Jonathan Orpin: 0:03

Employee owned companies have more resiliency in difficult times. Their people retire with much more money in their account. They care about their communities more. You know, in my case, I you know, I was bought out by this ESOP and I probably could have done better in the open market, but it was fine. I mean, it was really fine. And, and now I've got all of these people who have been, many who have been with me for decades now, becoming owners.

Tom Raftery: 0:33

Good morning, good afternoon, or good evening, wherever you are in the world. This is the Digital Supply Chain Podcast, the number one podcast focusing on the digitization of supply chain, and I'm your host, Tom Raftery. Hi, everyone, and welcome to episode 371 of the Digital Supply Chain Podcast. My name is Tom Raftery, and it's fantastic to have you join us today as we dive into the most current and exciting developments in the supply chain world. To all this podcast's amazing supporters, I can't express my gratitude enough. Your involvement and backing are the lifelines that keep this podcast thriving. And for those who haven't yet joined our supporter community, Here's your chance to be part of something special. Supporting the Digital Supply Chain Podcast is easy and budget friendly, with options starting as low as just 3 Euros or Dollars a month, less than the cost of your daily cuppa. This modest contribution can significantly impact my ability to continue delivering top quality content. To join, simply click on the support link in the show notes of this or any episode, or head over to tinyurl. com slash dscpod. Now, with that out of the way, I'd like to introduce my special guest today, Jonathan. Jonathan, welcome to the podcast. Would you like to introduce yourself?

Jonathan Orpin: 1:57

Sure Tom, thanks. I'm Jonathan Orpin, I'm the founder and CEO of New Energy Works and Pioneer Millworks. We're a 100%, employee-owned company out of, both New York State and Oregon in the US. And we do a number of things. We are a timber frame company, heavy timber construction. We're a a general contractor, an architecture firm, a millwork company specializing in reclaimed and sustainably harvested wood. And we do uh, high performance enclosures. So what we call HPEZ or making high performance easier. So we're doing all sorts of things. We do them on both coasts and as I was mentioning to you, Tom earlier, it's, it's a bit chaotic at times 'cause we do so many things. But our driving, our drivers tend to be wood. We're wood people for all sorts of beauty, ecologic and craft reasons. And and environmental stewardship. So those tend to be our drivers as a company. We're about 160 people. Again, spread out over a variety of different working centers and and both coasts.

Tom Raftery: 3:10

Sure. And you have a strong focus, Jonathan, on sustainability, right?

Jonathan Orpin: 3:17

Yeah, New Energy Works started quite a number of decades ago in my personal desire to, you know, bring more environmentally sound building technology forward. You know, I certainly wasn't doing it alone. That was in the early eighties when the solar energy industry was coming about. And people were being really sensitive to the, the oil embargo by OPEC way back in the late seventies. And the fact that it was time to start looking at our environmental impact on the planet. And I was just part of that. And so to do that through business made sense to me, you know, as a, genetically predisposed entrepreneur.

Tom Raftery: 3:57

Sure. And how do you ensure that your supply chain aligns with your sustainability goals?

Jonathan Orpin: 4:05

Yeah, it's hard. It takes a lot of research, Tom, honestly. And and sometimes it takes a certain amount of biting the bullet as you might say. So for instance, the most of our wood, as an example, is certified by a third party, either Forest Stewardship Council certification, which is, you know, an internationally known third party forestry and chain of custody certifier, or it's, I think it's, it's really its competitor the PEFC, which is the program of Environmental forestry, something, sorry. I'm not really sure what PEFC stands for. We've just become involved with it in the last few years and I think it's more oriented. The, the Europeans actually use it more than the Americans do, but our a significant amount of our wood comes from Canada and its PEFC certified, so we're pretty excited about both of those so those make us feel good, and um as a big one. The other one is always looking at, what is the carbon impact of the materials we use, which is really

Tom Raftery: 5:11

Right.

Jonathan Orpin: 5:11

hard. And, and so for instance, we've now made the switch over from insulation to, from petroleum, petroleum-based products to wood-based insulation products. If you can believe that, and Europe has led the way on this for decades. Wood fiber insulation is, represents, I don't know, maybe 20%, 30% of the European market where it really has just been introduced here in the last half dozen years in the states. And what that is, is basically it's forest products chewed up and recomposed into either loose fill insulation or rigid insulation. And we've been importing rigid insulation from Poland and Germany for the last half dozen years. And love it. It really sits well with our ethos as well as we like working with it. Honestly, it's, it doesn't it's not itchy or anything like that. And the forest that it comes from is Forest Stewardship Certified, or, or wood industry byproducts. Which is just brilliant. Here's the exciting new news, and that is that the United States just opened its first wood fiber insulation plant out of Maine, which is way up in the upper right hand corner of the states, the continental United States. It called Timber HP. And so we are now finally able to get domestic sourced

Tom Raftery: 6:39

Fantastic.

Jonathan Orpin: 6:40

wood fiber products and we'll soon, in about couple more years, have that have a similar plant on the West Coast. So, we'll be able to cover the whole country with wood fibre insulation. The cool news about this is that in the digital age, the amount of paper that's being used has really declined tremendously. And while people have different opinions about the pulp industry,

Tom Raftery: 7:07

Mm-Hmm.

Jonathan Orpin: 7:08

and in fact the pulp industry does have a checkered pass when it comes to leaving a mess behind it as it chew up trees um into pulp and paper.

Tom Raftery: 7:17

Mm-Hmm.

Jonathan Orpin: 7:17

It nonetheless did do a couple of good things, and one of 'em was to take lower grade wood products out of the forest which theoretically can help us manage those forests better against things like forest fire, et cetera. The other thing that does creates a lot of jobs. Well, Maine for instance, the pulp industry has been decimated. And because they're just not, people aren't buying as much paper anymore among other reasons, but certainly that's the main one. And so this is a perfect filler in that market segment,

Tom Raftery: 7:53

no pun intended.

Jonathan Orpin: 7:54

wood fiber. So those are pretty exciting areas that we're working hard on, and that leading the pack, so to speak in supply chain a thoughtful, sustainable supply chain.

Tom Raftery: 8:05

Just out of sheer ignorance on my part. Would, would would that that filler that wood fiber filler, would that be a fire hazard? Obviously not. Or you wouldn't be using it, but how do you make sure that it's not

Jonathan Orpin: 8:24

Yeah, so there's a borate additive that does two things. It it controls the fire spread. So this, you know, you can well imagine that we're highly regulated in items like fire spread. I live on the west coast of the US and fires here are real issue year after year. Now even on East Coast with half it seemed like it's not true, but half of Canada burning this summer, you know we had smoke all the way down to North Carolina. And it was eyeopening for many people. So we're really regulated to make sure that all of these testing and fire spread and smoke spread analyses are passed and created. And so borate is the main is the main anti flammable situation and borate it's a natural occurring mineral.

Tom Raftery: 9:13

Okay. Straightforward enough. Cool. That's good. Good. What would be some of the biggest challenges you've faced when you know, integrating eco-friendly practices into your supply chain, and how did you overcome them

Jonathan Orpin: 9:27

Well, I'd love to say we've overcome them all, but as you can imagine, it's an ongoing thing. You know, two steps forward, one and a half step back, that old dance.

Tom Raftery: 10:10

Yeah.

Jonathan Orpin: 10:10

But so there's a lot of, there's a lot of, struggles when it comes to pushing new technology or new information. And gosh, I'm sure that with all of your good quality people who get on your show, you've heard a lot of them. For us, there's the, the basic one is finances. You know, a lot of times when you're a niche player, things don't come in as inexpensive as maybe the monster players are. As an example, fiberglass. Let's use fiberglass. I pick on fiberglass all the time. I love to pick on fiberglass because it sucks as an insulation, and yet it has controlled the American market. Maybe the European too. I don't. It just has controlled it. It's cheap, it's made in unbelievably large quantities, and yet it doesn't do a great job. It doesn't breathe very well. It it takes a lot of carbon input to create. You can't recycle the stuff. It just is terrible. You know, in 1986 as a Saskatchewan house study by the Canadians, and the first thing they said was fiberglass makes a great filter. It makes a terrible insulation. But, nonetheless that industry was so powerful and so big, it continued and continues to control much of the insulation market. So that's an example where we're up against, you know, the David and Goliath thing. However people are learning and more and more, you know, used to be years ago, I would say, I would say, I know you're coming to us because we build gorgeous products and homes, but you're going to get the most sustainable and energy efficient home you can imagine whether you want it or not. And they would laugh. I would laugh, you know, but then we would actually do it. Now that's less so, you know, people are so much more sensitive. I mean, anybody who's still denying climate change is living under a rock. And, you know, all of our clients, you know, know that. And so they're, they're very open to that. Not perfectly. I mean, we're still fighting some code issues. We're still fighting finances. We're still fighting big industry. The worst example, and I mean even worse than fiberglass, is closed cell spray and polyurethane foam. I mean, it's global warming potential, or GWP is thousands, and thousands, and thousands of times greater than, some of your better alternatives, well, like wood fiber as an example, but also cellulose and others, and yet, you know, the construction industry has the, the, the polyurethane industry has combined with the construction industry to create a behemoth of it just is easy. So maybe the answer to your question of what we fight worse is easy, you know, because sometimes doing the right thing

Tom Raftery: 12:56

Yep.

Jonathan Orpin: 12:56

is not the easiest thing.

Tom Raftery: 12:58

For sure. Sure. No, of course, of course. And it's interesting that you brought up climate change because obviously that is having huge, huge impacts. So you know, what kind of strategies do you implement to future-proof your supply chain against the increasing unpredictability of global climate patterns?

Jonathan Orpin: 13:19

Tom, are you asking from a, a business standpoint to make sure we still have product? Is that one of the things that you're asking? I'm, I'm

Tom Raftery: 13:27

That's part of it, yeah.

Jonathan Orpin: 13:28

Sure, sure. Part of it is investing in the domestic manufacturer of wood fiber insulation as I described. I mean, we're a, we're an early investor and large promoter and brand ambassador of Timber HP, you know, timber hp dot com. So, you know, there's that in the wood product area, the one thing that's wonderful about wood is it doesn't matter what anybody says the trees grow. And by us using them, we're sequestering carbon. We're using a product that is the lowest carbon equivalent input in the manufacturing process. So in that way, you know, it's that old story. If we do good, we will do well. And so by, by really focusing on products that we believe in, we also coincidentally, are not, are actually using products that I think self future proof in a way. But it doesn't mean we can't, we, we, we don't have to push it along a little bit, you know with, with wood siding, for instance, our, one of our largest products is wood siding. And, you know, it's, it's, we're up against vinyl siding. and we're up against reinforced concrete siding.

Tom Raftery: 14:46

Sure.

Jonathan Orpin: 14:47

you know, both, actually not both of them. There's no excuse for vinyl siding, but for, concrete reinforced siding you know, there's, there's an argument for that. It'll last forever. it really is no, no upkeep pretty much, and it's aggressive in that way, and it comes into the market pretty inexpensively

Tom Raftery: 15:04

Mm-Hmm.

Jonathan Orpin: 15:04

The downside is the carbon equivalents to create it are off the chart. So for it to be called green, I think is greenwashing. It doesn't mean I don't think it's a reasonable product, I just don't call it green, you know? And so for us, a wood product that is low carbon inputs to you know, low carbon footprint to create, usually it's reasonably local 'cause trees grow local to our shops. You know, it's, it's, it's a really good sense of cradle to cradle. You know, you can, if you can't recycle it, at the very least you can do is, is chew it up and use it for mulch, or something. I mean as a silly example, but. But it, it is, you know, it can be a little more expensive than the massivity of the creation of some of those other products. And it's, and it's also takes a little more upkeep. So we're up against that there. But nonetheless, there will always be wood siding around. And so that's, you know, as an example, I mean, Tom, the, the thread here that is, is consistent is we're wood people, so. You know, apologies for always coming back to that, but we are wood people for lots of good reasons, craft, beauty and sustainability.

Tom Raftery: 16:17

It's a beautiful product. There's no, no reason to apologize for that. Tell me though, does technology play a role in your company's sustainable practices?

Jonathan Orpin: 16:26

Oh yeah, yeah. You might've heard that at times there's a difficulty in finding highly skilled craftspeople. You might have heard that

Tom Raftery: 16:35

Mm-Hmm.

Jonathan Orpin: 16:36

cos it's really true. And um, so you know for us we don't we we're, we're not sitting here with just a chisel, although we certainly do use hand tools. All of our shops are outfitted with CNC equipment. And we're always looking forward, forward, at our capital and expenditures. We're struggling right now with, with, probably wanting more investment than our cash flow can carry. And so, you know, do we go into debt to, to achieve some of these goals because, you know, some of this improvement of course, does exactly what we want it to do, which is to make our products more attainable for more people. You know, if if our high performance enclosures, for instance, are called HPEZ, high performance made easier, well it also needs to be more affordable or, you know, more available in quantity. Those sorts of things. So by relying on technology, and usually that's a CNC based technology we we are working forward to, you know, we're looking forward to making that work.

Tom Raftery: 17:47

Nice. Nice. And . And you mentioned as well the fact that you're an employee owned organization. Why did you shift to that? Because I know that's a recent shift, so why did you shift to that and has that impacted on your supply chain management in any way?

Jonathan Orpin: 18:05

Yeah. You know, you used the word future proof on our materials recently, but perhaps this is even more future proofing. I'm aging out at some point. My wife would like me to retire about five years ago. You know, I'm still going strong, working about as hard as I ever have, but the reality is I'm not gonna work forever. And, and there's a second generation of my coworkers who are amazing. But what does that mean if I was to, when I was to age out?'cause I'm a founder and used to be the sole owner. And what does that mean when I leave? You can leave a company in three, maybe four different ways. One of 'em is in a box with a leaving a mess behind you. Another is to find a, a VC or other buyer, you know, a venture capitalist or other buyer who comes in from the outside. And the truth is the math isn't good for that, you know. They come in with a heavy debt load on their balance sheet, and they want their return on investment. So that can leave a mess.

Tom Raftery: 19:02

Hmm.

Jonathan Orpin: 19:03

Particularly in the kind of quirky, spread out, mission-driven company like ours and, and then the third is find a way that the people who have helped you build this company can carry on as the new set of owners. And there's a few different ways to do that. One is just phantom stock or other stock options for limited number of management staff, et cetera, et cetera. But the, in the US we have an amazing, and as far as I know it is only in the US but some, one of your listeners might be able to correct us. As far as I know, the US is the only place that has what's called an employee stock ownership plan, an ESOP, and it's a method of of using a tax protected entity called an ESOP to buy out ownership in the name of the the employees. So the employees become owners. I now have, I, I like to say 150 partners in some ways. Now, of course, don't ever forget that there's a line drawn between manship management and ownership. But, but these are folks now who finally have, have a real stake in it. You know, we've always had sort of a ownership mentality, but, you know, an ownership mentality when you take that to the grocery store does not actually buy you food. You know, whereas the, whereas the value and the, and the shared earnings, the shared profits of that does. So in some ways, in its simplest form, an ESOP is just a extra retirement plan because when you retire or leave you, you cash in a certain number of shares. that you have earned through time and earnings. And depending upon how the company does, the better the company does, the better the value of your shares. And so you are now, if before you really cared, now you really care on a much more visceral and personally, financially responsible way. So it's a powerful, powerful tool of employee ownership. You live in Spain, don't you? Northern Spain has the most amazing employee owned system. The uh, Madrogans. The Madrogan work co-ops in northern Spain is unbelievable, you know, and it's people, it's people caring about, you know their workplace, generations of owners. It's in that example. It's not really an ESOP, but it's probably similar. The Madrogans.

Tom Raftery: 21:37

Sure.

Jonathan Orpin: 21:38

you know, there's various different industries and it's all tied together in this, in this interweb of ownership. And, and it's proven over and over again, at least in the US in the data that I've looked at, that employee owned companies have more resiliency in difficult times. Their people retire with much more money in their account. They care about their communities more. You know, in my case, I you know, I was bought out by this ESOP and I probably could have done better in the open market, but it was fine. I mean, it was really fine. And, and now I've got all of these people who have been, many who have been with me for decades now, becoming owners. And I don't, you know, it's has nothing to do with socialism or any bullshit like that. It's. It's, it's, it's has to do with classic capitalist thought processes. You know, and in the US where nobody agrees with anybody down in Washington, DC on either side of the aisle, this is one of the few bipartisan supported programs because on the right they understand it's a powerful capitalistic tool because employee ownership is powerful, it's more successful. And on the left it's the democratization of the workplace. So it's this wonderful mix of both philosophy and practicality that has worked. So long-winded answer to why we became employee owned. But it's amazing. And I'm so proud of my coworkers for earning it, and I am so psyched to be able to offer that.

Tom Raftery: 23:13

Just from a practical perspective, do the employees, I mean, if they own it, they obviously had to buy it, so they had to cough up money to get there. Did that present any challenges? I.

Jonathan Orpin: 23:25

So in the ESOP, that's not the case. So the ESOP process allows the previous ownership to be bought out using a tax protected entity. So in some ways, I'll just say this, we're a little like a church, you know, we have tax protections to do this process. And then with those, a combination of tax protections and profits and equity, that's what actually bought me out. The individual people in the company paid nothing. Which of course, you know, makes you think, oh, well, if they paid nothing, then what? You know, what do they care? But they earn it over time. And that earnings is a direct reflection on the on, on the value, as valued by a third party independent valuation company of the value of the company, which then affects the value of their shares. So they can see an immediate year after year growth or not of the value of their stake in the company. So, so they didn't actually, in an esop, they didn't actually pay anything.

Tom Raftery: 24:29

Interesting. Interesting. And have you seen any kind of sense of ownership among the employees? Had it, has it influenced the way that, you know, they, they've worked for the company, they've managed relationships with suppliers, anything like that? I,

Jonathan Orpin: 24:46

I I don't know. You know, one of the things I said is we've always had kind of an ownership mentality. I mean, I live in Oregon, which is, you know, whatever, 3000 miles away from New York, and I've lived here for 15 years. And yet both coasts seem to operate well in some areas. The New York has operated even better than where I am. That doesn't reflect well on me, but, you know, that's, that's just the way it's, and so I've always said we've had an ownership mentality and, and we're reasonably new here. We think that it's true, and certainly anecdotally, I've been told by people from, you know, my, my carpenter who's carpenters have been with me for a long time to even people who pull nails out of reclaimed wood, how much they appreciate it. We're an open book company. We've been down open book company for decades, so people understand. I've always taught them what business is and where the money comes from and where it goes. So I have nothing to be ashamed of, uh uh, or to hide bad or good. You know, when it's, when things are bad, I believe people wanna help. And when things are good, I wanna share. So, you know, for, for people who are in business who don't have that, those basic philosophies, mine might not be their path, but it has worked for us pretty well, I think. And I. And as I say, I've done well. And I think our people now have the chance to do better than they otherwise would. So, but one of the things I say over and over again is this ownership thing is not some tricky tool or, or manipulation by management to make you work harder. It's actually just an acknowledgement of what you've already earned. And I think that's sort of a, that, that I think lands on fertile ground in people's heart.

Tom Raftery: 26:31

It makes, makes sense, makes sense. What lessons would you say you've learned in sustainable business that would, that you'd consider most valuable for, you know, people listening to the show, who are the majority of whom would be supply chain professionals and or students and academics? I.

Jonathan Orpin: 26:50

So, Tom, do you have another hour?

Tom Raftery: 26:52

We have another seven minutes, six and a half.

Jonathan Orpin: 26:56

Yeah. I'm not sure. I, so, so as an entrepreneur, there was a book written dec a couple decades ago. It was called The E-Myth, and whoever wrote the book was was their premise was that entrepreneurs really don't take risks. You know, they really are all calculated out carefully, blah, blah, blah. I'm pretty sure that author never was an entrepreneur. I think a couple of things. One is don't be afraid to work hard. Don't be particularly greedy. Build from the heart and you'll get better people around you, and your clients will be better.

Tom Raftery: 27:37

Sure.

Jonathan Orpin: 27:40

So some of those things I'd love to say, follow your instincts, but since my instincts have led me into all sorts of brick walls over and over again, I, I think I should say follow your instincts if they're better than mine. But you know, we're doing all right. So again, in our little niches, we're, we're sort of top of class, but they're little niches and maybe that's even something there. Pick your markets carefully.

Tom Raftery: 28:04

Sure, We're coming towards the end of the podcast now, Jonathan, is there any question I haven't asked that you wish I had or any aspect of this we haven't touched on that you think is important for people to, to be aware of?

Jonathan Orpin: 28:16

You know, the things that drive me on a day-to-day basis are again, the things we've covered. You know, sustainable building, beautiful craft democratization of the wworkplace you know so those things you. I think we've covered pretty thoroughly, so nothing really comes to mind, frankly. Sorry, Tom.

Tom Raftery: 28:36

No, that's great.. That means we did a good job. Fantastic. Super. Jonathan, if people would like to know more about yourself or any of the things we touched on in the podcast today, where would you have me direct them?

Jonathan Orpin: 28:48

So, our website is new energy works.com, all one word. And that covers our design build part of the business, the sort of the service oriented part of the business. And then pioneer millworks.com is the reclaimed and sustainably harvested wood milling company. And, and those, and we do, uh, siding and flooring and paneling and all sorts of, you know, funny sort of off normal products there. You know, one of our big ones is Shou Sugi Ban, which is a charred wood siding that has really, really taken off. I think it's become our number one, our single number one product right now. So, you know, those two websites will tell you a whole lot and love to talk to anybody. I'm any of your listeners too, who just want to chat about business. I've started up a, I'm part of on the East Coast, a group there that's just on on mission driven companies, triple bottom line companies, the triple bottom line being people, planet, and profit. You know, all of those are equal legs in a stool. And I, and I'm part of starting up a new network out on the west coast young entrepreneurs who care, but who could use a little bit more mentorship in a group setting for mission driven companies. So I'm happy to talk about any of that stuff. And I'm Jonathan At New Energy Works dot com. And that's J O N A T H A N. I know there's allsorts of ways to spell it mine's the right

Tom Raftery: 30:18

put those links in. I'll put the links in the show and notes. Jonathan, great. That's been, that's been really, really interesting. Jonathan. Thanks million for coming on the podcast today

Jonathan Orpin: 30:26

Tom, thanks for all that you do.

Tom Raftery: 30:29

Okay, thank you all for tuning in to this episode of the Digital Supply Chain Podcast with me, Tom Raftery. Each week, over 3, 000 supply chain professionals listen to this show. If you or your organization want to connect with this dedicated audience, consider becoming a sponsor. You can opt for exclusive episode branding where you choose our guests or a personalized 30 second mid roll ad. It's a unique opportunity to reach industry experts and influencers. For more details, hit me up on Twitter or LinkedIn or drop me an email to tomraftery at outlook. com. Together, let's shape the future of the digital supply chain. Thanks. Catch you all next time.