Strategic growth, cuts help Veyance through the storm

ERJ staff report (R&PN)

FAIRLAWN, Ohio-A two-year string of expansions and acquisitions have proved to be cornerstones for Veyance Technologies Inc., bolstering virtually every business segment, despite the economic tempest that raged in 2009.

That doesn't mean the diverse rubber goods manufacturer didn't go through its own difficult trials last year, nor does it suggest it will sit back and relax as 2010 unfolds. President and CEO Tim Toppen said a soft market and increasing raw material costs affected Veyance just as it did other manufacturers.

“While we never forfeited our customer-first attitude, our associates and management had to make some sacrifices to ensure we could weather the economic storm,” he said. “We made tough calls early on and learned to increase our operating flexibility, which allowed us to react quickly to changes in demand.”

Veyance, which employs about 3,500 in North America and 6,000 globally, downsized its work force and changed some of the ways it ran the company, putting in better processes on the financial side. It also placed greater emphasis on every part of its business with a program called the “Three C's: Customers, cash and cost,” which is aimed at constantly providing enhanced value to customers.

By making those moves, Toppen said, Veyance hit its earnings objective, balanced the company globally and set the stage for growth in 2010.

There's also little doubt that expansions at the firm's North American conveyor belt anchor production facility and technical center in Marysville, Ohio, along with the completion of a new innovations center at its headquarters site, helped Veyance get through the economic turbulence, he said.

In fact, he said, new testing and manufacturing equipment in Marysville provided better quality, delivery and reliability throughout the year.

As the recession grew, the Fairlawn-headquartered firm came up with new technology to set the stage to roll out new products in either late 2009 or 2010. Those innovations cover almost every Veyance segment, including conveyor belts, industrial hose, power trans- mission belts, automotive hose and rubber track.

As an example, Toppen cited the company's industrial hose business, which released nearly 20 new products in the last 18 months. “The mini product blitz gave our distributors something new and exciting to talk about as well as providing end users with valuable, often cost-saving solutions,” he said.

Expanding in China

Next on its agenda, Veyance plans to add a large curing press at its joint venture conveyor belt operation, Shandong Aneng Conveyor Belt & Rubber Co. Ltd., in Anong, China.

The addition not only makes the factory stronger and boosts its capacity for the Chinese market, where the company claims it holds the top market position, but expands the facility's reach globally.

The project should be complete within the next few months.

In addition, the manufacturer, which acquired five businesses between August 2007 and September 2008, remains in the hunt for acquisitions that fit with its overall plan for growth, according to Toppen.

Looking ahead, the executive said the North American mining industry is expected to experience slight growth during 2010 while other markets around the globe show significant promise. Coal exports are expected to increase even though domestic demand is down, he said.

Because forecasters say other regions outside of North America will be robust, “our conveyor belt joint venture in China will continue to grow at a double-digit pace,” he said, adding that other regions-including Australia, India, Latin America, Europe and South Africa-are projected to provide positive contributions.

“Domestic manufacturing is critical in those growing markets and represents a great opportunity for all of our product offerings,” according to Toppen.

While Veyance is concentrating on growth investments in all aspects of its business as it enters 2010, he said it won't abandon its customer, cost and cash commitment.

To make that plan work better for everyone, the firm has introduced a program called Veyance Business System, “which is continuous improvement through the use of lean methodologies in everything we do every day,” he said. Its aim is to constantly improve the services customers receive.

Period of transition

The last two years have been a period of transition for the company, Toppen said, “but we've ultimately grown from it.”

Aside from the Marysville expansion, other significant changes that occurred include partnering with China's largest belt maker to form the joint venture in Aneng, helping Veyance to capitalize on a booming Asian market; the acquisition of specialty fabric and yarn plants to create support for its conveyor belt and hose businesses; and the purchase of conveyor belt service businesses, which give Veyance the ability to manage the entire life cycle of conveyor belts.

The manufacturer also built and opened its Innovation Center in Akron suburb Fairlawn along with upgrades completed at other research facilities globally.

All contributed in one way or another in allowing Veyance to maintain a steady course in 2009, as did the customer, cost and cash program.

“All companies can make money in good times; we learned we can do it in tough times, too,” Toppen said. “The difficult decisions we made to reduce costsàwill help us maintain a better-run business as the economy recovers.”

Another key factor in Veyance's success was that most of its $18 million expansion project was completed before the global downturn in the economy impacted the firm in the fourth quarter of 2008.

“Overall, the Marysville expansion project exceeded our expectations,” he said. “It provided great benefits for 2009 and will be increasingly more valuable moving forward.

“Originally, the expansion and upgrade of the Marysville facility was designed to enhance product quality and improve production efficiencies to meet an increasing demand for conveyor belt products leading up to 2008.”

But he said new equipment also helped¼ in other areas, including reduced waste and production costs, which minimized the impact of a drop in demand because of the economy.

From Rubber & Plastics News (A Crain publication)