Microporous has scheduled groundbreaking for a major plant expansion at its Piney Flats, Tenn., facility June 13. The company plans to invest $20 million in a capital project to triple the facility’s output of polyethylene battery separators.
“This $20 million will be the biggest investment we have made as a business since we went stand-alone again in 2013,” said Ed Feaster, CFO. “It’s even bigger than the one we did at Feistritz (the company’s plant in Austria) so it’s a really big deal for us. It’s a big deal for our employees. It’s a big deal for the community. It’s a big deal for our investors.”
The expansion will allow all of the company’s existing product lines to be produced at the Piney Flats plant. In addition, it will allow the plant to begin production of new products. “It’s all wrapped up in a bow,” said Arnie Gillert, director of Sales – North America. “It’s new customers. It’s new products. It’s expansion into different markets.”
The expansion is dictated both by increased demand from existing customers and plans for future growth, said Roger Calloway, plant manager. “We have already started the work. That work actually started months ago before we even had capital approval. We had a plan. We had a vision for the company. We have always had a strategy to grow with our customers and our customers have been growing faster than we can keep up with at our current capacity.
“We got to a point where we have successfully implemented a lot of de-bottlenecking projects in the plant,” Calloway said. “We’ve probably spent more on this plant in the last three years than in the previous 30 years. We’ve gotten to the point where we have de-bottlenecked and made the plant as efficient as we can with the capacity we have and the footprint we have now. So, the next step is to expand.”
The expansion should take about 18 months to complete, with production beginning late in the fourth quarter of 2019, Calloway said. The company plans to completely sell out the increased capacity shortly thereafter. It’s not a far-fetched goal, Gillert said. “We installed a third line in Austria in 2016. Subsequently, a year later product was virtually sold out there. Our track record has been stellar in being able to convert customers and grow with the market.
“We know we have some quick wins in front of us,” Gillert said. “Automotive we’re not really into. EFB (enhanced flooded battery) is a growing market; start-stop vehicles are a big growing market in the U.S., and we want to be ahead of that curve when it really takes off.”
The key to breaking into those new markets is the ability of the expanded plant to produce the company’s Duroforce ULR ultra-low resistance separators. “It’s the lowest resistance separator in the marketplace,” Gillert said. That’s important because the new breed of start-stop vehicles turns the engine off when the vehicle stops at a red light, for instance, but leaves everything else running, thus draining the battery. Lower electrical resistance separators allow the battery to recharge faster and more efficiently.
“Probably the number one requirement from our customers is a separator with almost no resistance,” CEO Jean-Luc Koch said. “Everybody’s fighting to minimize electrical resistance.”
“It’s a big market right now in Europe, but it’s slowly transitioning here to the U.S. as they look to continue to grow that space for auto makers,” Gillert said. “So that’s the big driver of this as well, in addition to having capability of just standard SLI (starting, lighting, ignition) or standard automotive which we don’t have right now.”
To date, Microporous has only produced industrial products at Piney Flats. “We are the largest industrial separator producer in the world,” Gillert said. “So, this will give us the ability to produce the automotive side of our business here locally. Ultimately, just out of a single location in Piney Flats, we’ll produce the most diverse range of separators in the world when this expansion is done. We’ll be able to produce all eight of our product lines.”
Koch promised more innovations will come from the Piney Flats facility once the expansion is complete. “(Duroforce ULR) is the first outcome of our new R&D investment. There are some other very interesting products in the pipeline, but this one is now commercially available already.”
Koch and his team have the freedom to reinvest in the company now, he said, because the private equity firm behind them, Seven Mile Partners, has faith and trust in management. “We’re getting close to five years now with Seven Mile,” Koch said. “So, with a private equity firm after five years you always hear, ‘What is the next step?’ Well, the next step is for them to invest $20 million. They are in for the long run. That’s what they said on day one and really, we have been very fortunate having these guys believing in us, believing in management getting results.”
It’s easier for the partners to have that faith because the management and rank-and-file employees at Microporous have a solid record of past performance. “I would have to say we have exceeded all the milestones and all the targets we have been given,” Koch said. “We have invested between $20 million and $25 million over the last four years and different projects altogether. Now it’s really about doubling that.”
It’s also easier when the trust doesn’t just flow from the investors down, Calloway said. Management and the workforce at Piney Flats have spent the last five years proving themselves to each other. “We have made strides in every key performance indicator that we’ve tried. Our first one was safety. We sit here today very proud that in the last two-and-a-half years we have only had one incident.
“Just recently we have decided that continuous improvement is so important that we have promoted someone from within to be a continuous improvement manager,” Calloway continued. “That’s just another opportunity for one of our employees who has shown a lot of aptitude and a lot of desire to do something more than just be a supervisor.
“The people on the floor – the morale out there is at an all-time high,” Calloway said. “We have had our challenges in the last two to three years, but we have met every one of them and come out on top. People see that and they appreciate it.”
