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CalStar in liquidation

gregory.shaver@journaltimes.com

Workers sort building products

as they come off the antiquing line at CalStar Products, 2825 4 Mile Road on June 25, 2014. The Caledonia plant closed early this year after CalStar moved production to a new plant in Columbus, Miss. After further trimming of the local office, CalStar ceased all operations Oct. 1, former CEO Craig Ratchford said Wednesday.

CALEDONIA — CalStar Products, the company built upon a once-highly promising idea for turning fly ash into bricks and pavers, is finished.

The company born from a Silicon Valley, Calif., idea is in liquidation, and its remaining offices at 2825 4 Mile Road — also formerly its manufacturing plant — are closed.

The remaining assets, including the patented process of making architectural bricks and pavers with coal-burning power plant fly ash (residue), are all bank-owned and for sale.

The Caledonia plant closed early this year, eliminating 29 local jobs, after CalStar moved production to a new plant in Columbus, Miss. That left just 13 people here at the time.

After further trimming of the local office, CalStar ceased all operations Oct. 1, former CEO Craig Ratchford said Wednesday.

“It’s not the outcome any of us wanted; it’s very disappointing,” he said, although most of the six to eight people left here at the end have found other jobs, he said.

CalStar came to Caledonia in 2009 with a unique way of making building products with significant quantity of fly ash which came from willing partner We Energies. CalStar started manufacturing architectural bricks and pavers in January 2010.

According to CalStar, the products had several clear advantages over standard bricks:

  • They used 40 percent recycled content.
  • They emitted 85 percent less carbon dioxide than standard kiln-fired bricks.
  • They required 85 percent less energy to manufacture. “We’re going to address the global warming issue,” then-CEO Michael Kane proclaimed when the plant opened.

CalStar products were also lighter in weight and sold for about the same wholesale price as bricks, said a later CEO, Joel Rood.

High expectations

Ratchford joined CalStar as CEO in January to try to lead it into a successful future. He said his job was to either find enough additional investors to continue CalStar’s growth — his preferred option — or sell it.

“We ran out of money” before they could do either, he said.

CalStar’s growth was strong, Ratchford said: Sales were doubling every year and would have hit $7 million to $8 million this year. The problem was not revenue, but profit, or cash flow, he said.

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Investors were patient, but they were used to speedier big returns on phone apps and other technology products, Ratchford said. In contrast, “We were dealing in building plants and heavy capital expense.”

It takes time to prove a new product to the construction industry, he said. “This is why you don’t see many disruptive products coming into the building industry.”

The State of Wisconsin hurt CalStar, Ratchford said, by not approving its products for state projects. It took five years to even get the OK for a state of Wisconsin test project. There wasn’t much private construction happening either in Wisconsin or the Chicago market, Ratchford said, and missing out on state projects was a huge blow to potential revenue.

“Silicon Valley thought we would be at $50 million (in sales) by now,” he said. “That’s what their experience is: crazy growth curves.”

Mistakes

CalStar had other fundamental problems, Ratchford said. Because it could not get state projects or much Chicago market business, “We shipped a lot of product into the South.” And bricks and pavers are heavy and expensive to ship.

Also, “(Early decision-makers) put the plant near the fly ash,” Ratchford said. “They didn’t think about where it should be.”

Ultimately, the choice to build CalStar’s first plant in Wisconsin was deemed an error, so the company built the Mississippi plant which opened in October 2014.

Even then, it wasn’t built near a coal power plant, Ratchford said, so high freight costs, for fly ash, continued.

There were other mistakes, he said, such as starting with pavers and bricks. “They came out of the gate with maybe the wrong strategy,” he said. “By the end, we weren’t selling any pavers,” and it took too long to correct by shifting to more-successful products.

Ratchford also said this country didn’t enthusiastically embrace CalStar’s energy-saving qualities. During his several months in charge he brought in the slogan, “More green for less green,” and to stress what he called “pragmatic sustainability.”

He also cut costs by getting rid of executives considered too expensive to keep because, “We were burning a ridiculous amount of money each month.”

“I was hoping we would get more investors,” Ratchford said. “We were starting to make progress.” With more time, he said, he thinks CalStar could have met expectations.

There’s still a chance the idea behind CalStar can succeed, he said, because companies are bidding on the intellectual property owned by Square 1 Bank. One of them could buy it and start making the unique building products again.

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Reporter

Michael "Mick" Burke covers business and the Village of Sturtevant. He is the proud father of two daughters and owner of a fantastic, although rug-chewing, German shepherd dog.

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