North Star Group, Inc.
19901 Quail Circle
Fairhope AL 36532
701-770-9118
michaelh@nsgia.com
In-House EPS Foam Production: Financial
Analysis
Northstar Group Investment Opportunity
Executive Summary
Structural insulated panels (SIPs) represent the optimal capital-efficient solution for delivering
high-quality, energy-efficient housing at scale. For the Serenity Village development program
targeting 12 projects annually (360 quadruplexes per year), expanded polystyrene (EPS) foam
billets constitute a critical cost component. While the current market relies heavily on imported
EPS billets at retail prices of $0.00167 per cubic inch ($0.24 per board-foot), this analysis
demonstrates the viability of establishing in-house production capacity at $0.00076-$0.00080
per cubic inch ($0.11-$0.115 per board-foot), generating substantial cost advantages and strategic
benefits.
Key Financial Metrics:
● Annual Production Volume: 276,307,200 cubic inches (1,918,800 board-feet)
● Current Market Price: $0.00167 per cubic inch ($0.24 per board-foot)
● Target In-House Production Cost: $0.00076-$0.00080 per cubic inch ($0.11-$0.115 per
board-foot)
● Annual Cost Savings: $247,000-$250,000
● Capital Investment: $125,000-$175,000
● Payback Period: 6-8 months
● 5-Year ROI: 613%-898%
Serenity Village EPS Manufacturing
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● 10-Year IRR: 142%-199%
Market Context and Opportunity
The EPS foam market is experiencing 4-6% annual growth, driven by increasingly stringent
energy codes and the prefabrication trend. In North America, total EPS consumption exceeds
500 million board-feet annually, with SIPs comprising approximately 15-20% of demand.
Current Market Dynamics:
● Imported EPS billets typically arrive at $0.00139-$0.00194 per cubic inch ($0.20-$0.28 per
board-foot) landed cost
● Distributors mark up to $0.00167-$0.00243 per cubic inch ($0.24-$0.35 per board-foot) to
cover inventory and logistics
● Price volatility stems from petrochemical feedstock fluctuations and shipping disruptions
Vertical Integration Opportunity:
● Elimination of shipping costs
● Process yield optimization
● Supply chain security and quality control
● Potential secondary profit center through surplus production
Production Requirements Analysis
Based on detailed analysis of the Serenity Village quadruplex design (22' tall × 30' wide × 50'
long with interior walls, 1,500 sq.ft roof, and two 1,500 sq.ft floors):
Annual Production Requirements:
● Per Quadruplex: 767,520 cubic inches (5,330 board-feet)
● Per Project (30 Quadruplexes): 23,025,600 cubic inches (159,900 board-feet)
● Annual (12 Projects): 276,307,200 cubic inches (1,918,800 board-feet)
● 5-Year Projection: 1,381,536,000 cubic inches (9,594,000 board-feet)
● 10-Year Projection: 2,763,072,000 cubic inches (19,188,000 board-feet)
Comparative Cost Analysis
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© North Star Group, Inc. 2025 All rights reserved.
19901 Quail Circle
Fairhope AL 36532
701-770-9118
michaelh@nsgia.com
Serenity Village EPS Manufacturing
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2
Current Market Scenario:
● Cost per cubic inch: $0.00167
● Cost per board-foot: $0.24
● Annual cost (276.31M cubic inches): $460,512
● 5-year cost: $2,302,560
● 10-year cost: $4,605,120
In-House Production Scenario:
● Cost per cubic inch: $0.00076-$0.00080
● Cost per board-foot: $0.11-$0.115
● Annual cost (276.31M cubic inches): $211,068
● 5-year cost: $1,055,340
● 10-year cost: $2,110,680
Annual Savings:
● Per cubic inch: $0.00090
● Per board-foot: $0.13
● Total annual savings: $249,444
● 5-year savings: $1,247,220
● 10-year savings: $2,494,440
Capital Requirements and Implementation
Production Facility Requirements:
Component
Specification
Approximate Cost
Steam Boiler
15-20 HP (low pressure)
$25K-$35K
Pre-expander
500-750 kg/hr capacity
$40K-$50K
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© North Star Group, Inc. 2025 All rights reserved.
19901 Quail Circle
Fairhope AL 36532
701-770-9118
michaelh@nsgia.com
Serenity Village EPS Manufacturing
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3
Block Mold & Press
4'×8'×24' mold capacity
$20K-$40K
CNC Hot-Wire Cutter
4-axis with 4'×8' table
$30K-$40K
Ancillaries
Piping, traps,
condensate
$10K
Facility Space
5,000 sq.ft (leased)
$30K-$60K/yr
Total CapEx
$125K-$175K
Operating Expenses (Annual):
Expense Category
Annual Cost
Cost per cubic inch
Cost per board-foot
Raw EPS Beads (48,000 lbs)
$48,000
$0.00017
$0.025
Flame-Retardant Additives
$9,600
$0.00003
$0.005
Energy (Natural Gas & Power)
$19,188
$0.00007
$0.010
Labor (2-3 FTE)
$120,000
$0.00043
$0.063
Maintenance & Consumables
$9,594
$0.00003
$0.005
Quality Control & Testing
$15,000
$0.00005
$0.008
Total Annual OpEx
$221,382
$0.00080
$0.115
Implementation Timeline:
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© North Star Group, Inc. 2025 All rights reserved.
19901 Quail Circle
Fairhope AL 36532
701-770-9118
michaelh@nsgia.com
Serenity Village EPS Manufacturing
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4
● Planning & Design: 2 months
● Equipment Procurement: 1-2 months
● Installation & Setup: 1 month
● Testing & Certification: 1 month
● Production Ramp-Up: 1 month
● Full Production: Month 7+
Production Scalability and Logistics
Production Schedule:
● Daily Output (250 work days): 1,105,228 cubic inches (7,675 board-feet)
● Weekly Output: 5,526,144 cubic inches (38,376 board-feet)
● Monthly Output: 23,025,600 cubic inches (159,900 board-feet)
● Per Project Requirement: 23,025,600 cubic inches (159,900 board-feet)
● Production Time Per Project: 2-3 weeks
The facility will require 2-3 full-time workers for daily operations plus one quality control position,
with standard 8-hour shifts being sufficient to meet production demands.
ASTM Certification and Compliance
To ensure marketability and code compliance, the facility will adhere to:
● ASTM C578: Rigid, Cellular Polystyrene Thermal Insulation
● ASTM E72: Standard Test Methods for Strength Tests of Panels
● ASTM E84: Surface Burning Characteristics of Building Materials
Quality Control Process:
● In-house density and dimensional testing for every batch
● Third-party lab testing for full ASTM compliance
● Annual retesting for continued certification
Certification Cost Impact:
● Testing Fees: $5K-$10K per full suite
________________________________________________
© North Star Group, Inc. 2025 All rights reserved.
19901 Quail Circle
Fairhope AL 36532
701-770-9118
michaelh@nsgia.com
Serenity Village EPS Manufacturing
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5
● ASTM Registration: $2K-$5K
● Added per cubic inch: $0.00006 ($0.008-$0.015 per board-foot)
Strategic Advantages Beyond Cost Savings
Supply Chain Security:
● Elimination of import delays (currently 45-75 days)
● Protection from international shipping disruptions
● Just-in-time production alignment with project schedules
Customization & Flexibility:
● Ability to modify production for specific architectural requirements
● Rapid response to design changes
● Potential for specialized high-performance billets
Environmental Benefits:
● 30-40% reduction in embodied carbon from eliminated shipping
● Control over flame retardants and additives
● Potential for incorporating recycled content
Secondary Revenue Stream as Risk Mitigation:
● Even with fewer Serenity Village developments than projected, the EPS production facility
becomes a standalone profitable business unit
● By selling directly to distributors, we capture both manufacturing and distribution margins
● 20% excess capacity would yield approximately 55 million cubic inches annually for sale
● Market rate of $0.00139-$0.00174 per cubic inch ($0.20-$0.25 per board-foot)
● Potential additional revenue: $80,000-$100,000 annually
● Expansion potential: Equipment can run additional shifts to increase production by
50-100% with minimal additional capital investment
● At full secondary market capacity: $150,000-$200,000 annual profit contribution
Hedge Fund Investment Considerations
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© North Star Group, Inc. 2025 All rights reserved.
19901 Quail Circle
Fairhope AL 36532
701-770-9118
michaelh@nsgia.com
Serenity Village EPS Manufacturing
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6
Key Investment Thesis Points:
1. Capital Efficiency: 6-8 month payback period represents exceptional ROI for
manufacturing investment
2. Margin Enhancement: $0.00090 per cubic inch savings directly improves bottom-line
profitability
3. Vertical Integration: Creates defensible competitive advantage in high-growth modular
housing sector
4. Scalability: Production capacity can be expanded linearly with minimal additional capital
5. Market Timing: Rising energy codes will continue driving demand for high-performance
insulation
6. Dual Revenue Model: Primary cost savings plus secondary market revenue creates
multiple value streams
Risk Mitigation Strategies:
● Diversified Business Model: The facility functions as both a cost-saving measure for
Serenity Village AND a standalone profitable business unit
● Market Insulation: Even if housing development slows, EPS foam demand remains strong
across construction sectors
● Pricing Advantage: In-house production at $0.00080/in³ with retail sales at
$0.00139-$0.00174/in³ creates substantial profit cushion
● Distribution Strategy: By becoming our own manufacturer-distributor, we capture multiple
margin points in the value chain
● Phased implementation with initial pilot production
● Diversified bead supplier relationships
● ASTM certification to ensure marketability
● Energy and raw material cost hedging options
Conclusion and Recommendation
Establishing an in-house EPS foam production facility for the Serenity Village program represents
a compelling investment opportunity with exceptional returns. The economics are
overwhelmingly favorable, with a 6-8 month payback period and potential 5-year ROI exceeding
600%.
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© North Star Group, Inc. 2025 All rights reserved.
19901 Quail Circle
Fairhope AL 36532
701-770-9118
michaelh@nsgia.com
Serenity Village EPS Manufacturing
______________________________________________
7
Beyond direct cost savings of approximately $250,000 annually, the strategic advantages of
supply chain security, production flexibility, and quality control provide significant competitive
advantages. The modest capital investment of $125,000-$175,000 creates a sustainable cost
advantage of $0.00090 per cubic inch ($0.13 per board-foot), which directly translates to
improved margins and enhanced competitiveness.
Importantly, the facility serves as a robust hedge against development pace fluctuations. Even if
fewer than 12 Serenity Village projects materialize annually, the production facility transforms
from a cost center into a profit-generating business unit by selling EPS billets to distributors and
capturing both manufacturing and distribution margins. This dual-purpose capability significantly
reduces investment risk while potentially enhancing overall returns through secondary market
participation.
We recommend proceeding with detailed facility planning, equipment procurement, and pilot
production to validate the financial projections presented in this analysis, with particular attention
to establishing distributor relationships as part of the business development strategy.
________________________________________________
© North Star Group, Inc. 2025 All rights reserved.
19901 Quail Circle
Fairhope AL 36532
701-770-9118
michaelh@nsgia.com
