As the economy strengthened and stabilized in recent years, the business of building homes roared back to life. Between 2012 and 2016, the total number of housing starts in the U.S. leapt 50 percent, to nearly 1.2 million, according to data from the National Association of Home Builders. Single-family home starts were up 46 percent over the same period.

Every home in America needs water. Plumbing needs pipes. And one company has a lock on about one-third of the market for plastic pipes in those homes: Apple Valley-based Uponor North America.

The company makes flexible plastic tubing called PEX that is used in plumbing, fire sprinkler, and radiant heating piping systems in residential and commercial buildings. Copper used to be the standard for plumbing in buildings. But today PEX is cheaper, more flexible (it often comes in rolls) and easier to install. And Uponor’s type of PEX, PEX-A, is considered the best available. Uponor sells about one-third of all PEX sold in North America.

While dozens of companies manufacture versions of PEX, “Uponor is probably the industry standard when it comes to PEX,” says Steve Hucovski, founder and owner of Plymouth-based Sabre Plumbing, Heating & Air Conditioning. He finds Uponor’s product to be smoother to work with and more reliable: “It’s very easy to use, it’s very flexible, it takes a lot to kink it … we don’t have a lot of leaks.”

“When I first started plumbing, everything was copper,” Hucovski says. His company typically does work on more than 1,200 new single-family homes in a year, and today PEX is prevalent in all of them. “I would say there’s less than 5 feet of copper in a new home; it’s all PEX.”

As the popularity of copper wanes, sales of PEX are accelerating. Uponor North America also is growing at a rapid clip.

“We do business with six out of the top 10 home builders on an exclusive or semi-exclusive basis,” says Bill Gray, president of Uponor North America. “There’s a huge demand for starter homes. There’s a huge demand for multifamily. There’s a huge demand for commercial construction. There’s a lot of deferred demand out there.” That is, amongst professionals. The average Home Depot or Menards customer likely doesn’t know the Uponor name: The company’s products are not available to retail DIY market.

Uponor’s North American revenue in 2016 topped $337 million, up 10.7 percent from the previous year. Employee count is now about 875 in the U.S. and Canada, with more than 600 in Apple Valley and more than 150 at a distribution facility in Lakeville. That’s double its North American headcount in 2012. The company also continues to invest in Minnesota: Since it opened in 1990, it has expanded its Apple Valley operations 10 times, including an $18 million expansion in 2016 and, most recently, a $17.4 million expansion completed in early 2018. Combined with its distribution center and resin-receiving facility in Lakeville, Uponor now has a Twin Cities footprint of about 738,000 square feet. And it has plans to open a second manufacturing facility in Hutchinson.

Uponor’s current growth in North America was kick-started in 2012 for two reasons: the strong rebound in the residential home-building market and the company’s expansion into the new territory of multifamily and commercial projects. The company’s North American sales climbed more than 72 percent from 2012 to 2016.

While Minnesota serves as the company’s North American headquarters, the parent Uponor Corp. is based in Vantaa, Finland, several time zones away from Apple Valley. (The name Uponor—pronounced “OOH-ponn-orr”—does not have any specific meaning in Finnish.) Its operations in Minnesota are extremely important, as it derives 32.4 percent of its total revenue from the U.S. and Canadian markets; the U.S. alone accounts for 25 percent of total revenue.

How exactly did a Finnish manufacturer wind up with such a strong presence in Minnesota? It’s a long, winding story of two intertwined Scandinavian companies.

Finland West

PEX was invented in the 1960s by Thomas Engel, a German national who never finished high school but went on to secure 120 patents for a wide variety of inventions. The original idea had nothing to do with home heating and cooling systems. There was a chicken farm in his neighborhood and Engel was asked about creating piping that could be laid in the ground to deliver heated water; the added heat would theoretically prompt the chickens to lay more eggs. This led to Engel’s invention of cross-linked polyethylene, otherwise known simply as PEX, in 1968.

Uponor does not have a monopoly on PEX. Dozens of companies make the product and there are three different types of PEX, referred to as A, B and C; the letters are not quality grades, but refer to three different manufacturing methods. Uponor makes PEX-A, which is considered to be the most flexible and durable type of PEX. It’s also more expensive than the B or C varieties.

A Swedish company, Wirsbo, became the first company to start selling PEX commercially in Europe in 1972. Uponor acquired Wirsbo in 1988.

Wirsbo’s history stretched back centuries. It started in Sweden in 1620, forging steel and weapons for the king of Sweden. Uponor was part of the larger, furniture-focused Asko Group, which began in Finland in 1918 as a carpentry workshop. When Finland-based oil company Neste Corp. became the majority Uponor stockholder in 1990, it divested everything except the plastic pipe business.

Wirsbo was selling PEX in Europe, but back in the 1980s it had opened U.S. operations in Rockford, Ill., essentially importing product from Europe. The Swedish company relocated north to Lakeville in 1988. While that move predated Uponor, Gray says the deep Scandinavian heritage of the Twin Cities resonated with Wirsbo. After acquiring Wirsbo in 1988, Uponor opened the doors of a brand-new 51,800-square-foot manufacturing facility in Apple Valley in 1990, effectively Uponor’s launch in Minnesota.

The company has seen different waves of growth, riding the ups and downs of the construction market. The company got its start with PEX used for radiant heating for floors and wall panels. But by 2003, PEX for plumbing had become half of the company’s North American business.

The housing boom of 2002 to 2005 helped spur growth. “We kind of rode that wave,” says Gray.

In the 1990s, the company had an early industry advantage because of its proprietary PEX installation expander tool, which made working with the product very easy. But those patents have expired; part of the company’s sales pitch now is strong support for customers. Uponor provides training, design, application and on-site consulting for contractors who use its PEX.

The housing comeback has been good news for the company, but commercial business lines are now nearly as important. Today the residential business is about 60 percent of its sales, with 40 percent coming from commercial.

Gov. Mark Dayton was on hand in May 2016 for a ribbon-cutting marking the opening of Uponor’s 90,000-square-foot expansion to its Apple Valley campus. And little more than a year later in June 2017, the company broke ground on a 58,000-square-foot addition to the previous expansion.

In connection with its Apple Valley expansions, the state of Minnesota’s Department of Employment and Economic Development has provided $1.74 million in grants and forgivable loans from its Job Creation Fund and its Minnesota Investment Fund. The state subsidies have been driven by job creation. As part of a $400,000 forgivable loan in 2017, the company committed to creating 66 new jobs; the company pledged to create 82 jobs in connection with a forgivable loan in 2016.

Uponor is the largest manufacturing operation in Apple Valley, according to Bruce Nordquist, the city’s community development director. But at this point, he says the company doesn’t have room to further expand its existing campus there. “They’re fully utilizing the land that’s available,” says Nordquist.

Uponor North America manufactures its PEX piping (above) in Minnesota. Compared with copper, PEX is flexible and comes in large spools (bottom).

Planting a flag in Hutchinson

Manufacturing is often cast as a dying sector in the U.S., but Minnesota retains a healthy manufacturing economy. Statistics from DEED indicate that Minnesota’s manufacturing industry accounted for $48.2 billion in 2016, representing 16 percent of the state’s gross domestic product. DEED statistics for December 2017 found 320,513 manufacturing jobs in Minnesota, 10.8 percent of the state’s 2.96 million nonfarm jobs. DEED data indicates that manufacturing jobs in Minnesota grew 9 percent between 2010 and 2016.

Uponor continues to add manufacturing jobs with yet another planned expansion. In February 2017, four Uponor executives traveled to meet with Miles Seppelt, economic development director for the Hutchinson Economic Development Authority and a representative of Ridgewater College, a technical school and community college with a location in Hutchinson.

“Their first question was ‘What are we doing for skilled workforce development?’ ” recalls Seppelt. The area has a $1.35 million skilled workforce development program, with backing from the Southwest Initiative Foundation, connecting the college and employers.

The Hutchinson EDA bills the central Minnesota town as “Minnesota’s Manufacturing City.” Seppelt says that 36 percent of Hutchinson’s workers are employed in manufacturing; the city is home to about two dozen high-tech, precision manufacturing companies. That’s anchored by a large 3M operation, which started not long after World War II and still ranks as one of the company’s largest production facilities in the United States, according to a representative of the Maplewood-based conglomerate.

Hutchinson Technology Inc., which started in the mid-1960s, was a big name in the central Minnesota community. The publicly traded firm had a global business but was a big employer in Hutchinson. But HTI, which ultimately specialized in producing suspension assemblies for disc drives, was sold to Japanese electronics giant TDK Corp. for $126 million in 2015. The company’s last annual filing as an independent company showed revenue of $252.8 million with about 2,400 employees in the U.S. and Thailand.

Hutchinson Technology’s smaller presence has helped create an opening for Uponor. In August, Uponor spent $6.35 million to acquire a former Hutchinson Technology facility, with plans to overhaul the 237,000-square-foot building to make more PEX. The company expects the property, about 70 miles west of Apple Valley, to be in commission by early 2019.

Seppelt says the strong existing manufacturing base combined with the workforce initiative were big selling points for Uponor. He also says that the company has outlined plans for 100 new jobs over the first 24 months of the plant’s operation; Gray says Uponor has not publicly disclosed any precise estimate yet.

“Hutchinson is about capacity and future options,” says Gray.

More than just homes

Uponor’s PEX business began with a strong focus on piping used for in-floor radiant heating systems in single-family homes. But Gray says that in 2012, the company decided to focus on the commercial market as an avenue for growth.

The company’s most recent annual report notes, “Plumbing, particularly for non-residential construction, has continued to be the primary driver of our growth in the North American market.”

Uponor is a player, for example, in the world of turf conditioning systems for stadiums and other facilities. The Minnesota Vikings are building a new practice facility in Eagan, and Uponor is in the game. The radiant heating turf conditioning system, meant to keep the outside practice field free of snow and frost, includes PEX tubing. Uponor’s snow-melt system is also in place at U.S. Bank Stadium in downtown Minneapolis.

Uponor does not install the systems, but typically works in conjunction with a project’s mechanical contractor on specifications and design.

Uponor’s products have been deployed in commercial snow- and ice-melting systems since the 1980s, says Joe Grubesic, Midwest director of sales. The company’s PEX was used in a turf conditioning system at Lambeau Field in Green Bay, Wis., in 1997, the first such system in the NFL. A similar system was added to Soldier Field in Chicago as part of a major overhaul completed in 2003. Uponor was the first company to use PEX for such systems.

Uponor has also started to invest in other companies to expand its business, including in New Brighton-based Upstream Technologies Inc. starting in 2014. Upstream is a “clean tech” company whose products include the stainless steel SAFL Baffle, designed to keep sediment out of storm water. Benefits of the baffle include improving downstream water quality. A December report from the Minnesota Department of Transportation estimated that using the baffles in state systems could save $8.5 million over a three-year period. Uponor has invested twice in the company and holds a minority stake.

U.S. Is Top Market
for Finland’s Uponor

Parent company Uponor Corp. is based in Finland, but Uponor North America is based in Apple Valley, with plans to expand manufacturing to Hutchinson. The company’s North American sales have been posting double-digit sales gains.

The investment “aligns with the Uponor vision of environmental sustainability,” says Carl Moe, a business analyst with Uponor Innovations, the investment subsidiary of Uponor North America. “At this point we’re pleased to see the growth of the [Upstream] business. There’s an alignment in the business profiles.”

In 2016, Uponor teamed up with California-based technology accessory company Belkin International to create a new Los Angeles-based joint venture project called Phyn. Uponor invested $15 million for a 37.5 percent stake. In January the joint venture rolled out its first product, Phyn Plus, a “smart water” device that tracks abnormal water usage and alerts homeowners through an app.

PEX has not yet replaced copper everywhere. PEX diameters are not large enough to be used for larger pipe systems that are part of bigger commercial projects. Another issue is the historical reputation of copper as a stable, long-standing plumbing staple, says Brant Dillon, director of MEP (Mechanical, Electrical and Plumbing) and energy performance for Golden Valley-based Mortenson, one of Minnesota’s largest construction firms.

“Copper still has the longevity factor; it’s pretty rock-solid,” says Dillon. “PEX just doesn’t have that track record. I think that’s probably the biggest hurdle.”

Some industry headlines have also raised eyebrows for potential customers. In 2015, Uponor, along with several builders, plumbers and distributors, paid $18 million to settle two class-action suits about failure risks in brass fittings on its products. Some consumers charged that they were seeing low water pressure and fittings failure within months of installation. Uponor had already stopped using the disputed fittings in 2009.

While perceptions of PEX are changing, Dillon says he gets the biggest pushback from customers like hospitals and larger collegiate institutions.

“They want to know that that product is something that they’re not going to have to replace in 25 years,” says Dillon. Dillon says that many large commercial projects remain hybrids. In a hotel, for example, the rooms have PEX, but the risers­­—pipes connecting higher units to the water supply—up to the room are copper.

Uponor’s Grubesic says the company continues to look to tap new lines of business for its plastic pipes.

“We’re certainly looking at a multitude of applications that we could pursue,” says Grubesic. “If you’re running water through it, you can utilize Uponor.”

Burl Gilyard is TCB’s senior writer.