State of the Coatings Industry - PODCAST TRANSCRIPT

Editor's note: The following is the transcript of a live interview with Greg Hlavaty and Hal Leland of Western Colloid. You can read the interview below, listen to the podcast or watch the recording.

Intro: Hello, everyone and welcome to this edition of Coatings Talk from CoatingsCoffeeShop. My name's Karen Edwards and I'm going to be your moderator today. And joining us for this important topic, which is all about the state of the coatings industry, are Greg Hlavaty and Hal Leland from Western Colloid. Greg and Hal, welcome. Let's meet our panelists. Greg, I will let you start by introducing yourself and telling us a little bit about your background.

Greg Hlavaty: Well, I've been in the roofing industry for 60 years. My father was a roofing salesperson for several big manufacturers, and also had a coating company that applied coatings for contractors around that didn't have coating equipment. And I started in that. I worked with him in distribution, wholesale distribution for until I was 15 or 16 and then started working in the coating application company that we had for various contractors and applied everything in the industry. That was any job that needed, had coatings applied, didn't matter what it was, whether it was Tremco BURmastic, RPM, water based, solvent based, resaturants, reflective coatings, federal specs on government jobs, everything. So I did a little bit of everything for a long time in the coatings application, and moved into the manufacturing side of it with Thermo Materials, which was a San Diego based company that made water-based roof coatings and early in those days, reinforced membranes out of the coatings.

So they were early on a coating manufacturer that went into membrane. So I had a lot of experience there. So I had hands-on. Had a contractor's license for 50 years. Inactive most of that time because in manufacturing I didn't need the license, but I kept it and kept it inactive, so both selling through wholesale distribution, manufacturing and application. So a little bit of all sides of the industry, which gave me a lot of background and what people were doing where. So anyway, that's my background. Now it's Western Colloid.

Karen Edwards: Yeah. Yeah. Wow. You have a long, long history in the industry with lots of experience. Thank you for sharing. And next, Hal, please. You're up.

Hal Leland: Okay. Yeah. Hello, everybody. After I got out of college and headed down to San Diego and started surfing and I needed a job, so I went to work with Greg Hlavaty and here I am many years later. We got into the roofing thing. So we started working on the chemistry with our coatings and our assemblies and our systems back at Thermo Manufacturing and San Diego, California, which was wonderful. And Greg and I have taken a couple of different roads since then, but we're back together at Western Colloid and I handle all the codes and standards, all the testing, sales support. We each wear a number of hats at Western Colloid, and that's it.

Karen Edwards: Wow. Well, thank you both for being here. I do want to say that the chat is open, so feel free to say hello, tell us where you're from, where you're watching from and if you have questions, go ahead and drop them in there. If we can answer during the presentation, we will, but we do have some time saved at the end to address the questions as they come in. And lastly, this is being recorded. I don't think I said that yet. And it will be available on coatingscoffeeshop.com, usually within a day. So if you want to share this with somebody after you see it, just go out there and grab the link. So let's get to it. So what is happening in the roofing coatings and liquid applied industry? Greg, you want to start us off?

Greg Hlavaty: Well, that's actually a good point. What is this industry? Because we are strong and supporters of our group at the RCMA, Roof Coating Manufacturers Association and it's been a great association to be associated with because I've learned a lot about the rest of the world is doing in other parts of the country. Because coatings is not the same in Southern California as it is in New York and in Florida. And that they have some similarities, but they have some differences. And beyond that, the differences for coating as roof restoration. And it's long been a roof restoration. If you talk to some people, they would call it a roof band-aid. It's always been looked at as a band-aid in the industry. It has grown to be something more substantial than that. It is roof restoration.

And beyond that, it's grown into fluid-applied systems that are either reinforced or non-reinforced, which actually become restoration membranes or membranes that go over existing roofs. So it's stepped up almost into the full roofing category in some instances, and dependent on where you're at in the country and what you do, we're going to be looking at this and some people will probably question some of our views because they're at a different part of the country and they may not do it the same way.

So we're looking at it from our point of view, which is what we do here in the west and we do a lot of it, millions of gallons in a year of products that go on and many millions of feet that we do. So we might have somewhat of a skewed view, but we think we have a pretty good feel for it, especially with our association with other great roofing coating manufacturers that belong to the RCMA that we talk with regularly and meet with.

So anyway, the coatings that are becoming more and more acknowledged in the industry as restoration. For a long time, the consulting part of the industry more or less ignored them. Or if they didn't ignore them, they looked at them as, again, as a band-aid and very seldom did consultants, roof consultants, use them as part of their repertoire of answers to building owners. And so that has changed considerably over the last decade. And coatings are now getting their place in the industry, and it's fitting in because of exactly what the bullet points say, roof restoration and energy efficiency.

A lot of coatings became accepted because they are reflective and they're a way to take a non-reflective, non-energy efficient roof membrane and give it some energy efficiency through reflectivity and emissivity. They can take a cap sheet roof or an asphalt, smooth asphalt roof, many forms of roof, even certain types of single-plies like EPDM and what have you that have no energy efficiency of their own and add that to it. So because that has been pushed heavily starting in California and now through the rest of the country where they want more energy efficiency, roof coatings are one of the most economical ways to achieve that. So again, another bullet point for coatings in the roofing industry.

Karen Edwards: And we know the industry is seeing extreme growth. It's becoming more popular, and as you mentioned, because we don't want to have to tear the roof off and put it in a landfill and we want that efficiency about it. And when we talked last week, I'm not sure if it was Hal or Greg that you talked about the Cool Roof Rating Council and working on projects in India. This is beyond just the US where this is taking off.

Hal Leland: Yeah, I spoke briefly about that at the Cool Roof Rating Council. One of our biggest areas of growth is education and our education committee. And we did reach out to India. We sent one of our board members to India. We flew him out there. He met with several code officials out there. And if this can help anyone, it's going to help in India where the sun is beating down, they don't have any money. Living situation's pretty extreme in some places over there. So yeah, I mean, this is a global effort at the end of the day and at the Cool Roof Rating Council, we're deeply involved in that. And I'll speak a little bit more about that when we talk about energy and building codes in a minute.

Karen Edwards: Okay.

Hal Leland: But yeah, it's a focus of ours.

Karen Edwards: Excellent. So let's go a little deeper and talk about liquid applied coatings and liquid applied membranes.

Greg Hlavaty: Right. And there's a difference in there. A coating is generally a... It's not a paint and that's something that we like to make a strong difference in, and we talk about that at the RCMA. Roof coatings are an industrial-grade product that is made similar to paint in the same kind of a factory, a manufacturing facility, but it's made with resins, fillers and reflective properties that bring it up to a heavy industrial standard. The comparison, if you will, of building anything. You've got the home do-it-yourselfer, lightweight stuff that you can buy at Home Depot and then you've got industrial grade when they build buildings and high-rises and that. And roof coatings step up to that measure. They're tougher, they're stronger, they're put on at much heavier quantities and that's the liquid applied coatings. And those might be put on for the reflectivity and energy level, they might be put on to protect the membrane that's on there and give it more longevity.

And then there's another step up they can be put on with reinforcements or they can be the type of a coating that has its own strong characteristics, tensile strengths and tear strengths that step it up from just a coating to a liquid applied membrane. That membrane has its own weather, water intrusion and resistance to the elements that bring it up close to, if not equal, to many roofing membranes. So you can do that by reinforcing a coating. We sell acrylic coatings all the time as many of the coating manufacturers out there do as reflectivity and to give longevity to an existing membrane, because a membrane will wear out asphalt and modified bitumen, even single plies and a coating can make that last longer or give it the surface weathering it wants.

But the next step up is to... You can take that same acrylic, reinforce it, reinforced acrylic coating, put on at what we think is the proper gallonage, comes up to a 60-mil membrane with a reinforcement in it, similar to what a single-ply membrane does. But so it is more than just a coating now. It becomes a membrane. And urethanes and some of the two-component products step up to that also, where they're very tough, very strong, they go on, they have their own dimensional stability in the form of tensile strength, tear strength and weather resistance and they become a new surface membrane or renovation membrane or however you want to use the terminology.

Hal Leland: Our assembly's going to, actually, Greg mentioned 56, 60 mils. That's for a one-ply all acrylic. We have assemblies that are over 130 mils thick. So I mean they're much thicker than any single ply, any TPO, any PVC membrane. And the warranties are at the same age limit as those warranties, up to 20-year MDLs. So we're building really strong assemblies, really strong membranes. This is not just a coating anymore. This is a legitimate fluid-applied membrane on a roof that is sustainable, it's renewable. These things can last the life cycle of your structure if they're maintained and recoated periodically. So [inaudible 00:14:23].

Greg Hlavaty: And that depends on the... depending on the technology you use, and we'll talk about that in a few minutes, about the longevity of it. But anyway, I said this at one of my meetings when I was president at the RCMA and talking to our group and I says, "You're all coating manufacturers, but you're also membrane manufacturers. You just don't know it yet." Because many of the coating manufacturers have not stepped up to the membrane level where they're fully reinforcing their coatings. Same technology, just adding to it.

Hal Leland: Yeah. Just taking the next step and getting the testing and growing up, quite frankly.

Greg Hlavaty: Right.

Karen Edwards: Yeah. So let's talk a little bit about the installation, because that really matters, right? And if it's not installed correctly, it's not going to perform, it's not going to last.

Greg Hlavaty: Right. That's one of the... I'm going to say weak points. It's not necessarily a weak point, but it is a strong consideration when you're using liquid applied membrane, fluid-applied as we call it. But as a manufacturer and almost every manufacturer out there, so I'm speaking for us, but I'm probably speaking for more than just us at Western Colloid and that is we're only 50% of the package. We're going to make the best products we can in our manufacturing facility. We'll talk about it later. We have them tested, we have them regularly random inspected, we do all the things we can to make the best products we can. But that's only 50% of the package. The other 50% is our contractor in the field. He takes our products and builds that membrane. The single-ply membranes, they have a benefit in that it's all made in a factory to an exact mil thickness and it comes out at the end of what they call the calendaring machine. That starts out as a liquid and ends up as a sheet goods without reinforcement varying things.

But it's all factory done. We know what the mil thickness is going to be. So now it gets out to the field and it's going to be welded in place, it's going to be glued in place, it's going to be what have you. So there's maybe less margin for error because the full sheet. For us, the contractor is 50% of our package. We want a contractor that's going to take our products and build the rest of the membrane for us in the field, and there's some strong benefits for that. It's become seamless. We can go edge to edge of that roof without an exposed seam. It is a true roof envelope on the roof horizontal side of that structure, and it doesn't care what it's going over as long as it's built to adhere to various substrates and what have you.

But it's got to be done by a contractor that knows what he's doing, and because it all falls back in our lap. We end up with a warranty, and the building owner comes back and says, "Oh, your stuff didn't work." Well, didn't it work because we made a poor product or didn't it work because it didn't get put on properly? So having contractors, and especially in warranted situations, having approved contractors that are doing the right thing, is of great importance in this industry and all of us have to be aware of that. And when I say us, it's manufacturers of roof coatings.

Karen Edwards: Yeah, and that goes along... There was a comment that contractors are selling a sprayed-on coating as a new roof, and that the manufacturers are working to provide that education, which we're doing this webinar today to be able to talk about these things. Well, let's move ahead and talk about what's happening in California, because we know that a lot of times things start in California and then they kind of trickle out across the country. So what are you guys seeing?

Greg Hlavaty: I'll let Hal talk about this in a minute. I'm just going to mention that California gets beat up in many instances of building codes, and this is a perfect example of it, both with energy, with VOCs, all the different... environmental. We have the toughest place to exist. That's why Hal is going to talk about that. But when we're at our RCMA meeting, they talk about, "Oh, they're going to put in this VOC law here, they're going to put in this energy law here." Hal and I sit back and we support our members, but we just smile. Been there, done that. We're in California and they're in Southern California, and we kind of have the worst or the... Depends on which way you look at it.

Karen Edwards: Most stringent?

Greg Hlavaty: Most stringent, yeah, of that. But...

Karen Edwards: [inaudible 00:19:32].

Hal Leland: Yeah, we're definitely in the toughest environment there and Craig is right, most of the work we do at the RCMA is for the rest of the members. It all starts with the California Energy Commission in California and the energy building codes. The CEC sets building energy efficiency standards for the state of California. And if you look on their website, they're leading the state to a 100% clean energy future for all.

We're going to save the world in California. They're half nuts, but it is California. Now, this is for newly constructed and existing buildings and I'm going to read a few things off here and it's the most boring part of our job, but I'm going to tell you about it. We're currently right now on the 2022 energy codes, and they change these codes every three years. The 2025 building efficiency standards will apply to newly constructed buildings, additions and alterations.

The proposed standards were adopted last month, September, 2024, with an effective date of January 1st, 2026. The California Energy Commission, like I said, updates these every three years. The CEC recognizes, and this is where I'll go into the Cool Roof Rating Council, the CEC works and recognizes the Cool Roof Rating Council for rating solar reflectance and thermal emittance values of roofing products. This is Title 24. So that's why everyone in our group at the RCMA test all their products at the Cool Roof Rating Council. And we have an initial test and we have three-year age test. California Energy Commission only recognizes the three-year age test. So you've got to get to that three-year age spot, you get your numbers and that's what you... If you're in California, you have to qualify for a certain level with the California Energy Commission. Roof Rating Council doesn't set those numbers, they just rate and they test materials.

I'm deeply involved with Cool Roof Rating Council, on the board and been working with those guys for, well, since 2005 when they started out in Oakland. Currently, Payem Borzogchami I think is how you say his name, he's a civil engineer at the CEC and I share a board seat with him and he's a guy that we support, we keep an eye on, we talk to, we've become friends with, because he's the guy that gives us all any updating, anything to be afraid of, anything that scares rough coatings. So we work very closely with him, I work very closely with Payem to make sure that our membership knows what's going on in California. Because if it happens in California, it's going to spread to the rest of the nation. That's kind of it.

That's why I'm at the Cool Roof Rating Council on my third term as a board member. These are three-year terms. I'm kind of like a lame duck now, I can do whatever I want, because what are they going to do? So I'm trying to have fun with it, I always have. And these are the brightest minds in our industry. When I sit down with the board of directors with the Cool Roof Rating Council, these are sharp people. Some are pontificators, but most of the time they're very sharp people. So,

Karen Edwards: Yeah, yeah.

Hal Leland: ... that's what's happening with the CEC.

Greg Hlavaty: And the next bullet point is, and that all leads to... A lot of the stuff is adopted into different building codes in different parts of the country. So keep your eye on California because many of the places don't even bother doing their own research. They say they've done it out there, that's what they're doing. Some of them take it word for word for what they put in California. So be aware of that. California has added recently the insulation to the building code when you're reroofing, and this is an important factor here and it may reflect other places. But even if you're re-roofing, you have to add the insulation that you would've if you were a new construction. And when that happens, it starts a ripple effect that affects many cost factors on that building.

It's not just the adding of the insulation when they do it, but how high are your air conditioning units sitting above the roof? Is there enough space? There has to be a certain amount of space between units and the roof deck? If there's not enough inches there, then you got to raise your units, you got to raise your pipes, you've got to raise all the stuff you had on that roof. It becomes very costly. But if you can put on a fluid-applied membrane as a renovation, called a maintenance and repair system as they're classified with FM and UL, then that can be accepted in its place. It's maintenance and repair.

And so more and more consultants in California are specifying fluid-applied systems because it's costing their building owners big money to tear off, re-roof, add a lot of work to raise air conditioners and other types of units to get them high enough off the roof to put more insulation in, which is costly and then re-roofing it. So as that re-roof gets more and more expensive, coating becomes more and more economical for that building owner as an answer. So that's a big, big part of it.

Karen Edwards: Yeah, definitely.

Greg Hlavaty: The next part of it is the environment, and that's California. Again, they have throughout the state, but the very tough area is South Coast Air Quality Management District, which is Los Angeles County Orange County and the San Bernardino Riverside County. Those are all come under that those back in the day when I was growing up in the Inland Empire, we went through many, many, many days we could not see the mountains and we were 8, 9, 10 miles from the mountains. Our valley in San Bernardino was filled with so much smog. They started the South Coast Air Quality Management District, they started tightening up factories and many things that were putting a lot of pollution in there. So I got to give them an applause for... They cleaned up a lot of our air. But after a while, they were no longer funded by the state or they were less funded by the state and they said, "Well, if you want to stay in business, you're going to have to support yourself."

And when you support yourself, you do it through fees and fines. We pay for every gallon of product we make and sell into Southern California in the form of whatever VOC.

Hal Leland: VOCs.

Greg Hlavaty: They measure it, they have formulas and we pay in lots of money to the South Coast. Everywhere else just puts in the laws, but they don't do it under fees. Every ounce of product that goes into the air, pay for in South Coast, because they have a big Taj Mahal out here and a diamond bar that they want to keep and keep operating. So you can go from being very effective, which they did a good job of, to being total power gives you sometimes too much control. And that's what we fight. We want to keep them in their place, doing the right thing, but not going overboard. And if you give them a chance, they'll go overboard.

I sat at a meeting one year and they had a big pie chart on who's putting all the VOCs and NOx into the air, and they had it all divided up into cars, trucks, factories and way down, way down on it was roof coatings and other forms of paints and coatings that were used in the industry. There were little slivers on there. And I says, "Well, why are we getting beat up so hard against us when you could take just a small piece of the auto truck and all that?" And they says, "Well, because those people are strong. They have people in Washington, they have..."

Hal Leland: Yeah.

Karen Edwards: Oh, yeah.

Greg Hlavaty: "And you people are diverse, and because we can. There's no way you're going to stand against us. You don't have enough power." So we get beat up. So we always have to be aware of that. They can be overly onerous on the regulations, because sometimes they will ruin a product. Okay, we're going to take out 100% of all VOCs. Well, over the years, we've always done the right thing. We're down 90% from where we were 25 years ago in the amount of VOCs. Almost all of in our industry has taken out 90% of that. There's that last little 10% is what we need to make a good product. We could take it all out, we could take other things all out and then the building owner's left with a piece of junk that doesn't work on their roof. So we've been responsible. We've done the right thing.

Anyway, environment is a big thing, but you can go overboard and then end up having to recoat multiple times, which doesn't do any good. If you take it all out, you can make a product less, "Oh, well, we saved the environment a little bit." And then what they don't realize is the consequences of that down the road, which is instead of doing it every 10 or 15 years, we're doing it every four or five years. Well, now we're still back to square one because we're putting on more. But they get to put a check mark and send it off to Washington, say, "See what we did."

Karen Edwards: Yeah.

Greg Hlavaty: We have to watch that, but [inaudible 00:29:52].

Karen Edwards: Okay. So, we touched on this a little bit earlier, but training, training, training. We probably can't say that enough. And let's talk a little bit about what you're seeing the need in the industry. I know that RCMA has put out, in the last year or so, some training courses. Let's talk about that.

Greg Hlavaty: Right. The RCMA has three modules, and you can get a certificate for each one by going on there. We recommend any contractor out there to go there, look at those modules. You'll pay a few dollars, but it's nice to have your people if you're doing coating work. When you go to that building owner and say, "Oh, by the way, we've got a certificate from the-

Hal Leland: Certification from the RCMA. And those-

Greg Hlavaty: ... RCMA."

Hal Leland: ... modules, Greg, they're a hundred dollars each. There's three of them. They're pointed, they're all-encompassing and once again, we do recommend anyone that's getting into this to take a hard look at that. Sorry to interrupt, Greg.

Greg Hlavaty: It's one aspect. They do get very general, because there's a lot of different technologies that belong to the RCMA. So you can't go in depth into any one, but they still give you a good basis. And I'll speak now from our point of view, from what we do, mainly because we do so much of our product, our actual membrane, fluid-applied, liquid-applied membranes that we put on roofs. And as I said, we rely on that roofing contractor to be our 50% partner, really, with this in getting a good membrane on. So the technical support is always valuable no matter what you do in the coating industry, but it's especially valuable when you putting out a guarantees. And so we have on-the-job support. We pay...

Hal Leland: Field techs.

Greg Hlavaty: ... field techs to do it. And I was just weighing something, whether I should say or whether I shouldn't say, but I'm going to say it anyway, because I'm not going to keep it in. As a coating company, and many coating companies are asked by wholesale distributors for rebates. If you sell my product, I'll put it on your shelf. We expect a XXX percent rebate at the end of the year, the end of the quarter. That's almost universal by the big distributors, I mean each one of them.

And we get approached at that, and I've always declined that because we spend our money on our contractors. We have tankers in our case, because we do large enough volume work that we have a fleet of 3- to 5,000-gallon tankers that are rolling on the road every day and I mean many of them and are parked on job sites. So that's costly. And then we have a crew of people that go and work on crews. And I don't mean just go out and show them how to butter a little bit of mastic around a pipe, or take a paintbrush or a roller and put a little bit of coating on. I mean work with their crews, setting up. They help them buy equipment.

That's on-the-job support, and that's costly. And when I'm asked for rebates, I say, "We're giving the rebates directly to the contractor in the form of support, and that support makes them money in their pocket." Doesn't give them a fishing trip at the end of the year or something. It gives them money in their pocket.If you cut down two working days because you're trained a little bit better on a job with a three- or four- or five-man crew depending on the size of the job, that is a lot of money. That's a lot of money that goes right in the contractor's pocket.

So that's what we do, and we think on-the-job support is a good way to do it, but it's not easy to find those people. But you can. You can take guys that have been applying coatings. Our guys have been doing it for decades and have a lot of experience, and so our contractors love that we have on-the-job. Or fly contractors out from different regions to work on some of our friendly contractor crews in our region that don't mind having an extra person or two up there seeing what they do, how they do it, their efficiencies, their application methods, the size of spray tips they use for different things. There's all kinds of things that go into it. And if you can short cut contractors, they can be your best friend. And if you help them make money, they're going to be your best contractor or your friendly contractor.

So on-the-job support is on it, which leads to the warranty connection is like... And then at the end of that job, we got to write a warranty. We want to know it's done right.

Hal Leland: Yep.

Greg Hlavaty: Because they're going to end up coating it with usually white or maybe a color, but usually a white coating and a complete coating over the top of a job hides a lot of... You don't know what's done underneath that, and you can't be there every day. If there's a consultant on there with an inspector, they might be there every day, but we can't be there every day. So if you're going to write warranties, you can go out and take a picture. We got a lot of pretty pictures of the end of jobs, and there's a few of them that aren't so pretty when you get underneath them, so that we rely on our contractors and so it goes back up the on-the-job support training. We do some training classes in our Texas facility.

Karen Edwards: Yeah, yeah, so important. So let's keep moving, because I want to make sure we get through all of our content. And I know that how you've been doing some talking to some folks in Florida, and Florida, I mean, right now Hurricane Milton is heading for Florida as we're recording this and Florida is its own unique rules and codes and issues. What are you seeing going on?

Hal Leland: Yep, they absolutely do. Florida is the other California, if you will and they've got a big group out there, Miami-Dade. And everyone on this call probably has their products and their systems tested at Miami-Dade and as we do. We just had Helene, and that was horrific, mostly for South Carolina. Milton will be in tonight. And all my folks in Florida listening right now, if I talk some crazy talk right here, please chime in and tell me I'm insane. But I'm going to go through what I understand to be the Florida insurance situation right now, and you can argue about this, but all they get is hurricanes, one after another, every season. I'm going to talk about that.

The largest one in 1992 I think was Andrew. It was a Cat 5, and it caused about 64,000 houses being damaged, 27 billion worth of insurance costs. And that just caused insurance companies to try and flee the state of Florida. When that happened, the Florida legislature came together and they developed Citizens Insurance Company, which is a not-for-profit group trying to save the day. They immediately acquired 1.4, 1.5 million policies, but they didn't expect that to happen. So now that's a concern for citizens, right?
The reason it's a concern, Florida has what they call the 25% rule. If 25% of the roof was damaged, the entire roof would need to be replaced to meet code requirements. In 2022, Florida developed Senate Bill 4-D.

Senate Bill 4-D says as long as the rest of the roof complies with Florida's 2007 building code, and it's 25% or less, it only needs to be repaired. Now, I'm kind of butchering this up a little bit because it's very complicated, but let's talk a minute about the Florida building code in Miami-Dade. As I understand it, Florida building code listens to whatever Miami-Dade says. Miami-Dade doesn't really listen to the Florida building code. So Miami-Dade is the major player in Florida now. Now we got Senate Bill 4-D. A group of our folks from the RCMA got together, I think it was last month, led by our current RCMA president, Chris Hudig, along with influential members like Jeffrey Ladblank, Matt Dickinson, Bettiana Acha and others.

They went to the CFO's office, the Florida State Capitol. They sat down to discuss Senate Bill 4-D. Now they've opened up the lines of communication, they're trying to form an alliance with the state and the RCMA and I think it went very, very well. We're talking with them. As the RCMA, we're offering our assistance, our expertise and we're trying to form an alliance with them. So if any major changes come about, the RCMA should be aware of them through Blank and Bettiana. And I expect we're going to get a little synopsis very shortly from the RCMA, from Dr. Ralph Paroli, our new RCMA technical director, explaining what happened during that meeting. But the bottom line is that we're involved, as the RCMA, with the Florida insurance companies and that's a moving target right now and probably always will be, but we're monitoring it and we're watching it.

Karen Edwards: Well, that's good to know.

Greg Hlavaty: You got to admit, if you were an insurance company, you know you're going to pay out lots of money and the money's got to come from somewhere. So there's got to be a balance there. It's going to be a give-and-take.

Hal Leland: Yeah, I guess farmers, everyone, they started running out of Florida, right? They're like, "This is nuts. We're not going to make any money here." So Florida reacted with citizens, and I'm not saying it's a horrible decision, it's probably the only decision they could make. So our friends in Florida are watching that. I hope they're listening today. And if I've said something crazy, please let me know in the chat.

Karen Edwards: Yeah, yeah, thanks. Okay, so earlier in the conversation, you touched on, Greg, that consultants really didn't even give coatings and fluid-applied systems the time of day, but you're seeing that change now.

Greg Hlavaty: Exactly, for several reasons. First of all, to be responsible to a building owner, consultants need to be cognizant and aware of many things, but a big part of it is budget. You could always put on the best roof you can afford or the best roof you can, and maybe you can and maybe you can't afford it. And for many building owners, and we have this exact example in some of buildings, we have a plant now in Texas and we've been there for a while and we got a call from a few people there that said, in some of the outlying areas of Texas, Panhandle and some of them, there were building owners that the cost of a re-roof was more than they paid for the building itself, because it was just so costly to do it and buildings in some areas are not that expensive and they say there's got to be another answer.

So if you're going to be responsible... That's an extreme example. But consultants in years past gave very little consideration to coatings, even though they knew some of them worked well. It was only anecdotal. Well, we used this here and we used it there, but many of them, they didn't have anything, as we say, to hang their hat on and that comes into standards and codes and testing. I don't know if we're going to talk about that a little later with Hal, but we do factory mutual, we do UL, we do a lot of things so that when that consultant needs something to put in his file on the building he's working on, he has something as opposed to, "Well, I know it worked over there. I think it works pretty good. I like these guys. They're a good manufacturer." All that doesn't mean a lot to a strong building owner. It's some of the codes and standards meeting them.

And so consultants have gotten on the bandwagon. We get a lot of support from consultants in our area. There are still some consultants that are very conservative. If it's a reroof, their term is if I don't see the deck, I am not doing it. They want it torn down to the deck and built up, but that's not as practical in our expensive world as it used to be. So they've gone to roof restoration as one of their things they can offer building owners.

Hal Leland: That's a normal progression, right, Greg? Because we wouldn't expect them to go to a building owner and say, "Hey, we think this works." "Hal said it works," or "Greg said it works." But if you go to the expense of having these tests at FM Global and UL and Miami-Dade, it's a big deal. It gives them something to hang their hat on. So they have a piece of paper say, well, they spent $400,000 on these tests and FM says it works and we're going to back it. So it gives them something to work with. So they needed that from us. We saw the need, we went and did it. And a number of my colleagues on the program here today did the same thing and we're growing from it.

Karen Edwards: Good. That's great. So let's move on to, if I can advance my slide. My cat paid me a visit there while you were talking and messed with some of the controls. There we go.

Greg Hlavaty: Uh-oh, cat lady.

Karen Edwards: Contractors. What are you seeing in terms of best practices, opportunities for them? Let's talk about this topic a little bit.

Greg Hlavaty: Well, the best practices folds back into, for us, the training. But we have many video and our videos are... Feel free to wander through them because some of them are... They're all field videos. None of them are production videos that you have [inaudible 00:45:09] company and do it. They're done in the field, they're done in real-life experiences. Our field tech guys will sit and do some talking about equipment and what have you. And so we have some best practices videos which have nothing to do with our products and what we sell and how good we think they are and all that. It's what kind of hoses do you need to hook up to a 275 gallon plastic tote? How do you hook up to a tank, or what do you need for in the form of brushes, rollers or various pieces of equipment that you should have before you start a job?

You can go and look at all these things from us or get it from your own manufacturer so that you already have best practices in your mind. I can't tell you how many times our guys will show up on a job and one of my field tech guys have called. "We got here. They finally showed up at 10 o'clock," and we said, "Okay, where's your scissors and your gloves," and all these things. "Oh, well, we'll go over to home people and pick those up." Totally unprepared. So best practices can mean just being prepared for that morning's job, or it can mean understanding the right equipment, which for our materials, we know what that right equipment is. We can send you to a equipment manufacturer and give you a line of specs for how long of a hose can I pump through, how high can I go up on a building?

Many guys are shocked that you can go up to a 15, 16, 18-story building from the ground with the right equipment and pump and spray, but you need the right hoses, different sizes, the burst pressure. We go through a lot of stuff so that they can be prepared and have the best practices, how to set up on a job, how to start a job, where they set up their ladders. Our guys will have them automatically do 30 or 40 squares right to the adjacent to the ladder. So when they get to the last day of that job, they have an area that's already completed they can back onto as they pull their hoses off and go down. They don't have to wait an extra day, "Oh yeah, well, we had to get off the roof. We'll go back tomorrow and finish up around our ladder." There're just all kinds of little things that become part of best practices.

Karen Edwards: Yeah, how?

Hal Leland: Yeah. Well, I just wanted to mention, because Greg's talking about these new guys, right? We'll send our field techs into Texas or Alabama or New Orleans or Colorado or New Mexico. These guys have never seen what we do before, but they're interested in learning. And even though some of the guys have been doing it for a while, they they're putting on 30 or 40 squares a day and when our techs get done with them, they're putting on 200 squares a day. There's simple tips that you can't know until we tell them to you. And these are some of the tips that are on the videos that we're willing to share to grow this industry, the right way.

Karen Edwards: Yeah.

Hal Leland: So, just to note.

Karen Edwards: Yeah. I'm going to keep us moving because we've got a couple of good questions that have come in and I want to make sure we get through this content and we're down to our final 10 or 12 minutes. So this topic might be, I don't know, a little [inaudible 00:48:19].

Greg Hlavaty: I've been quiet about it because many of our fellow manufacturers at the RCMA, and matter of fact, if not all, but at least most, including us, are silicone manufacturers. But in my opinion, after the years I've been in it applying all the coatings from a teenager to where I'm at right now, I'm going to say something that might initially sound shocking, but I'll qualify it, is the most dangerous technology to come into the roof coating industry, if not the roofing industry in 50 years and most of that is not because it's not a good product. Silicone is an amazing technology. It can weather for decades. You can put silicone out and it will, on something that's substantial, you can leave it out there and come back when your grandkids are here and it's probably still out there. It can weather for decades. But it's mostly the problems is irresponsible selling of silicone.

Silicone is being sold out of five-gallon pails at every distributor's yard. And what they're doing is they're going up and they're throwing little silicone patches in... Oh yeah, I can go up and I can fix your roof. And it doesn't matter because it's silicone. It can take ponding water. Well, silicone can take ponding water itself, but it doesn't protect the roof underneath from ponding water unless you do all the proper steps and you do it right. And when we sell it, we sell it by invite only, that we know a person that knows what they're doing, that knows the technology. And the technology is you don't put silicone over most membranes. You use a primer. And the primer is not just for adhesion. The primer is a vapor barrier.

Hal Leland: Vapor barrier.

Greg Hlavaty: Silicone is a very poor vapor barrier. It allows a lot of water through it. You can put silicone over a ponding area, and if you haven't put down a vapor barrier primer underneath like a two-component acrylic or epoxy or one of those, silicone will allow moisture through and allow that roof to continue to deteriorate underneath the silicone. It needs a base. We have some combination systems where you put down acrylic, a polyester fabric and top it with silicone. Now you've got the best of both worlds, because silicone will take the weathering for decades. That strength is built by the polyester and the acrylic, and the vapor barrier underneath. There's many ways you can do it. But right now, it is being sold irresponsibly to guys running around in pickups and five-gallon pails and slopping it on in spots. I'm really happy to say that a couple of our other fellow manufacturers have said the same thing.

I saw one video that I looked at from one of our fellow manufacturers, a very strong one, that they pointed out, if you're going to use silicone, don't use it as a patch on a roof, if you're intending on putting a renovation system or a maintenance system on later. Because even though they say you can recoat silicone with silicone, that has had limited success. Not saying it's an impossible, but it doesn't always work. Some silicones don't take good adhesion later. They blister, they do everything. So assume that once I put silicone on that roof, that is a throwaway.

Hal Leland: That's it.

Greg Hlavaty: It's over with.

Hal Leland: Yeah.

Greg Hlavaty: You can't do anything with it but tear it off or put an overlay board on it. And that's what makes it so dangerous. It's how it's being sold irresponsibly. I'm going to give you one real good example that we had not very long ago. We had many building owners or property managers that budget one year for the next year's work, and they had a nice membrane system that we were going to have put on by a contractor that they had budgeted for the following year. Well, when that following year came around, they picked up the phone, called that contractor that gave them the numbers and a bid and says, "Okay, I'm ready to do it. Let's get going on it." He shows up at the job and says, "I know I told you it was going to be 250,000, now it's going to be 550,000."

"What are you talking about? Because we budgeted 250,000." "Yeah, but you let somebody in the meantime, over the winter, go up there and put silicone on all over the place in the valley, in the ponding area, thinking they were helping me get through the winter." What they really did was is they contaminated your roof and made it impossible for us to put on a good membrane system. And the roof needed a strength membrane.

Because silicone has almost zero tear strength and almost zero tensile strength. So it's not a membrane, but it is a wonderful surface. You can take a TPO membrane that is wearing out and put silicone on it and give it many, many years of life as long as the membrane still has integrity. There are many places it could and should be used, and a lot of places it should not. And so because of that, my feeling is it is the most dangerous technology in the roofing industry since Hypalon.

Karen Edwards: Okay. So let's keep moving. And I want to give Hal some time to talk a little bit about the building codes and approvals, and then we'll... Maybe two minutes on that and then we'll spend a couple minutes answering questions.

Hal Leland: I don't have a whole lot to say about it. ASTM, we're deeply involved with ASTM. Everyone on this phone call is, or this presentation's deeply involved with ASTM. Our meeting's coming up in December. I'm the subcommittee chairman DO809 at ASTM, and that is liquid applied coatings for roofing and asphaltic concrete pavement, which includes ASTM D6083 that I worked on with George Daisy and Jeff Blank and every other interested acrylic coating manufacturer, Shridhar. In fact, Shridhar is trying to work on 6083 and he needs to talk to George Daisy about that, if you're both listening. FM Global, that's where we hang our hat at Western Colloid. We spent a million dollars, and mostly the big boys, they spend a lot more than we do. FM's huge, just the gold standard. UL has been around forever as well, and we test for fire mostly at UL.

Miami-Dade is also a very powerful player. I'm currently adding some more products to Miami-Dade as we speak. ICCES is a testing agency that we qualify for, and they have a number associated with it. So anywhere in the United States you go and a building code or a city's going to ask for something from ICCES.
Building codes and approvals, we're deeply involved with it. I know we don't have a whole lot of time. It's the most boring part of our industry, but also one of the most important.

Karen Edwards: Sure.

Hal Leland: Like I said, it gives consultants something to hang their hat on and gives us legitimacy in the industry. So that's enough of that.

Karen Edwards: Questions. And it's funny because they both relate to California and Florida. The first question from Lisa was do roof coating manufacturers need to have Title 24 certification to sell roof coatings into California? And part two is is a Prop 65 statement disclosing props at 65 chemicals required on the pail, or is the warning with the website sufficient?

Hal Leland: You need to label everything with Prop 65 as your easiest avenue out of any problems in the state of California. And absolutely you need to qualify for Title 24 in the state of California. You can't sell an aluminum. This is on air-conditioned space. If you're covering cow sheds, you can put whatever the heck you want on it. Air conditioned space [inaudible 00:56:40].-

Greg Hlavaty: Open warehouses, you can get away with that.

Hal Leland: What's that?

Greg Hlavaty: Open warehouses, you can get away with that.

Hal Leland: Yeah, yeah, yeah, yeah.

Greg Hlavaty: That aren't air-conditioned.

Hal Leland: So Title 24 is it. That's law in California.

Greg Hlavaty: And I'll say something about Prop 65, is that Hal's exactly right. You can put it on your data sheet, you can put it everywhere, but it needs to be on the container, just like the little kid with his head in the bucket.

Karen Edwards: The baby in the bucket.

Hal Leland: Baby who's head in the bucket.

Greg Hlavaty: [inaudible 00:57:03] that we all put on and laugh at.

Hal Leland: Right.

Greg Hlavaty: But because it becomes so ubiquitous, it doesn't mean anything anymore. When you walk into Target, there's a Prop 65 label. When you buy... You can go to a counter and buy lipstick and there's a Prop 65 on it.

Hal Leland: There are popsicles. Everything has 65, yeah.

Greg Hlavaty: So most people just put it on to be safe, and in some cases it's so ubiquitous that it no longer has meaning. It's just everywhere. And that's unfortunate because it should be doing some good, but what it really does is just... legislators [inaudible 00:57:38].

Hal Leland: Yeah. They beat it to death.

Greg Hlavaty: Yeah. But anyway, you do have to do it.

Karen Edwards: Oh, George Daisy said we are listening. So that was a nice little call-out there, Hal.

Hal Leland: Thank you, George.

Greg Hlavaty: Shridhar too.

Karen Edwards: Yep. Yep.

Hal Leland: He wants to do some work on 6083, George and I know everyone's shaking their head right now.

Karen Edwards: You know, it's Shridhar, yeah-

Hal Leland: Blank's probably banging his head into a wall.

Karen Edwards: We wanted to know your thoughts on how Florida legislator, how they view sustainability. Because as you reroof, you have eroded the sustainable value proposition of fluid roof coatings? Does-

Greg Hlavaty: Well, yeah. I don't know that Florida, how many know or somebody else know. I'm not sure that sustainability even becomes a term anymore, and that's unfortunate in some aspects of the building codes, because that probably should be something we target through, I don't know if it's ASTM or somewhere else.

Because sustainability is a hot topic, and that's a big part of our business. That's what we do. We make things that are throwaway things into sustainable things. This was something they tore off every year and hauled to the dump. Now we've got coatings over roofs that were put on during World War II that have been coated and then recoated, and they're still performing. They're still up there. They're now a sustainable part of that building. So it should be part of it. I don't know if it is or not, but once you do make them tear off, you take sustainability right off the table. So how do we get around that in the legislature and have them acknowledge it?

Karen Edwards: Yeah. Well, this brings us to the close of the hour. It went by really fast. I want to thank Greg and Hal and Western Colloid for being here today and sharing the incredible knowledge that you bring to the industry. And I just want to thank everybody today for tuning in, and please visit coatingscoffeeshop.com and check out the other webinars that we have and we hope to see you on a future one. Thank you, gentlemen. Thank you, everybody.

Greg Hlavaty: Thanks,

Hal Leland: Thanks, guys.

Outro: ... everybody. Appreciate it.