In the late 1990s, even as many U.S. roll good producers ignored a growing threat hovering over them like a storm cloud, the strengthening demand of many nonwovens technologies/markets easily grew their sales. A combination of high volumes and easy profits created a false sense of security and—for some producers—the illusion that existing technologies would sate customer demand in coming years. A casualty of this phenomenon was research and development investments vital in keeping the nonwovens industry fresh and open to new markets.
R&D is the driving force that helps roll goods producers remain innovative, competitive and, ultimately, profitable—the goal of anyone in the business. In nonwovens, R&D has seen a downturn for years, a trend that has spanned from raw materials to finished goods. Most importantly, said industry experts, R&D budgets were slashed because many roll goods producers fell into a state of complacency as they ignored threats posed by foreign markets such as Asia. When those threats arose, domestic producers were unable to respond quickly and were ill prepared to meet the lower prices offered by these emerging markets. Gradually, production was outsourced to cheaper production facilities across the globe in places such as Asia and Mexico.
The past year has seen a movement away from off-the-shelf technology by roll goods producers, with efforts accelerating in the past several months. Companies that have wisely and continuously invested in their R&D capabilities are leading this trend, and those that have not must adapt or be left out in the cold.
“The only way to succeed in this industry, or any industry in the U.S., is to innovate,” said Konstantin Goranov, the newly appointed director of fiber research at Foss Manufacturing, Hampton, NH. “For the past 10 years, companies have somehow forgotten that was the key to their success. Therefore, I think R&D is the driving force in this industry for the next century.”
Ahead Or Behind?
In the current nonwovens landscape, there is an increased reliance on internally developed innovations. This trend is driven by the need for specialized, unique properties in almost all segments of nonwovens. Companies that have preserved their R&D capabilities in the face of economic pressure have been able to take new technology to market more quickly and efficiently and meet the needs of increasing customer demand. This shift is critical, as many roll goods producers now realize that R&D lags have left them unable to respond to market changes. Budgets were slashed, resources eliminated and many well-educated workers let go. “No one was looking into new materials or technologies, no one was there to make it happen,” said Dr. Garanov. At Foss, researching and innovating specialty synthetic fibers and nonwoven fabrics has always been the company’s top priority.”
In his first 45 days, Dr. Goranov said he has come to recognize his company’s focus on making R&D its main strategy. “The market has become much more demanding as customers demand more,” he said. “Everyone is trying to provide specialized, unique products and still remain cost effective.”
Innovation is difficult to achieve when mid-sized companies, or large corporations, for that matter, have no resources to tap for the development of new products. “There is a glut of commodity-type products,” said Dr. Goranov. “The challenge is for companies to regain the intellectual potential and focus it into very specific new products and materials.”
One company known for this is industry supplier Clopay Plastic Products Company, which plans to carry on a long legacy of innovation by reinvesting heavily in R&D. A producer of specialty films and extrusion coated and laminated fabrics, Clopay does not supply commodity or generic-grade materials. The company works intimately with its customers to develop products that meet their specific performance and development needs. “We strategically cannot get away from reinvesting in R&D,” said Rick Jezzi, vice president of global technology at Clopay.
“We find that a lot of suppliers of nonwovens and films in the past few years have had to decrease and cut back their R&D expenditures.”
Executives recognize that much of Clopay’s customer base has experienced phenomenal cost pressures and, as a result of these pressures, have reduced some of their own internal development capabilities, most notably in the materials they use. They now look to Clopay, as a material supplier, to bear the brunt of R&D and material development. “Part of any company’s goal is to give added value in the performance of a material while maintaining cost at an acceptable level,” said Mr. Jezzi. “Everything we do has to follow that.”
Clopay recently opened a new technical center at its corporate headquarters in Mason, OH. The state-of-the-art, meter-wide pilot line duplicates commercial processes, and its modularity and flexibility allow Clopay to work intimately with customers to develop products to their specifications.
The facility includes a fully equipped testing laboratory and a research center staffed by experienced technicians and scientists. Pilot-run results can be quickly evaluated, and new formulations are developed right on site. As a result, development time is significantly reduced, and products get to market faster.
Executives at Clopay said one corporate growth initiative is to be the leader in innovation with 25% of sales generated from products that are less than three years old. This aggressive approach is backed with pilot facilities that mimic commercial plants to move ideas quickly from development to commercialization.
“That’s important for our customers to rely on because it shortens the development cycle with regard to implementation,” said Mr. Jezzi. “That’s what uniquely differentiates us from the rest of our competition.”
Evidence of a widening gap between industry innovators and straight commodity producers can be found in new product development. Executives at Polymer Group, Inc., N. Charleston, SC, said their commitment to R&D has already resulted in a number of new product announcements this year, each driven by its customer’s needs. At the IDEA ’04 show in April, PGI announced a number of new offerings that included imaged wiping products, an expansion of its Comfort line of products with ComfortLace for the hygiene market, PGI’s MediSoft medical fabric, filtration media and a series of flame-retardant fabrics for the home furnishings sector. Company executives said they would continue to work with some of the best companies in the world to bring innovative materials to the market. “We are focusing on both internally developed innovation and joint development programs with strategic partners,” said Dennis Norman, PGI’s vice president of strategic planning and communications. “We want to be able to provide customers with the best value proposition available whether that is through our own efforts or by partnering with them or others to make that offering.”
A Working Model
One company that has taken a multi-faceted approach to R&D is Ahlstrom, which has tightly integrated R&D with manufacturing. Ahlstrom’s businesses and manufacturing sites have their own dedicated teams which are both supported by a corporate research center. Company executives feel that this organizational model demonstrates a clear commitment to making R&D an integral part of the way Ahlstrom does business. Furthermore, it ensures that Ahlstrom combines its knowledge in material science, manufacturing processes and customer applications to deliver innovation.
“Ahlstrom approaches R&D in essentially two different ways,” said Larry Kinn, Ahlstrom’s director of technical nonwoven products for the Americas. “First, market-driven innovation ensures that the company delivers what our customers need. On the other hand, technology-driven innovation allows us to be more pro-active in expanding our product and process envelopes in order to anticipate future market needs.”
“This has been a major strength of Ahlstrom in the past and will continue to remain a driver for our innovation strategy in the future,” said Mr. Kinn.
Success with this plan has been proven through the introduction of recent products in filtration (clean diesel filters), wipes (flushable and abrasive wipes) and medical (breathable viral barrier) markets. Company executives said one unique driver for R&D is the company’s commitment to develop environmental solutions. Products such as biodegradable webs and waste treatment filtration were recently added to its platform.
Ahlstrom is also implementing an aggressive growth agenda, which will be supported by R&D activities. This strategy calls for both organic and external growth. Recent key investments have helped the company expand its capabilities in nonwovens, both in core wetlaid processes and others such as composites, spunlaid and fine-fiber technology. These investments are rooted in Ahlstrom’s belief that nonwovens companies must rely heavily on their ability to constantly adapt to market needs and therefore invest significantly in R&D.
A roll goods producer that lacks the internal capabilities to conduct R&D has alternatives. Facilities such as The Nonwovens Cooperative Research Center (NCRC) partners lab at North Carolina State University and the Textiles and Nonwovens Development Center (TANDEC) at the University of Tennessee offer state-of-the-art facilities at which collaborative studies on nonwovens materials and processing can be conducted.
Utilizing substantial expertise in nonwovens and textiles, both agencies offer a series of pilot and testing facilities for manufacturing various types of nonwovens. Each will customize research programs to meet specific client needs. Planning for the $12 million NCRC lab began five years ago and was led by Subbash Batra, the facility’s founder, and its director, Dr. Behnam Pourdeyhimi. NCRC has an annual budget of $1 million that Dr. Pourdeyhimi uses to fund research projects selected by a member board. Meanwhile, TANDEC, at the University of Tennessee, is partnering with ExxonMobil and Reifenhäeuser for a more centralized research focus. TANDEC offers unique capabilities in fundamental science, process improvement and applications development.
For those who are strategically committed to innovation, R&D is justified as an investment in the company’s future and measured like other investments for proper return. Those who invest in R&D see the cost a critical component in achieving its goal of maintaining a leadership position in the industry, yet others either fail to recognize this advantage or simply do not take steps in that direction. Industry experts said there are a lot of cases in which companies are buckling to price pressures and reducing their R&D budgets.
“We’re fortunate that we have experienced a growth trend in our business. We certainly have seen double-digit annual growth for the last 10-plus years,” said Clopay’s Mr. Jezzi. “The fact that we can grow our top line allows us to continue to invest in our R&D efforts at a certain percentage level. In absolute dollars, those dollars keep going up and we continue to hire new people and invest in new pilot equipment.”
At Foss, Dr. Goranov is a bit more cautious when discussing the benefits of R&D. “Costs and development? It is a little too early to tell. This is definitely an exciting time. R&D in 2004 is vastly different from R&D in the 90s,” he said. “The dynamics are vastly different. In the 90s, there was still an upstream flow, demand was continually increasing and there was not much competition out there for U.S. manufacturers.”
Quickly To Market
Investing time and money on innovation can damage cost effectiveness when ideas or products do not make it quickly to market. Industry innovators understand that there isn’t always time to develop technology. That’s how fast the market wants to be satisfied. Patenting is an extremely expensive process, costing upwards of hundreds of thousands of dollars. Ideally, technology that is paper patented does nothing but stroke some individual egos,” said Clopay’s Mr. Jezzi. “Our object is to patent (technology) that is ready to commercialize…(You) must be serious about how you want to use it.”
However, as some experts point out, as roll goods producers tap foreign markets, simply patenting a technology will not protect it globally.
As an industry, fewer participants are focused on innovation, mainly as a result of cost pressures, but some are willing to continue to expand their efforts. Slowly, more roll goods producers have become committed to providing innovative solutions to their customers based on their specific needs. An emphasis to bringing innovative solutions to customers is paramount. “The trick is people want customized, exclusive materials that are commodity priced,” said Mr. Jezzi. However, to stay ahead of the curve, chasing a trend is simply not enough. Innovation should not be merely a practice but a philosophy.
“The rules of the game have changed a lot,” said Foss’s Dr. Garanov. “R&D has to learn a business language, and we must be extremely conscious of the dynamics of the market today.”