When you’re an Iowa-based environmental products company that has transformed millions of scrap tires into safe tile surfaces for playgrounds that have been proved to significantly reduce children’s injuries while cleaning up the environment, what do you do for an encore?

How about launching a subsidiary that specializes in retrofitting older diesel engines and generators with a clean-burning dual-fuel technology that uses compressed natural gas (CNG)?

GreenMan Technologies Inc., based in Carlisle, appears to be poised for significant growth on both fronts.

GreenMan’s playground equipment subsidiary, GreenTech Products Inc., formerly Welch Products Inc., uses a patented cold curing process to manufacture safety tiles from recycled rubber. The molded rubber products, which have been installed in playgrounds at schools, state parks and other facilities throughout Iowa and five Midwestern and Western states, are manufactured at the company’s plant in Carlisle.

Huge opportunity

GreenMan, which was formed by an investment group in Boston that launched an initial public offering of stock in the mid-1990s, acquired Welch Products in October 2007.

The company purchased its other subsidiary, Algona-based American Power Group Inc. (APG), in July 2009. American Power Group has developed a patented dual-fuel technology that, when installed on a diesel engine or generator, displaces between 40 and 60 percent of the diesel fuel used with CNG.

“(APG) is just a huge opportunity from an environmental standpoint,” said Lyle Jensen, GreenMan’s CEO. “We started production in August 2009, and then we started to see bids pick up in January and February. I think significant commercialization of this (technology) will happen in the fall and in 2011.”

Internationally, APG has installed stationary applications of the product on generators within corporate buildings, hotels, manufacturing facilities and oil drilling rigs, as well as vehicular applications for delivery trucks, city buses and government vehicles in South America, Africa, India and Pakistan.

The system, which is now being evaluated by the U.S. Environmental Protection Agency for use on intermediate-age and older vehicles in the United States, provides average fuel savings of 25 to 35 percent while significantly reducing emissions, the company claims.

“With diesel prices forecasted to increase and the growing worldwide focus on protecting the environment through the reduction of greenhouse gas emissions, we believe APG’s dual fuel technology is the right solution at the right time,” Jensen wrote in a February letter to the company’s shareholders.

Jensen, a Marshalltown native and Simpson College graduate, began his career with Rockwell Collins Inc. in Cedar Rapids. He joined GreenMan’s board of directors in 2002 and returned to Iowa four years ago to lead GreenMan as its CEO. Previously, he was executive vice president and chief operations officer of Auto Life Acquisition Corp., an automotive aftermarket dealer, and has been a consultant and CEO for other technology companies.

GreenMan has 20 employees at its Algona plant and about 17 workers at its Carlisle manufacturing plant. Jensen said he’s hopeful those employment numbers will increase significantly within the next two years as sales increase for both subsidiaries.

Educating potential customers is the key to opening up both markets for expansion, Jensen said.

“We call it environmental education,” he said. “We believe that awareness and education are what really create a market.”

As one aspect of that approach, GreenTech Products connects with school boards and other organizations initially through free playground safety seminars it offers through its marketing arm, National Playground Compliance Group Inc. (NPCG).

“We give information away for free,” said Tim Mahoney, president of GreenTech Products, who said NPCG has working relationships with about 100 of the 370 school districts in Iowa.

“Even if they don’t purchase from us, they’ll probably be building a safer playground,” said Mahoney, a Des Moines native and Iowa State University graduate. In many cases, even if a school district purchases a competitor’s equipment, it will often buy GreenTech Products’ specialized surfaces to place beneath them, he said.

Recycled safety

The company’s DuroMat safety tiles were the focus of a three-year study by the Iowa Legislature to test whether playground safety tiles, made with Welch’s patented manufacturing process, could prevent serious injuries to children when compared with traditional loose-fill surfacing such as wood chips and pea gravel. In a report to the Legislature, the National Program for Playground Safety at the University of Northern Iowa concluded that the combination of Welch-manufactured tiles with supervisory training resulted in a 75 percent reduction in serious injuries.

GreenTech Products also played a significant role in helping Iowa clean up mounds of scrap tires that littered the state. From 1995 to 2008, the company operated a tire recycling plant on East Euclid Avenue in Des Moines that recycled approximately 70 percent of scrap tires annually in the state.

“In the early 1990s, 90 percent of old truck tires were still getting piled up in Iowa,” Jensen said. “We turned that around. And this is not a highly subsidized industry. This is one I truly believe comes at a savings to the taxpayer.”

In 2006, GreenMan received a grant from the Iowa Department of Natural Resources that enabled the company to invest more than $1 million in upgraded technology to produce crumb rubber at its East Euclid Avenue recycling plant.

Two years later, when the nation’s largest tire recycling company, Pittsburgh-based Liberty Tire Recycling, came knocking in Iowa, GreenMan sold the operation rather than trying to compete, Jensen said. The sale agreement assures GreenTech Products continued access to hundreds of thousands of pounds of recycled rubber annually to supply its Carlisle manufacturing plant with raw material, he said.

Shipped to the Carlisle plant in 2,000-pound bags, the crumb rubber resembles dark ground coffee. After it’s combined with colorant and other chemicals, the material is poured into forms that proceed along a conveyer belt, where it’s compressed into its final shape in a 15-minute process.

The Carlisle company, which as Welch Products had been in the pattern and mold-making business more than 50 years, has the capability to create its own molds to develop new products, Mahoney said. “That’s a huge benefit to our customers,” he said.

GreenMan, whose stock is traded on the over-the-counter market (OTCBB:GMTI), recorded net sales of $3.23 million for the fiscal year that ended Sept. 30, 2009, a 7 percent decrease from net sales of $3.45 million in the prior fiscal year. The decrease was primarily due to decreased playground tile and equipment sales because of the economic slowdown, the company said in its fiscal year-end report. However, as a result of operating losses of about $800,000 in each of the past two fiscal years, GreenMan also wrote off all of its goodwill and recorded a non-cash impairment loss of $2.29 million.

“Despite these challenges,” Jensen told investors in March, “we have solidified our existing relationships with municipalities, school board associations and state-based departments of natural resources during the past year and have made progress toward expanding our footprint into new geographic markets.”

The Americans With Disabilities Act (ADA), which celebrates its 20th anniversary this year, has created additional market opportunities for GreenMan.

In June 2009, NPCG received the ADA and Green Innovative Product Award from the Great Plains ADA Center during the National ADA Symposium held in Kansas City, Mo., in recognition of technology that “integrates accessibility into its overall design.”

“That gave us a lot of exposure to the ADA world,” Jensen said. “We believe that’s going to create lots of business opportunities for us.”

Last month, GreenMan announced it had entered into a sales and marketing agreement with Disability Access Consultants Inc., a Las Vegas-based technology company specializing in software that assists clients in complying with provisions of the ADA.

“We’re always looking for opportunities for synergy,” Mahoney said. “Their technology expedites our process. We saw it as a natural fit.”

With the opportunities ahead for both GreenTech Products and American Power Group, Jensen said 2011 and 2012 should be transformational years for his company.

“We really believe in 2011-12 you’ll see GreenMan hit its stride,” he said.