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After several years of uncertainty, AGY is entering a new era, confident that it and its products can meet the ever-increasing expectations of the market. Since the company appointed new vice presidents for the Technology, Operations, and Sales and Marketing departments, made changes to its commercial organisation and gradually increased its S-2 Glass production capacity, JEC Composites Magazine decided to find out more. At the JEC Composites Show 2005, we met with Doug Mattscheck, president of AGY, and Drew Walker, vice president, Sales & Marketing.
(Published on August-September 2005 – JEC Magazine #19)
AN INTERVIEW WITH DOUG MATTSCHECK, PRESIDENT OF AGY,AND DREW WALKER, VICE PRESIDENT, SALES & MARKETING
JEC Composites Magazine: At the JEC Composites Show this year, you announced an additional manufacturing capacity expansion of 10% for S-2 Glass® roving, on top of the 25% announced the previous fall. Will those increases be sufficient?
Doug Mattscheck: Our forecasts tell us those increases will be sufficient, but if they are not, we’ll add more. Our willingness to meet the market’s need with additional capacity is based on three factors. We know the market needs a dependable and predictable supply of high-strength glass fibre on which to base material decisions. To grow the market, we need to assure our customers that they will be able to get material when they need it. Another factor is our company’s “scalable” capacity, which means we can add small increments of capacity rapidly; we don’t need a major leap in demand to justify increasing our capacity. The third factor is our lean, nimble and independent organization. We can make capacity decisions relatively easily and quickly compared to some larger and more complex organizations.
J.C.M.: Which sectors – marine, transportation or defence, for example – are driving market demand at the moment?
Drew Walker: The two most active sectors in the first part of this year have been aerospace and defence, specifically new aircraft and ballistic protection. The Airbus Industrie’s A380, which made its maiden flight in the same month as the recent JEC Show, is a good example in the aircraft category. Our proprietary S-2 Glass® fibre is part of the GLARE (GLass and Aluminium REinforcement) system used in the fuselage between the cockpit and the leading edge of the wings, and also in the front of the vertical stabilizer. S-2 Glass yarns and other AGY products are also being used in interior applications on this cutting-edge aircraft. Looking at the market as a whole, the good news for us is that aircraft engineers are incorporating more glass fibre into their new models, and aircraft manufacturers are building more planes.
Military conflict has stimulated the market for ballistics, of course, but we also see signs that civilian security concerns are fueling market growth. Key applications in the armour and ballistics market include the Humvee and Stryker vehicles; there are now 23 licensees for our HJ1 armour system, up from 17 last fall. Parts include appliqué panels for doors, hatches, covers and spall liners for vehicle applications on both the Humvee and the Stryker.
J.C.M.: In your opinion, how will market demand develop over the next six months or so?
D. M.: That’s an important question and we gave it a lot of thought as we developed our capacity expansion and production plans. We expect the current economic expansion to continue in the second half of the year. As we said earlier, the aerospace and defence markets are strong and expected to continue to be strong, and we also expect continued strength in the industrial and construction markets. And regardless of what happens with the overall global economy, we will do our best to see that the composites market grows at a faster rate.
D. W.: There are a couple of new applications on the near-term horizon that could certainly help the growth of composites outpace the economy. One is in the electrical distribution market in an application that really hasn’t had much attention in the past. We hope to be able to talk about that publicly very soon.
J.C.M.: What is happening with the wind energy initiative that was announced last fall?
D.W.: Our wind energy initiative is going well. As it is with all market development activities, such work takes time and we are limited in what we can release because of confidentiality agreements we have with our customers. We do have projects underway with multiple development partners. Ten months after announcing the initiative, we are even more convinced that the long-term trend favours higher-performing materials due to the movement to larger blades for increased generating capacity.
J.C.M.: Do you observe a difference in thermoplastic and thermoset demand?
D. M.: Historically, demand for high-strength glass fibre reinforcements has come almost exclusively from thermoset applications. We see that beginning to change and emerging technology could very well accelerate the shift to reinforced thermoplastics.
By emerging technology I am referring to processes like DRIFT (Direct Reinforcement Fabrication Technology), and other long-fibre thermoplastic (LFTP) processes.
Gordon Composites (Montrose, Colorado, U.S.A.) has also been working in thermoplastics processing and sees so much potential in the material that they started a whole new business – named PolyStrand, Inc. – to focus on thermoplastics using a process they perfected. They are producing ballistic material using S-2 Glass and thermoplastic resin that has a much faster mould cycle than traditional ballistic material using phenolic and other thermoset resins. The application offers a tremendous amount of cost-effective protection. PolyStrand has not fully developed the new technology but they are already doing well with NIJ level IIIA testing. Level III testing is also planned once the company has applied and tested what it learned in level IIIA testing. When the first applications reach the market we expect them to open a lot of eyes to the potential for high performance thermoplastic applications.
J.C.M.: Which geographical areas are most dynamic?
D. W.:We see demand growing in all areas of the world but we are specifically focused on growing our business outside the U.S. Earlier this year, we strengthened our commercial organization with that objective in mind. One of the key elements of that change was establishing a new business development team that will work closely with the existing commercial and product management teams. Multifunctional business teams have been set up to capitalize on key strategic applications, new product opportunities and new technologies uncovered from a more focused new business approach. With representation from sales, marketing, technology, manufacturing and finance, the new business development teams will focus on the strategic growth opportunities we have identified.
In response to continued growth in the use of high-performance glass fibres for composite reinforcement, AGY has increased previously announced capacity expansion plans for manufacturing S-2 Glass products. The new expansion was announced last April at the JEC Composites Show 2005. Upon completion in July 2005, total capacity for production of S-2 Glass reinforcements will have been increased by 35% during an 18-month period. In October 2004, the company announced a total increase in capacity of 25%. Since that time, adjustments of an additional 10% have been made to the expansion plans, and the overall project timing has been brought forward about 6 months, as the company continues to respond to the changing market demands.
The standard for high-strength, high-performance glass fibre reinforcements, S-2 Glass has provided outstanding performance across many applications served by the global composites market.Originally developed for military applications in the 1960s, S-2 Glass was first introduced to the commercial market in 1968. Initially compatible with epoxy resins, its compatibility has been expanded to include thermoplastics, polyesters and vinyl ester resins. The high-strength, high-performance product is used in a variety of markets including aerospace, defence, marine and recreation. S-2 Glass is made exclusively by AGY and has a tensile strength that exceeds that of standard-modulus carbon fibre as well as most grades of aramid fibre. Its impact strength is similar to aramid fibre and its elongation-to-break performance is 5.7% compared to aramid’s 2.8% and carbon’s 1.5%, meaning that S-2 Glass will give significantly under strain before failure.
D. M.: A key objective for the AGY team as we move forward is to identify and secure profitable growth opportunities and the new business development team will provide the focus we need to make that happen. In addition, we revised our commercial organization to provide for long-term growth and customer focus internationally. To that end, we are realigning our sales organizations for Europe and Asia to manage growth in those areas.
J.C.M.: Do you plan to invest soon, and what are AGY’s main objectives?
D. M.: Our capital expenditures are currently focused on adding capacity for S-2 Glass roving and yarn. That is our most immediate need. Beyond that, we are looking for the right opportunity to expand our manufacturing base into our key regional markets. We are determined to become a more balanced global company, and at the present time the majority of our sales are in the U.S. and all of our manufacturing capacity is based there. We need to change that to become the kind of global company we want AGY to be.
J.C.M.: How does AGY plan to compete with the lower-cost fibre producers, and with the large integrated companies?
D.M.: The key strategy for AGY is to continue to provide not just a material, but an overall material solution. This includes high quality level, a high level of technical and customer service support, a flexibility to supply what the customer needs, and to provide a local source of supply and service to our customer base. Our strategy is to focus on the value we provide to our customers and to increase that value proposition in the face of competition.
In terms of competing with the large companies, the strategy is pretty clear. We will be fast, flexible, close to our customers, responsive to market changes and leverage the advantages we have as the only major independent glass fibre producer in the market.
J.C.M.: Are there any new developments with Beta® yarn and vinyl coated yarn?
D. W.: We have a number of Beta® yarn projects going at the moment as designers become more and more comfortable with architectural fabrics as a design alternative, and as the need for new, lighter-weight material continues to surface. Stadium projects in China and Germany, airport projects in Thailand and California, and smaller shopping pavilion projects in Saudi Arabia are all underway with Beta® fabrics. Vinyl coated yarn continues to be a strategic focus for AGY and is a significant part of our re-organization for a growth focus in the commercial and technical functions.
J.C.M.: Do you have anything special you’d like to say to the readers of JEC Composites Magazine?
D. M.: AGY emerged from Chapter 11 a little more than one year ago (April 5, 2004) as a financially sound, independent enterprise. Since then, our performance and our actions have resulted in an even stronger company. AGY is a profitable enterprise. It is a nimble company today that is willing to work with customers to develop new applications and help grow the market. We would love to hear from your readers if they have an idea that will help grow the composites market.
D. W.: I would encourage the materials specifiers among your readers to not overlook glass fibre based solely on their experience with E-glass. They may be able to get the increased performance they are looking for without making the jump to higher-priced aramid and carbon fibres. Lots of engineers are finding every day that there are cost-effective alternatives to those higher-priced materials.