COVER STORY – Seeing the light – Orion opens eyes to the ease of saving energy

Posted on Mar 1, 2012 :: Cover Story
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Posted by , Insight on Business Staff Writer

In a culture where a new gadget seems to hit the market by the month, Neal Verfuerth thinks it’s absurd we’re still using the same light bulb invented 130 years ago.

 

“The light bulb you buy today pretty much uses the same technology Edison did when he made it,” says Verfuerth, the CEO of Orion Energy Systems Inc., while sitting in his sunlit office at the company’s Manitowoc headquarters. “We have to get beyond that to go to what’s next.”

 

Figuring out what’s next is what Verfuerth and Orion have been doing since 1996. From his trademarked Apollo Solar Light Pipe and solar panels to energy management and thermal storage units, Orion devises ways to help some of the country’s biggest businesses – Pepsi, Coca-Cola, General Electric, Apple and Toyota – save on their energy costs. Overall, Orion has helped more than 6,100 companies across North America save more than a $1 billion in energy costs.

 

With companies as cost-conscious as ever, one might think a major investment in new, energy-efficient lighting might be an unaffordable luxury. But Orion has found a way to make such an investment irresistible. In 2002, the company launched a unique financing program that allows customers to borrow funds from Orion to install the new technology – and then use their energy savings to pay the Manitowoc manufacturer back.

 

“Our customers are able to get results without putting up the capital,” says Michael Potts, Orion’s president and chief operating officer. “There’s really no financial risk to companies using our products. We know our products will save customers money using our proprietary technology and energy systems so we can guarantee savings down the road.”

 

That ability to guarantee future savings, along with constant product innovation, is helping Orion attract new customers and grow their business at a time when many companies aren’t too keen on making capital investments. In fiscal 2011, Orion brought in sales worth $92.5 million, up from $65.4 million the year before.

 

With energy costs being the No. 2 or No. 3 expense for businesses, Orion’s market appears limitless, with plenty of companies in need of energy-saving devices and systems.

 

“We guarantee savings and have an in-house financing program so clients can deploy the technology without taking the risk,” Verfuerth says. “We’ve proven it so many times that I wonder ‘why aren’t more people lining up at our door?’ Maybe they don’t know about us yet.”

 

The inventor in his lab

Verfuerth clearly loves showing off Orion’s campus in Manitowoc, the beta site for all of the company’s products. It includes part of the former Mirro plant (where pots and pans were built for years) as well as a state-of-the-art, light-filled technology center and corporate headquarters. A few more people learned about Orion in January 2011, when Verfuerth hosted the company’s highest profile guest: President Barack Obama. The day after the State of the Union address, Obama traveled to Manitowoc to shine the spotlight on how cutting-edge companies like Orion cannot only be successful, but also be environmentally friendly, too.

 

A year later, Verfuerth remains in awe that his company was selected for the visit. He met previously with administration officials looking into alternative energy and attended a White House roundtable on the same topic. But he didn’t expect that onsite visit.

“Having the president visit your company definitely puts you in the spotlight and is good for business. No matter what your politics are, having a president come to visit your company is surreal,” he says.

The visit inspired Orion to become more proactive in finding new clients, Verfuerth says.

“When talking to potential customers, we point to our case studies and how other companies have benefited. We now have a call center and we’re reaching out to customers and setting up appointments to meet with people and talk about our Orion Value Proposition – how we can help them save money with their electrical costs and even help them pay for it. We are not waiting for the phone to ring,” he says.

When visitors come to Manitowoc, Verfuerth says they can easily see for themselves how Orion’s products work.

“We have our various inventions here and we can show them to businesses that come in to show them how it works. We try everything out on ourselves first. … I guess we are our own guinea pigs,” he says.

Voith Paper in Neenah is one of the more than 6,100 companies to discover Orion and what the business can do for their bottom lines. Since installing Orion products, Voith saves on average more than $25,000 annually on its energy costs, says Lewish Welsh, a maintenance and environmental project manager for the company. But, he says the company saves a lot more than money.

“It isn’t often when a company can enhance the workplace environment for its employees, improve its workers’ productivity, contribute significant cost savings to make it more competitive and reduce its environmental footprint at the same time,” he says.

And you don’t need to be a large company to realize the savings or afford the products. Qualheim’s True Value in Shawano is a small city hardware store that went with the Orion Apollo Solar Light Pipe to illuminate its interior. One of its more popular products, the light tube reduces energy costs to zero for significant portions of the day. Sunlight is harvested through the dome and travels through the sealed light tube, bringing focused sunlight into the building.

Qualheim’s saves an estimated $12,500 on energy costs and more than $2,500 in maintenance costs annually with Orion’s products.

“This Orion energy-efficient lighting project was a no-brainer for us,” says store owner Willis Qualheim. “In fact, we expect a three-year payback on the energy-efficient project, plus we’re getting on average 45 percent more light in the store.”

Since technology is constantly changing, an Orion customer from a few years ago may save even more by updating with today’s latest systems and devices. For example, Quad Graphics, a Sussex-based commercial printer, originally purchased Orion products in the early 2000s. “We recently went back in there and took out the original fixtures and updated them with our new products. We originally took them from 465 watts to 221 watts to now 140 watts,” Verfuerth says. “Retrofitting is a huge part of our business.”

Potts says Orion also attracts attention from businesses with goals to cut back on their energy usage. “That’s an area, I think, more people are going to become interested in. They want to be able to show customers how they’ve reduced their carbon footprint. Energy costs are also huge for businesses and as they continue to go up – and they will – businesses are looking for any way to reduce the amount being spent in that area.”

Since nearly every business is looking to trim costs, Verfuerth says one challenge the company faces is that marketing its products can be overwhelming.

“There are so many opportunities out there. Early on, we would talk to anyone who would listen to us,” he says. “We used to have wide expansive national accounts, but found out we spent a lot of time traveling. Now, we just go into an industrial park and go door-to-door.”

 

Constant innovation

A blur of movement and full of energy, Verfuerth has been an inventor all his life. While in high school, he would buy broken lawnmowers and fix them. During the 1980s, he bought two solar panel distributorships. Both failed, but Verfuerth was hooked on the energy industry. He founded a lighting distribution company that was acquired by a California firm in 1993. He then founded Orion, and by 1996, the company was no longer just distributing lights, but making their own products as well.

Verfuerth loves coming up with new ideas and making current ideas better. Orion currently holds more than 30 patents and has another 20 pending.

Innovation defines Orion, from product developments to creative product financing.

One example of the company’s innovative philosophy is its financing program. When clients buy Orion’s products, they can budget the same amount on lighting as they did the previous year. The amount they save on their lighting bill makes up the difference on their investment.

“We become like a utility bill and you pay us back every month until it’s paid off,” Potts explains.

Orion has oodles of information and research validating the savings customers will make once the new devices are installed. When companies are presented with that information, it’s an easier sell, Potts says.

“It really takes the risk out,” says Verfuerth. “Capital expenditures are huge for companies, especially when the economy is less than ideal. By taking that out of the picture, it has made a big difference in getting businesses interested.”

While Orion is creative in helping customers pay for its products, it’s also keeping up with the latest technology to better meet customers’ needs. One way they’re doing that is by expanding product offerings, Verfuerth says. When the company opened its Manitowoc manufacturing facilities in 2004 (the company maintains a small facility in Plymouth in Sheboygan County, where it got its start), Orion had between 20 and 30 product models. Today, that number is 10,000 and includes everything from solar panels and the Apollo Solar Light Pipe to utility control systems and high-intensity interior and exterior fluorescent lights.

In the past year, Orion redid the layout on the manufacturing floor to change the way the lines flowed and to make the process more efficient.

“We had to retool what we’re doing to keep our promise to customers and to get our products out the door on time,” he says.

In 2007, Verfuerth made the decision to take Orion public. He went to investor events, made his pitch and walked out with guarantees of millions in capital. “That was needed to help take our company to the next level. I tell you, going to meetings with investors and raising money was a bit surreal,” he says.

Every employee is a shareholder and has the option to sell their shares at any time. “Everyone here owns a piece of the rock. I think it makes employees more vested in what they do every day,” Verfuerth says.

After a strong 2011, Verfuerth anticipates more growth in the years to come as energy costs increase and more businesses discover what Orion can do for them. “I’m very bullish on our future,” he says.

Verfuerth and his team at Orion are constantly looking to the next big thing. For example, one product would convert solar light into DC usage or using an Apollo light tube to exhaust heat. “It’s all about the next product, the next product, the next product. People say they want to think out of the box. Well, here we live outside of the box,” he says.