vigorous growth plan. In 2005 Commonwealth forked over $6 million for a major facility expansion and renovation project. Phillips says this included adding a 74-inch tandem coater/laminator to help ramp up production. This year the company will add its second tandem, bringing the total to three—two tandem, one single. Ernie Showfety, the company’s vice president of operations says this math adds up. 

Commonwealth’s manufacturing involves a three-step process: lamination, a pressure-sensitive application and finally coating. A tandem machine is capable of handling two of the three required phases. Rather than loading and running the same product through a tandem system twice, thereby wasting 50 percent of the machines capabilities in round two, Showfety says a tandem machine can be paired up with the company’s older single-run machine.

“Our volume doubled in two years,” Showfety explains. “Adding that third machine is simply a must with the company growing as it is.”

Phillips says expansions in manufacturing require additional support on the front end. As a result, Commonwealth followed its $6-million plant expansion by expanding its office facilities in 2006. But new machines, larger manufacturing facilities and an impressive new office space mean nothing if they aren’t filled with the right people.

“First and foremost you have to have the right people,” Phillips explains. “The right people help you acquire the right equipment. They help you develop the best processes. They help you buy the best raw materials and design the best products. We are truly fanatical about adding and retaining better-than-average people.”

Phillips says, though he’s been there from the beginning, he can’t take all of the credit.

“Although you can say, yes, the CEO is very important, truly every person in this company counts,” he explains. “My key players include our senior management team: Jennifer Shorr on the domestic side, sales and marketing; Melanie Bryant, our vice president of finance, accounting and IT; Matt Phillips, our chief operating officer; and Ernie Showfety, our vice president of operations.”

Staying Homemade
To this day, Commonwealth is solely a window film manufacturer. And all of the company’s film continues to be manufactured in Martinsville, Va. Phillips says his company’s attention remains primarily on the domestic market, but that doesn’t mean it’s not gearing up for overseas markets. Though he says it is unlikely Commonwealth will ever manufacture overseas, the company does have several foreign distribution centers. Most recently it reopened one such facility in Sydney, Australia. It also installed a distribution center in Shanghai, China, and most recently in Germany.

“More and more we’re looking at things from a world-wide perspective,” Phillips says. “We look at the [United States] as a North American market. It’s the biggest and most important market in the world, but there’s also Western Europe, Eastern Europe and Russia; there’s Asia, the Middle East and Africa. We’re becoming increasingly focused on all of these markets around the world.”

This may be what allowed the company to maintain its high growth rate, even in what Phillips says was a depressed market for 2007, domestically.

“I think it’s fair to say that last year the domestic market, overall, was down in 2007, yet we grew more than 15 percent in the U.S. market last year,” he explains. “But our international business grew more than 30 percent. Fifteen percent domestic growth was lower, as a percentage. But I estimate that the market overall was down ten percent.” Phillips says foreign markets will certainly continue to be important in the coming years, but there are other factors he expects to drive the window film industry. Though he feels it’s a bit behind schedule, he expects the green movement to begin influencing the domestic window film market significantly.

“Everything else equal, I think there is going to be more and more emphasis on solutions for saving energy and window film is right up there,” he says. “It’s a fast, easy alternative for new and existing homes. That will increase this industry more than anything.”

He also feels the architectural market remains largely untapped to this day.

“The architectural market, compared to automotive, is still very under-saturated,” Phillips comments. “For the most part, everybody that would or could want automotive film does. But there’s still a growing awareness in the architectural market, so there’s still a lot of untapped business. I think with fuel prices skyrocketing and more and more emphasis on green, there’s only going to be an increase in awareness. People who wouldn’t even think of conservation in the past are going to absolutely have to start thinking about it.”

But the automotive market remains the majority of Commonwealth’s business. And Phillips says he doesn’t see that changing.

Been There and Rewrote the T-Shirt
“I’ll give you a good example,” he says. “Fifteen years ago, there was a big fear in the industry that the growing sport utility vehicle (SUV) market, with tinted rear windows, was going to destroy the automotive tint market. 

Not so. Those vehicles still needed window film on the front windows and, in many cases, on the back windows.” But he admits, there are ways to prepare for such a potential problem. “That’s one of the strengths of our film line—it works very well with factory tinted glass. It didn’t hurt the market at all that I [can] see.”

Phillips says Commonwealth’s SunTek brand isn’t the little guy on the block anymore.

“I’ve had a number of experiences where I was given a turn-around situation,” he says. “Ten years ago, Commonwealth was the smallest factory in the world. At that time we had nothing distinctive about us, other than being the smallest factory in the world.”

Phillips feels he met the promises published in SunTek’s ad campaign.

“I was just being honest,” he says. “They should have paid more attention to the ad! [laughs] All of them! [laughs] We grew about 30 percent in 2005, and I wouldn’t have expected the same in 2006 and 2007, but we did. We’ve exceeded all of my expectations.” 

Drew Vass is editor of Window Film magazine.


WINDOW FILM
© Copyright 2008 Key Communications Inc. All rights reserved.
No reproduction of any type without expressed written permission.