On Firm Footing: A closer look at Trex, Port of Little Rock’s $400 million win
December 13-19, 2021
By Dwain Hebda
Trex Company’s October announcement that the Virigina-based company was bringing to the Port of Little Rock its latest, $400 million production facility was more than a major win for the state, it was the latest big win for the Port itself as a magnet for mega-investment and Arkansas' economic development.
And, according to Trex leadership, it was a major step in the manufacturer’s efforts to maintain market share and push international expansion.
“Trex invented the category of composite decking and low-maintenance decking. We’ve been growing over the long term in the mid-teens,” said Trex CEO Bryan Fairbanks. “We see a great opportunity to convert more of the existing stock of wood decks. There are about 50 million wood decks in the United States today and we see the ability as those wood decks start to fall apart and as people are going after new home improvement that composites can be a much larger share of the market."
“Today, composites are about 2% of the decking marketplace. We see the opportunity to move that up to 45 to 50% with the product lineups that we presently have.”
Over the last five years, despite expansions to existing production facilities in Winchester, Va., and Fernley, Nv., Trex leadership realized a new facility would be required to meet the anticipated demand as the company pushed deeper into international markets. The third facility would take pressure off existing plants by serving a swath of the central U.S., a task that will now fall to the Little Rock factory.
“The Little Rock facility, while they won’t ship internationally, will have a big impact on our ability to grow overseas,” Fairbanks said. “We recognize having a third site, putting it in the middle of the country, would reduce the freight that we would have in getting the product to our customers, especially in growing markets in the southern area of the U.S., such as Arkansas, Louisiana, Alabama, Georgia, Florida and Texas.”
Fairbanks said the search for the perfect location to house the facility, which would be the company’s largest to date, took more than a year. He said Little Rock won out with a combination of tangible and intangible assets other suitors couldn’t match.
“A couple of key things that really made Arkansas attractive is the availability of a great highway system that allows more access to Little Rock,” he said. “The fact that multiple rail lines service the Port and then, of course, the ability to provide the amount of property we need with the rail siting and the ability for longer-term growth. All of those came together to say this site makes sense for us to consider for the long term.”
“What put it over the top was the reception that we received from the local economic development committee. Conversations with Mayor [Frank] Scott and Gov. [Asa] Hutchinson showed their desire to have Trex come to Little Rock. We were also impressed by the business-friendly environment that they are building here. And we didn’t just hear that from the mayor and the governor, we heard that from people who had built in Little Rock. We found that everything [the committee] was telling us is exactly what these other companies experienced when they built in Little Rock.”
For Bryan Day, Port of Little Rock executive director, the deal presented some special challenges to meet the company’s requirements.
“I’ve been a public servant my entire life; I’ve only been directly involved in economic development since 2014,” he said. “No deal is as simple as ‘Hey, I’ll take that 50 acres of land.’ So, of course, we have to work hard at it. Any major project, there’s challenges.”
In this case, Day said, securing the land for the plant was a study in flexibility and creative vision.
“When Trex came, they needed 300 acres,” Day said. “We showed them a piece of property that we had under contract on the west side of the port that we’d worked hard to make that work. Due to some issues with elevation, with access, with the expense of running utilities, the site just would not work.”
“We were fortunate that we had a second site that they were interested in but we needed to buy some additional land to square that site up. Until you own it, you don’t, right? So, we were concerned that we couldn’t pull that together.”
Day said despite having a seller in the wings for the adjacent ground, time was not on the Port’s side.
“[Trex] had a hard stop; they had a hard deadline that we had to meet to get it all together,” he said. “We were able to pull that parcel together at a fair price and square up the site Trex needed and get it all done by their deadline, I think, because our team worked so well together. But, that’s why we exist, to grow jobs for Little Rock and Central Arkansas.”
The Trex factory is the latest in a good run of success the 4,000-acre Port has enjoyed over the past five years. In that time alone, more than $460 million has been invested over 17 projects, not including the latest announcement. Amazon, Czech gunmaker CZ-USA, and HMS, a Michigan-based plasticware manufacturer have all set up shop there in just the past few years. Recent projects have also added nearly 2,400 jobs during that time window, per the Port’s 2020 Annual Report.
But, as Day points out, the Trex deal should be a wakeup call for the need to proactively add more ground to the Port to better prepare for the next such deal.
“Property is our biggest challenge, not only at the Port of Little Rock, but pretty much across the state of Arkansas,” he said. “We, as a state, do not have shovel-ready sites readily available, particularly large shovel-ready sites of 300-plus acres. By shovel-ready, I mean you pull up to it, it’s clear and level and it’s got all the utilities, it’s got all the road, it’s got all the rail.”
That challenge having been met with Trex, Fairbanks has now turned his attention to the next issue, that being finding sufficient help between now and the plant coming online sometime in 2024.
“In this environment right now, everybody’s having [labor] issues,” he said. “It doesn’t matter what part of the country you’re in. It’s clearly a concern as we move forward. One of the other things we liked about Little Rock is the number of people that are there. There is a net migration into the southern states at this point and we offer the opportunity to be able to work for a global company.”
Fairbanks touted other advantages that he hopes will entice the workforce, including working with the latest manufacturing technology, providing a safety-forward workplace and offering robust pay and benefits including full medical upon hire and a generous 401k.
He also said the nature of the product itself – built from 95% recycled materials – is another lure for many prospective employees, as is the company’s culture.
“Over the past 30 years we’ve always been a green company. We were founded on those green principles of using recycled materials and it’s something we continue to do this day,” he said.
“We’re about a billion-dollar organization from a revenue perspective today, so it’s not so big that you get lost in the company. People know who you are. The executive team knows who you are. We’re out on the floor talking with them. You have the ability to get your ideas across and be heard.”
Trex at a Glance
Trex Company (NYSE: TREX)
Headquarters: Winchester, Va.
Other corporate locations:
Minnesota, Nevada, South Carolina, Arkansas
Revenue: $880.8 million
Distribution: 6,700 retail outlets across 40+ countries
Products: Wood alternative decking for residential and commercial use
• Made Forbes’ 2021 List of America’s Best Mid-Size Companies.
• Listed on Fortune magazine’s 100 Fastest-Growing Companies.
• Commercial division holds dominant share of market for railings for professional sports venues in North America including Madison Square Garden, Yankee Stadium and Citi Field in N.Y., Busch Stadium in St. Louis, Nationals Park in Washington, D.C., Banc of California Stadium in Los Angeles and SoFi Stadium in Inglewood, Ca., to name a few.
• Trex products divert more than 900 million pounds of polyethylene plastic and wood waste from landfills, and 100% of factory scrap is recycled back into the manufacturing process.
• The company’s school and community recycling programs, launched in 2011, have collected an estimated 3.5 million pounds of waste plastic film through community outreach.