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June 29, 2016 | Tom Ballard

PART 1: Toho Tenax’s production line one is the “little engine that could”

TohoTenax(EDITOR’S NOTE: This is the first article in a two-part series focused on Rockwood-based Toho Tenax America Inc. and its recent exciting news.)

By Tom Ballard, Chief Alliance Officer, PYA

Rob Klawonn describes production line one at the Toho Tenax America Inc. plant in Rockwood as the “little engine that could.”

Built more than 30 years ago, the line that produces carbon fiber has kept the Roane County plant afloat during the economic downturn that started in 2008, really took hold in 2013, and resulted in the layoff of about half the company’s employees that year. The cutbacks also idled two other production lines.

Today, the outlook could not be brighter for the plant that is part of the Teijin Group, and Klawonn, Toho Tenax President, credits the workers who remained and the reliability of the “engine that could” for opening new opportunities.

One of those opportunities, announced at the beginning of the year, is a significant designation that Toho Tenax realized after more than two years of hard work.

“I viewed it as a rallying cry,” Klawonn says of the invitation he received from United Technologies Group’s Aerospace Systems (UTAS) to pursue a special supplier designation. “They told us we were already one of their best suppliers.”

With United Technologies’ encouragement, the Toho Tenax team pursued the opportunity as a lifeline and a key plank in the company’s long-term plans for the future.

Of the newly expanded UTAS group companies, “We’re the first company to achieve the ‘Supplier Gold’ status,” Klawonn says proudly. “UTAS has approximately 500 suppliers. We were one of the few selected for the program and the first across the finish line.”

As a result of the improved relationship and growth in the UTAS Landing Systems growth, Toho Tenax will open one of the two production lines that closed during the downturn and increase annual production of Pyromex Oxidized PAN fiber by 40 percent. The flame-resistant and chemical-resistant fiber is used in aircraft brakes.

“Our amended supply agreement with United Technologies takes us to 2030,” Klawonn says. “We become a more preferred supplier.”

He adds the “Supplier Gold” standard means United Technologies “can rely on us that everything we ship does not require inspection.”

It’s a far cry from 2013 when Klawonn was presiding over the layoffs and very different from a decade ago when he joined the company as Vice President for Sales and Business Development.

The first few years at Toho Tenax could be characterized as part of a growth spurt.

“We invested $40 million to convert our process to use Japanese feedstock,” Klawonn said. The investment was made to rehabilitate and upgrade existing lines two and three, previously running with a lower grade feedstock from the UK. With newly converted production lines, the Rockwood facility would be fully utilized. Line two, built originally in 1996, was converted in 2006, and line three, built in 1998, was converted in 2008.

“It was really bad timing as it turned-out,” Klawonn says, citing the price of oil – the carbon fiber that Toho Tenax Japan makes consumes petroleum-based materials to manufacture its precursor – and the weakness of the dollar against the yen as key factors.

“Great tailwinds turned into headwinds” as the world economy continued to decline, Klawonn explained. Another key headwind has been an ongoing issue with what is described as an “inverted tariff.” Toho Tenax is assessed a 7.5 percent tariff that is applied to raw material it imports to make carbon fiber, while carbon fiber produced outside the U.S. and imported into the country is not subject to the tariff.

NEXT: How the United Technologies designation positions Toho Tenax for future growth.

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