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AstenJohnson: Spanning the globe from the Lowcountry
By Dan McCue
Staff Writer
For generations, nine in the case of the Johnson family, five in the case of the Astens, the privately owned firms that a decade ago merged to become the AstenJohnson company have followed the papermaking industry across the globe.
“It was a case of going where the growth occurred, and that continues to be our approach to doing business,” said William A. Finn, the company’s chairman and CEO. “Simply put, supply goes where the demand is.”
The company, first separately and now as one, creates the paper machine clothing, the complex textiles of various grades that are used in the conversion of wood or recyclables into paper as it is formed, pressed and dried.
Early on, serving the paper industry brought the Johnsons, in the business since 1790, and the Astens, relative newcomers having entered the field in 1882, to the northeastern United States and Canada, and later to the Southeast.
Today, with a mature market for its goods in the United States, AstenJohnson is expanding its reach overseas, which has meant reallocating its resources here and opening plants in China and the Czech Republic.
While the move hasn’t been without some distress—the Charleston-based company announced the closure of its Pittsburgh plant earlier this year—AstenJohnson’s principals insist this wasn’t just another case of an American company shuttering a plant and sending U.S jobs overseas, but rather a necessary step to take when serving an industry that demands that its supply chain be as short as possible.
“The fact is, we couldn’t serve the markets we’re expanding into from our Pennsylvania facility,” said David C. Meek, AstenJohnson’s senior vice president of finance and business development. “The other thing I should point out is this: Of our 62 employees at that plant, 52 have been relocated to other facilities.”
A unique business
Recently, the Business Journal got a unique look at the inner workings of the closely held company, a status Finn said is critical to its continued success.
At present, the company employs 1,255 worldwide, including 80 at its headquarters on Corporate Road in Charleston.
Its other facilities include plants in Walterboro, S.C.; Georgia; Massachusetts; Wisconsin; Vermont; Quebec, Ontario; Suzhou, China; and the Czech Republic.
“I think we’re unique in the Charleston business community in that we’re one of the few companies that has its corporate headquarters here,” Finn said. “All of our activities, no matter where they are found in the world, are directed from these offices.”
Seated with Finn in a conference room overlooking the Ashley River were Meek, Daniel Cappell, the company’s president and chief operating officer, and Jerry Davis, its vice president.
Davis provides much of the historical context.
“The 1990s were a time of constant restructuring,” he said. “Six years ago, our industry narrowed from 10 companies down to four industry groups that compete head to head in every market in the world.
“As the world’s largest consumer of paper, North America will always be one of our primary markets, but it’s one that’s matured and, in terms of potential for future growth, slowed, especially when compared to Asia, the former Eastern bloc nations and South America.”
Logistical challenge
While everyone at the table acknowledged that the closure of the Pennsylvania plant was necessary, “a symptom of what’s happened in our customer’s market,” said Finn, they also pointed out that two other North American facilities, one in Appleton, Wis., and the other in Canada, are expanding.
As they’ve charted the company’s course, Finn and his fellow executives have kept a close watch on consumer markets, knowing that where purchasing power increases, a demand for paper is soon to follow.
“Since the late 1980s, 70 to 80 percent of the new investment in the paper industry has occurred in Asia,” Cappell said. “What’s happening is more and more people are rising up economically, and as they do, they demand more paper, for instance, for use in the packaging of the products they buy.”
But that creates a logistical challenge for the company because its paper machine clothing comes in huge rolls that are neither easy nor inexpensive to transport. And if one of the rolls breaks, the paper mill needs to secure a replacement as quickly as possible.
“The fixed costs in the paper industry are tremendous,” Cappell said. “In a sense, our job goes beyond just supplying a product; it’s to help ensure that they can stay in business themselves.”
Emerging Asian market
Seeing an emerging Asian market about to open up, the company established a technical center in Australia in 1988 and a joint sales and marketing company, called the Heimbach Group of Germany, in Singapore.
“The unique thing about being a private company and a family-owned company is that we can make the right long-term decisions without worrying about what the (stock) market is going to think about it,” Finn said.
The company opened its first plant in China last October. The plant, called New Horizons Technical Fabrics, was founded in partnership with Heimbach.
“Our experience in China has really been something,” Meek said. “On the day we announced that we were hiring, 7,000 to 10,000 people lined up to fill out applications.”
What’s more, the setting of the plant is nothing if not breathtaking: An industrial park that looks like a carefully designed city, with abundant green space, fountains and lighting that could easily rival any tourist destination.
So concerned are the Chinese about aesthetics that they emptied a large natural lake and reconfigured it to enhance its look before refilling it. Islands in the middle of the new lake will soon be the site of restaurants and retail stores.
“Industrial parks are an area where the Chinese are really ahead of the curve,” Finn said.
AstenJohnson’s involvement in the Czech Republic began with the company outsourcing some products to a small, privately owned concern there, a textile manufacture that soon concluded it would be better off within the American company’s fold.
“We spent a lot of time looking at its goals and objectives, probably nine months all told, and closed the deal last August,” Finn said. “It’s a very good shop, and it got us into Eastern Europe, where we just had not been a factor in the past.”
Future expansion
Today, the company has basically three markets—the Americas, Europe and Asia—and it needs a supply chain in every market because its customers want product manufactured locally, Cappell said.
“That will mean growth and expansion in the future,” he continued, drawing an elaborate diagram on the legal pad in front of him.
Something very much on his mind was a recent projection by investment giant Goldman Sachs that suggests the makeup of the confederation of economic powers known as the G-7 will change dramatically, and soon.
According to Goldman Sachs projections, India will overtake current G-7 members Italy, France, Germany and Japan by 2035, and China will occupy second place, trailing only the United States. Russia and Brazil are also expected to be economic superpowers by that time.
“All of those markets are expanding rapidly, and our logistic decisions will have to be made accordingly,” Cappell said.
Whatever changes lie ahead for AstenJohnson, Finn was emphatic about the company’s future in Charleston.
“We are here to stay,” he said. “It’s a great place to live and be based, and it adds character to our company. Besides that, this is a very easy place to attract people to from all over the world.
“We’re taking our technology and taking it around the world, all from Charleston.”
Dan McCue is a staff writer for the Business Journal. E-mail him at dmccue@charlestonbusiness.com.
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