By Maureen Flanagan
Formed Fiber Technologies, Inc. ("FFT"), headquartered in Auburn, Maine, is the industry innovator and technology leader of nonwoven fiber products used for automotive interior trim.
Using patented processes, nonwovens are increasingly popular in the manufacture of automobile trunks and other car components. Appealing to carmakers as a more cost-effective alternative to conventional tufted carpeting, formed fiber materials make auto interiors more attractive and functional as well as quieter, lighter, and less expensive. They also "extend" the vehicle's interior with added features such as concealed storage, tailgate trays, tool storage and emergency equipment compartments. FFT's nonwoven products have been rapidly embraced by major automotive OEMs and suppliers.
On August 22, 2003, Morgenthaler Partners, a middle market buyout firm, established FFT, a company formed to purchase Gates Formed-Fibre Products, Inc. from Tomkins PLC. Tomkins is a UK company with �3.3 billion in revenue. Morgenthaler currently manages four venture capital and buyout funds with a total of over $2 billion under management, including MVP VII, an $850 million fund closed in 1981. To support the transaction, American Capital Strategies, Ltd. (Nasdaq: ACAS) provided $10.8 million of senior subordinated debt. Morgenthaler plans to use FFT as a platform on which to acquire other fiber solution suppliers and build it into the leading, one-stop fiber product and systems supplier to automotive and non-automotive markets.
"FFT is the industry innovator and technology leader in thermoformed nonwoven automotive trim products and dominates the North American trunk liner market," said American Capital Principal Ken Jones. "As OEMs and their suppliers turn more to nonwoven trim components to make cars more functional, attractive and cost effective, FFT's strong management team will capitalize on this conversion with its production efficiencies, continuous product improvement, patent-supported innovation and long term industry contracts."
Founded in 1979, FFT manufactures and supplies nonwoven fiber and custom thermoformed products in addition to nonwoven roll goods and polyester staple fiber. (Nonwoven material is a fuzzy polyester mass created by needle punching fibers.) The company's CON-FORM® line of products was introduced in the mid-1980s, making FFT the first to bring needlepunched formed fiber products to market. The company's revolutionary products were far superior to the standard offering of regular carpet glued to cardboard or polyethylene. With FFT's new technology, liners of complex, form-fitting shapes could be made, allowing the trunk to become an extension of the car's interior. The material was lightweight, environmentally friendly (because of the use of recycled materials), highly durable and non-rattling. Moreover, its flexibility and ease of installation provided significant cost advantages for OEMs.
Building upon CON-FORM�'s success, in 1994 the company introduced CON-FORM II�, a lighter version of the original product with enhanced weight-to-stiffness characteristics that enable "deep draw" into the recesses of the trunk interior. It is currently the primary technology used for the company's molded products. FFT has also developed designs for nonwoven materials in other parts of the car, such as full interior floor carpets, kick panels on the backs of seats, package trays (the shelf beneath the rear window), tool reservoirs for the seat body compartments of pickup trucks, and sound-absorbing wheel well liners.
FFT's customers include major automotive OEMs and their primary suppliers. In 1999, the company established a joint venture with Detroit Technologies, Inc., a certified minority supplier controlled by Detroit Pistons star Joe Dumars. This relationship allows OEMs who buy through this entity to satisfy minority purchase quotas. FFT also has a program to license its proprietary technology to manufacturers in key automotive centers worldwide. The company currently has licensees in Australia, Italy, Malaysia, Mexico, and South Africa. FFT is unique in the automotive industry for manufacturing its own solution dyed polyester fiber from 100% post-consumer and post-industrial recycled materials. Its Auburn facility is the only one in the world currently capable of producing fiber, fabric and molded parts.
In the August 2003 buyout, alongside ACAS' $10.8 million of financing, PNC Business Credit provided a revolving credit facility and senior term loan. In addition, Morgenthaler and the company's senior management invested in preferred and common equity.
FFT joins American Capital's portfolio of more than 75 companies, representing more than $1.8 billion of investment in the middle market.
Click here for more information about ACAS' investment portfolio.
In the $175 million trunk liner market in North America, FFT has captured the leading market share. Despite declining sales in the U.S. automotive market, the outlook is favorable for well-positioned suppliers of interior auto components. Automotive manufacturers, in fact, continue to focus on interiors due to frequent style changes, consumer demand for a high quality interior, OEMs' need to differentiate their products and increased outsourcing to suppliers.
As auto manufacturers make the transition from conventional to molded interiors, the market offers clear growth potential. While only 20% of the 23.5 pounds of fiber in the average car made in North America is nonwoven, use of this material is increasing at an 8% to 10% annual rate. In fact, nearly all of the 23.5 pounds could utilize nonwoven products.
The conversion to nonwoven materials is driven primarily by cost and quality. At the same time, the increasing sophistication of these products has raised the value of components like trunk systems (through the additional features provided) and reduced the number of suppliers needed for production. To a large extent, these changes have been made possible by FFT's pioneering technology and the drawing and molding characteristics of the company's materials.
As interior components become increasingly sophisticated, the company has even more opportunity to enhance trunk systems with value-added features. FFT's leading, patented products and its strong contractual relationships with automotive OEMs and suppliers promise to further strengthen its already commanding market position.
A technology pioneer and product innovator, FFT will likely drive the auto interior market into a future of nonwoven fabric products -- offering design, utility and style to boot.
For more information about FFT, visit its web site at http://www.formedfiber.com.
