Glove Makers Prepare for Better Times

• By Jerry Laws
• Apr 01, 2009

The economic slowdown began last fall for manufacturers and suppliers of protective gloves, with orders for occupational gloves slowing sharply to levels below those at the same point in 2007. Yet executives of several glove manufacturers said they are positioned to gain market share, particularly in markets outside the United States, when the global recession eases. Several recent developments -- they include the completed integration of Showa-Best Glove; Ansell's new occupational units in Brazil, Mexico, China, and India with good growth expected there; Kimberly-Clark Professional's organic sales growth in Developing & Emerging markets; and the transformation of Honeywell's Automation and Control Solutions unit, which includes Honeywell Life Safety's North Safety business.

"Certainly, we're affected by the downturn just like everybody else. That’s the honest answer," Showa-Best Glove President and COO Bill Alico said March 13 as he discussed the newly completed integration. The transaction had closed Oct. 1, 2007.

"We've felt the pinch, certainly, in industry," he said. "We support automotive and the automotive sub-assemblers, and research, and everything that's somewhat taking it on the chin. But we were pretty strong through September of last year. And you could almost set your watch to it: In October, we experienced this downturn.

"But as the eternal optimist here, I think this is the perfect time for us to be doing this," Alico added. "We're building for the future. This is truly an integration. We're moving forward with the staff we have of these two companies and trying to build a foundation during these difficult times to come out stronger on the back end."

2009 Results and International Initiatives
How are other manufacturers doing? Ansell reported flat sales for the first half of its fiscal 2009 versus the same period in its fiscal 2008, but earnings per share rose 13 percent year over year. The company's executives said at the end of 2008 that the recession's impact on sales of occupational gloves (which represent 49 percent of Ansell's sales) was becoming significant. Bright spots were lower commodity, energy, and transportation costs and sales growth in emerging markets from $42 million in the first half of FY2008 to $107 million in the first half of FY2009. Ansell said it established new occupational units in Brazil, Mexico, China, and India.

Kimberly-Clark, meanwhile, plans to accelerate its growth in Developing & Emerging markets and to extend the portfolio of Kimberly-Clark Professional, which supplies gloves, apparel, respirators, and eyewear. D&E markets are Asia, Latin America, the Middle East, Africa, and Eastern Europe. K-C's volume growth is rising even faster in the BRICIT countries -- Brazil, Russia, India, China, Indonesia, and Turkey -- than in D&E overall.

Some large PPE manufacturers and distributors have cut costs and positions. Sperian Protection announced March 4 that its recent measures will cut 760 employees from its workforce of about 6,000, and Grainger announced Feb. 11 it would eliminate 300-400 jobs, eliminate merit increases for executives, and take other cost-cutting steps. At the same time, Roger Fradin, president and CEO of Honeywell International's Automation and Control Solutions (ACS) unit, gave a presentation at the company's Feb. 23 Annual Investor Conference in which he said Norcross (North Safety) and PPE are "just a great space for us to be in." With sales rising year over year, more than 400 new ACS new products introduced in 2008, and 60 percent of product sales made outside the United States, he said ACS is "a completely different business" than it was in 2002 and "a new-product-development machine."

Showa-Best Glove's Alico and Tom Eggleston, director of Sales and Marketing, said R&D also will be one of their company's strengths. "In the last 15 years or so, the two greatest innovations in the hand protection business were, one, Best's inventing the disposable nitrile glove, a latex alternative. And, as you know, that type of product dominates the disposable market," Alico said. "And on the other side, Showa invented flat dipping. They created this flat-dip process that everybody tries to imitate. We're putting together two companies here that have had the two greatest innovations in the last 15 years, and that's where we feel the strength and the power of this thing is going to come from, moving forward.

"Just one statistic, if you will: If we tally up our R&D and technical people [worldwide] now with these two companies, we're well over 75 people in that group. For the glove business, that's a big deal," Alico said.

He said Central and South America could be one of the company's greatest opportunities for growth. Showa-Best Glove has two manufacturing facilities in Central America to support that growth, he said.

"We've been growing steadily," Alico said. "And part of it is an education process. It’s the old joke about two salesmen, shoe salesmen, that go to Africa. They get there the first day, and they run around. At the end of the day, one salesman calls back to his factory and says, 'Look, I'm taking a flight out of here tomorrow. Nobody wears shoes.' The second salesman gets on the phone and calls back to his factory. He says, 'I'm staying longer. Unlimited potential. Nobody wears shoes.'

"With that said, that's somewhat of our view. I think PPE in general, in those markets, it's an education process and it's a long-term investment. It is a long-term investment for us," he explained.

"We're trying to get this point across: 'With two powerful companies, one powerhouse in protection,' " Eggleston said. "With these two businesses coming together, with over a century in hand protection, we're focusing on hand and arm protection. One contact in the field [and] the 98 percent service levels we talked about, as well as continuing to move forward with this new product development -- that's what we want the customers to see. It starts today with the integration, and what comes tomorrow is still to be determined, but it is going to be very, very exciting."