In 1943, Kleen Test Products Corporation was founded in downtown Milwaukee to provide filtration products to Wisconsin’s dairy industry. Since then, the company has grown and greatly expanded its product and service offerings to include contract manufacturing and product development services in a number of product segments, such as wet wipe and dryer sheet manufacturing, die cutting nonwovens, coating and conversion of specialized nonwoven products, liquid filling and bulk blending.

Today, Kleen Test Products Corporation has five locations in Wisconsin and two in Ohio.

Kleen Test is still owned by its founding family. In the early 1980s, Meridian Industries was formed as the parent company for Kleen Test Products as well as several sister companies. Today, Meridian Industries remains privately held and consists of five operating companies—Kleen Test Products Corporation, Aurora Specialty Textiles Group, Majilite Corporation, Kent Elastomer Products and Meridian Specialty Yarn Group. Meridian Industries President, Chairman and CEO Bruce Eben Pindyck has led the company since 1984 and continues to set the tone for the innovative, customer-focused spirit that is embraced by all of the Meridian companies.

Three of the Meridian companies—Kleen Test, Majilite and Aurora—are major players in the nonwovens marketplace with customer and supplier relationships spanning the globe.  

Recently, Nonwovens Industry interviewed several senior leaders at Kleen Test Products, including: William Ahlborn, President, Doug Arnold, Senior Vice President, and Jeff Maxon, Vice President—Technical Services and Product Development, to gather their collective insight into the state of the nonwovens converting industry.

Nonwovens Industry (NWI): What is the biggest change you’ve seen in the converting industry in the past decade?
Kleen Test Products (KTP): The converting industry has experienced a significant evolution over the last 10 years. For example, in the early 2000s, there was a surge in new converters entering the industry, particularly in the wipes space. The expectation was that wipes usage was going to explode and many companies rushed to fill this perceived need. During the last 10 years, however, many of those upstarts have been acquired or exited the wipes segment.  
From the standpoint of product evolution, we have seen a desire from our customers to manufacture and develop more complex products. The product complexity may be in the packaging, the nonwoven or the solution. This added complexity is intended to create a product that is higher performing, addresses a targeted need, and, most of all, gives our customers differentiation on the shelf.

NWI: What are some of the major changes Kleen Test has made to its converting operation in terms of new investments or new technologies? What is driving your changes?
KTP: We have made two significant investments in recent years to strengthen our product development capabilities. The first was the construction of a dedicated formulation lab. This lab is staffed with experienced chemists, who develop formulations for the wipes and liquid filling segments of our business. The second product development investment was the creation of our Nonwovens Innovation Center. This center houses a variety of coating and converting equipment from pilot scale to full production. This location has been the launch point for a number of unique nonwovens products, including two that have been the recipient of Edison Awards.

Within the manufacturing environment, our investments have added new packaging and converting capabilities and expanded our blending and filling capabilities for complex solutions such as bleach, peroxide and alcohol. We have also become more automated to keep our prices competitive.

It is also worth noting that Kleen Test is part of the Meridian Industries family of companies. Two of our sister companies, Majilite Corporation and Aurora Specialty Textiles Group, are both highly regarded for their nonwovens coating, laminating and converting expertise. Majilite and Aurora continue to invest to expand their capabilities and operate on the technological leading edge. Where possible, our three companies work together to leverage one another’s expertise and manufacturing capabilities.

NWI: How has consolidation among both nonwovens producers and customers in the wipes market changed your business?
KTP: The consolidation of nonwovens producers has not had a major impact on our business. These producers have generally done a good job of managing merger integrations in a way that is not disruptive to the supply chain. With respect to the consolidation of customers, we are impacted most when a brand shifts from a company that outsources manufacturing to a company that self-manufactures. In those cases, the customer may bring outsourced products in-house. Since many brand owners have outsourced the manufacturing of their nonwovens products, that fortunately does not happen very often.

NWI: How has this trend impacted pricing?
KTP: Changes in raw material costs and overall inflation seem to have a more significant impact on product prices than M&A activity by nonwovens suppliers.

NWI: Do you think we will see more consolidation among converters as a byproduct of the nonwovens consolidation?
KTP: We do not believe those two situations are connected. We expect that the consolidation of nonwovens converters will continue but at a slower rate than has been experienced over the last decade.

NWI: Have you had issues with sourcing nonwovens domestically? What other issues are impacting sourcing?
KTP: We source our nonwoven substrates from a variety of providers. While these companies are located all over the world, the majority of our product volume is purchased from U.S. suppliers. For the most part, it is possible to get the majority of the substrates we use from domestic suppliers. However, sometimes the domestic source comes at a higher delivered cost. Our biggest issue with nonwovens sourcing, both domestic and international, is with supply and demand imbalances that result in shortages of certain grades of material. This is more apparent during world events when demand is high (e.g. the flu crisis), but it also occurs at times when there is no apparent driving force in the market.

NWI: How have converters dealt with the movement of many industries customers and suppliers to China and other offshore areas?
KTP: Ten years ago, there was a big concern about production moving to China. That has not been an issue in our business. Most wipes products that are commonly regarded as having “good” to “premium” quality are produced in the U.S. The strong quality and customer service that U.S. manufacturers deliver, coupled with shorter lead times, far outweighs any cost savings associated with moving a product to China. We have a strong Lean Manufacturing program, which helps us remain very competitive in the global marketplace.

NWI: What are some of the other main challenges facing converters?
KTP: Nonwovens converting is a tough business. Margins are tight, capital costs are high and expectations from customers are ever increasing, but these are the same challenges facing all U.S. manufacturers. Additionally, products that were once considered specialized are now seen as a commodity good, which means that the prices for them are falling, not increasing, while the costs to produce those products are still increasing.
We also continue to see customer requests to lower order quantities and extend payment terms. At the same time, nonwovens suppliers have long lead times, want to ship in truckload quantities and be paid in 30 days. This is forcing converters to be the inventory buffer and working capital provider with no added compensation for the change.  

NWI: What do you see as the biggest challenge your customers have when trying to develop a new product and bring it to market?
KTP: The complexity of nonwovens products is often misunderstood. We have both liquid filling and nonwovens converting segments in our business. Based on our years of experience in developing both types of products, it is much more difficult to create a wipe version of a product than a liquid version. The interaction of the nonwoven substrate, solution and packaging creates development challenges with wipes that are not present with traditional liquid products.
Our customers turn to us when they have difficult challenges that they can’t solve in house. Helping customers overcome these challenges is the fun part of our jobs. The challenges take many forms such as a need for speed to market, a search for a special purpose formula, desire for a novel product construction, or unique packaging needs to serve a certain purpose. Our two Edison award winning products are examples of how we partnered with our customers to develop highly innovative nonwovens products.

NWI: Is there still room for innovation in nonwovens?
KTP: Yes, there is still more room for innovation. There will always be new nonwoven substrates, new ingredients for wipes solutions, changing regulatory requirements and evolving customer needs. Companies that stay abreast of those changes and react quickly to them will be able to operate at the forefront of the industry. That’s where we expect to continue to play.

NWI: How has Kleen Test been able to grow yearly despite supply issues, slower market growth recession and other economic challenges?
KTP: Kleen Test has been able to grow due to continued investment in people and technology and a constant focus on our core values.
We pride ourselves on providing superior customer service which has led to strong partnerships with our customers. Our tagline is “Your Brands, In Trusted Hands.” Our team knows that we have to work hard every day to earn that trust.

NWI: What is new in Kleen Test’s wet wipes business? What are some of the biggest trends impacting this business today?
KTP: There is a strong demand for new packaging formats for wipes, especially in personal care. The current package designs have remained largely unchanged for years. Many products look alike on the shelf. Customers are also looking for converting companies to provide ready-to-go options for them in order to launch products quicker and easier. Our formulation lab has a line of products that are available for customers on a significantly reduced lead time.  
E-commerce is another major trend.  We are working with several customers to develop packaging that is both manufacturing and e-commerce friendly. This will be a large part of our business in the years ahead. We know that our manufacturing processes and overall business model will need to evolve to adapt to the changing retail landscape.

NWI: Tell us about what is going on in your customer converting operation? Do you continue to see innovative new ideas from your partners?
KTP: Yes, we continue to see innovative new concepts from our partners. We call our strategy in this area “Connect to Grow.”  Kleen Test Products has developed a strong reputation for being the company that brings together those who have unique technologies with those who have a use for the technology.
For example, a small company with a unique chemistry that could benefit a wide variety of consumer products can connect with Kleen Test. We will use that technology to develop samples to present the technology to our customers.  It is an approach that benefits the technology owners, our customers and Kleen Test —a win all around.