NewAge Industries installs rooftop solar-energy system

At NewAge Industries, what goes on under the roof has been the priority at the plastic-tubing manufacturer for 57 years.

On Wednesday, all attention will be on the roof itself.

There, a one-megawatt solar system consisting of 4,082 panels - a monster in terms of rooftop photovoltaic arrays and believed to be the biggest of its kind in Bucks County - will be the toast of local and state dignitaries, green-business advocates, and NewAge's 100 employees.

For a plant that uses two megawatts of power a year to churn out tubing with widespread applicability - from pharmaceutical laboratories to McDonald's milk-shake machines - the solar project represents a serious cost-savings opportunity. The Southampton factory's annual energy bill is about $300,000, said Ken Baker, NewAge's chief executive and son of its late founder, Raymond Baker.

Yet the $4.2 million rooftop addition - half of which is being financed with state and federal subsidies - is just the latest chapter in NewAge's story of not only surviving, but being set up to thrive long after any Bakers are interested in being at its helm.

And Ken Baker is the catalyst, "a great idea man," said Ann Phy, a 21-year NewAge employee who started as a secretary and is now the company's marketing coordinator. "He's always looking ahead, looking to the future."

In 2006, Baker turned over 30 percent of the company, which had $29 million in sales last year, to the workers as part of an Employee Stock Ownership Plan (ESOP). NewAge employees do not have to buy their shares, currently valued at $160 - they are part of a retirement package that includes a pension and a 401(k) plan.

"I knew that if I didn't give ownership, I wouldn't be able to get the company to where I wanted it to be, meaning you have committed team members treating this like more than a job," Baker said of his decision to share NewAge's ownership with the entire workforce.

It was a decision he came to 13 years before implementing it. First, he worked on reducing $11 million in debt that resulted from buying out his brother Gordon 15 years ago and his father five years after that, as well as the purchase in 2000 of the 240,000-square-foot building NewAge now occupies alongside the Pennsylvania Turnpike. Before that, the company - which started as a distributor and moved to manufacturing in 1992 - had been located in Warminster and Willow Grove.

Shortly after converting NewAge to an ESOP, Baker turned his attention to increasing the company's energy efficiency. All lighting was changed to fluorescents that used one-third the energy of the bulbs they replaced and provided more light, Baker said. Any new equipment purchases had to be more energy-efficient, too. A new white roof and added insulation under it boosted the factory's energy efficiency even before the solar panels went up.

Baker, 57, who lives in Ambler, said he was no "tree-hugger type." His commitment stems from one basic question: "Why waste energy?"

Meanwhile, his business operating strategy appears to be premised on three words: Do not panic.

Baker would not say how profitable NewAge is, only that the dollar amount of orders placed in 2010 was 30 percent higher than in 2009, and that it was the sixth straight year of record orders.

He credited that performance, even in a struggling economy, to doing the opposite of most of the business world. As competitors sold off product and kept inventory low, Baker said, NewAge increased inventory 5 to 10 percent so it would have product ready to ship when customers called.

Instead of laying off workers or freezing salaries during the slowest times in 2008, when orders for NewAge's non-pharmaceutical line of tubing went down 20 percent, Baker said the company took the opportunity to cross-train employees "so they have better utility."

Currently, its pharmaceutical line, which trades under the name AdvantaPure, is NewAge's primary growth driver. Baker attributed that to being "lucky getting into the pharmaceutical processing market when we did, when single-use disposable technology was taking off."

That technology involves the use of throwaway plastic bags similar to intravenous bags, which NewAge makes.

Where Baker has not been so prescient has been in the field he has only recently gotten to know: solar power.

He didn't see coming the price collapse for Pennsylvania solar-energy credits (SRECs), which utilities can buy to satisfy alternative-energy use requirements rather than producing such power themselves.

Alex Sarly, senior project developer for Borrego Solar Systems Inc., installers of NewAge's new ray-catching rooftop network, said he was caught off guard, too. He attributed plummeting SREC values to state and federal grant and tax-credit programs that encouraged the construction of solar systems. The result has been a solar-energy supply in Pennsylvania that is twice the current demand, Sarly said.

A legislative fix has been proposed in Harrisburg that would increase the amount of solar energy that utilities must buy through 2015, a measure likely to encounter opposition.

Meanwhile, SRECs that NewAge recently sold went for $125, down from the $280 Baker said Borrego representatives had told him to expect when he was planning his solar system. That means NewAge's $2 million investment will likely take 61/2 years to recoup, rather than the four years originally anticipated, Baker said.

That change did not have him rattled as he talked about it inside NewAge's plant last week.

Outside, crews were installing $150,000 in energy-efficient windows.