Thornton Cleveleys, England--What do a product developed in 1978 and a company formed in 1993 have in common? A very profitable relationship!
The company: Victrex Plc. The product: PEEKTM (an aromatic polyketone thermoplastic polymer). The profitability: more than £31 million (U.S.$50 million) in sales last year alone, which continues a skyrocketing revenue growth of more than 20% over the last three years. Even more impressive, profit before taxes was up 35% last year, with earnings per share up 38%.
Historically, Victrex was the trade name for a broad family of high-performance thermoplastics produced by the UK's sprawling ICI chemical operations. Key members of the management team at ICI, including Victrex CEO David Hummel, bought the Victrex and PEEK trade names and formed a new, independent company in 1993. The new owners dedicated their company exclusively to the manufacture of PEEK polymer, which they sell throughout the world to compounders, injection molders, OEMs, and end users.
Unique product. PEEK is a semi-crystalline, high-purity polymer. "It is unique in that it offers significantly higher mechanical, thermal, and chemical properties than are found combined in any other single thermoplastic polymer," enthuses Paul Syms, Victrex commercial director.
The resin comes in pellet and powder forms in three viscosities: standard for injection molding, extrusion, and compounding; specially filtered for fiber and film extrusion; and high flow for injection molding and compounding.
Originally developed in 1978, the material was formulated to specifically meet stringent military and nuclear standards. However, because of its property profile and ease of processing, PEEK has found an ideal fit in a wide field of industries and applications--particularly where hostile environments exist and performance must be maintained over a long period of time. In fact, primary markets today include such core industries as automotive, aerospace, oil and gas, electrical and electronic, medical, business equipment, and food and paper processing.
Typically, PEEK has served as a replacement for machined metals. In the case of stainless steel, for example, the resin not only provides a cost-effective alternative, but can give a design engineer greater design freedom. At the same time, it effectively meets demands for heat, chemical, and wear resistance.
Components molded from the material can be found in engines, pumps, compressors, valves, electrical systems, and mechanical structures. Transportation applications include: powertrain washers and seals, and interior and exterior aircraft parts. In the electronics market, the polymer finds increasing use in water carriers for integrated circuits, disk drives, and connectors. Medical/analytical market manufacturers have turned to the resin for chromatography fittings, tubing, bearings, and dental, scope, and angioplasty devices and components.
Aerospace provides a perfect example. Airbus Industrie has replaced several aluminum components with parts injection molded or extruded from PEEK. In fact, the material is now specified for cable conduits, clips, and luggage-rack retainers. Compared to aluminum, PEEK offers significant weight reduction and cost savings. It also exhibits excellent flame retardance performance--a key factor in aircraft safety.
"Cost reduction, as well as weight savings are essential requirements of the global aircraft industry," says CEO Hummel. "Airbus has demonstrated a 50% reduction in part weight and a cost savings of up to 75%."
Worldwide reach. Victrex is truly a global company, with sales and operations placed strategically throughout the world. The U.S., however, is the company's prime target area today, with about 50% of total sales conducted on the North American scene last year. Western Europe accounted for more than 30% of the sales pie, with the "rest of the world" serving as the remaining marketplace.
Realizing its U.S. market potential, Victrex USA was incorporated in Delaware in 1993, the same year as the ICI buyout. The North American headquarters is located in West Chester, PA.
| The North American market has played a big role in Victrexís rocketing increase in sales.
To expand its reach in the U.S. and worldwide, and to extend its spiraling growth, Victrex has formed strategic alliances with many of its key U.S. customers. Initial companies involved in these alliances have two attributes: They are high-performance processors with specialist skills, and OEMs that have a specific market focus.
OEM market mastery comes from Fluoroware Inc. (Chaska, MN), and Hoerbiger-Harco Manufacturing, Inc. (Golden, CO). Processing expertise comes from DSM Engineering Plastic Products (Reading, PA); Ensinger Corp. (Washington, PA); Greene, Tweed & Co. (Kulpsville, PA); RTP Co. (Winona, MN); Upchurch Scientific (Oak Harbor, WA); and Westlake Plastics (Lenni, PA).
QMR Plastics (River Falls, WI) is also in discussions with Victrex to become a strategic-alliance partner. QMR has a new 35,000-sq-ft facility with state-of-the-art production capabilities. Here, everything is focused on meeting customer requirements for component performance, tolerances, and delivery. The firm's high-performance plastics processing includes a very extensive relationship with Victrex, where the two work closely in the molding of PEEK. Attention to detail extends to every phase of the QMR operations, from statistical process control to specialized services that include ultrasonic welding, testing, and assembly.
Meeting future demands. The effort to strengthen sales and prepare for future growth does not stop here, however. The comparative length of the product development cycle means it's important for Victrex to have a full pipeline of products at all stages of commercialization. Last year, these ranged from the production of PEEK to variations of PEEK for the electrical and automotive markets.
Also, the Victrex plant at the old ICI Hillhouse facility in Thornton Cleveleys is a modern computerized operation. The addition of a new production line at the plant last year at an estimated cost of £6.2 million (U.S.$10 million) will increase capacity by around 50%. And, in support of R&D efforts, a new £1.3 million (U.S.$2.1 million) technical center opened at the plant site this year. Moreover, Victrex has gained BS 5750 and ISO 9001 accreditation.
†Technical support. Victrex's efforts to turn out quality products and improve its identity with present and future customers also takes other forms. For instance, technical service and support is a key element of the company's overall program of customer satisfaction, supplied through the R&D organization. Last year, Victrex increased R&D spending by 30%--with the emphasis on the customer.
The company also prides itself in supplying the customer with good technical data, processing support, and help with general problem solving. Technical support personnel reside in the U.S., Germany, and the UK for Asia-Pacific distributors.
Also in the UK, the technical staff has been strengthened to improve the company's technical information and update product literature. An example: finalization this year of a program to develop more extensive information on the tribology--wear and friction--of PEEK since many automotive and industrial markets require these properties.
"We will not rest on the success of the past, but continue to drive performance forward in all areas," says CEO Hummel. That drive could result in even more profitable rewards.