Business & Real Estate

Sacramento building materials firm plans China expansion

A Sacramento manufacturer of building materials is expecting to boost sales by more than $100 million over the next few years as a result of a joint venture with a Hong Kong company.

Composite Technology International, which has its headquarters here but does its manufacturing in China, said it is partnering in the venture with Merry Garden Holdings to jointly produce molding, door jambs and other products for the U.S. market.

Both companies are in the building products business but decided they could benefit by combining forces in the new joint venture company, which has yet to be named, said Rich Brooks, CTI’s chief financial officer.

“We both need to be more competitive in world markets, and we need to work together to do that,” he said.

Brooks said CTI brings research, marketing and manufacturing experience to the deal, while Merry Garden adds its own manufacturing prowess as well as access to capital as a publicly traded company on the Hong Kong Stock Exchange.

The goal of the venture will be to increase sales to U.S. distributors of building materials, including current CTI clients Masonite and Jeld-Wen.

CTI, which uses 22 different milling sites in China, will be able to add to that total, acquire more warehouse space and meet orders more quickly under the arrangement, Brooks said.

The new venture anticipates sales of $141 million over the next three years – a figure that Brooks called “a nice bump” for his company.

“It wouldn’t double our sales, but it’s a significant jump in our revenues,” said Brooks, who is one of about 10 employees in the firm’s U.S. headquarters in midtown Sacramento.

CTI was founded in 2004 by Griff Reid, whose family started a logging business in the 1890s. Its products are made from a mixture of recycled timber and sustainable woods like bamboo and are sealed with a patented protective coating, said Mark Peterson, a partner at the Diepenbrock Elkin LLC law firm in Sacramento who handled the legal work in connection with the joint venture.

He said CTI is a major player in the building products business but is not well-known because it sells parts that get put into finished products bearing other company’s names.

“But if you go to Home Depot and buy a door from Jeld-Wen,” he said, “it’s likely some of their products are in it.”