Although Glatfelter is a 150-year-old company, 50 percent of its revenue comes from products in its portfolio that are less than five years old. That’s because the company has always focused on using historical know-how to garner future growth. Its foundation may be rooted in the specialty-printing world, but Glatfelter has branched out through acquisition and organic growth into adjacent industries, continuously building off and adding on to its capabilities.
The company was founded in 1864 by Swiss-German papermaker Philip H. Glatfelter, who bought a defunct newspaper mill with money from his life savings and borrowed from family members. He transformed the mill to produce specialty paper, setting a precedent of flexibility and innovation that continues at the company today. Glatfelter CEO Dante Parrini says that although specialty paper remains a growing business for the company, the past few years have been focused on breaking into younger markets.
“We’ve been producing fine printing and writing paper since 1864,” Parrini says. “But as the market reached maturity or entered decline we found it necessary to diversify our portfolio. Over the last 10 years, we’ve been more actively reshaping our portfolio and chose market segments and technology that we thought represented the best strategic fit for Glatfelter and provided plenty of opportunity for profitable growth.”
Three Units, One Goal
What started with one facility in Pennsylvania is now a global operation with 11 facilities on three continents. And instead of specializing in one industry, Glatfelter now has three distinct business units. Its specialty papers business focuses on carbonless papers and forms, engineered products, envelopes and converting papers and book publishing. Its composite fibers business includes food and beverage packaging, nonwoven wall coverings, metallized products, technical specialties and composite laminates. Finally, Glatfelter’s advanced airlaid materials business includes home and body care products such as female and adult hygiene products and specialty wipes. Each business unit is headed by a general manager responsible for all profit and loss reports, has dedicated production facilities and is supported by dedicated sales and service organizations. Of its three business units, composite fibers and advanced airlaid materials are its newest divisions but also show the most growth potential.
“It’s been a very methodical evolution of our business,” Parrini says. “We’ve leveraged the things we were good at and found adjacent applications in similar categories that would allow us to grow as the world changes.”
For example, Glatfelter has been producing tea bag papers for decades. Its success in the single-serve tea market allowed Glatfelter to leverage its knowledge and capabilities in manufacturing low-basis weight filtration material and move into the single-serve coffee market. It now manufactures filter papers for brands such as Keurig, Senseo, Mondelez and Kraft and last year completed a $50 million expansion of its Gernsbach, Germany, facility to expand its inclined wire capacity by nearly 20 percent, or approximately 10,500 short tons. The project involved converting a conventional flat wire paper machine to a state-of-the-art inclined wire paper machine used to manufacture filter papers for tea bags and single-serve coffee applications, as well as certain composite laminate products and technical specialties.
Glatfelter announced the project in 2011 after seeing that shipments in its composite fibers business had increased 20 percent in 2009 and 2010, led by the strong demand for beverage filter papers. Parrini says the growth in this segment is related to the growing global middle class being seen in emerging and developing markets.
“While our continuous improvement initiatives have generated significant incremental capacity, the rapid growth of this business is simply outpacing our organic capacity gains,” Parrini says. “This expansion will not only allow us to continue to meet the growing demand of our market-leading customers with sophisticated and innovative products, but it will solidify our leading position in this rapidly growing, global category.”
Another growing segment for Glatfelter is the adult hygiene market. As the population ages, especially the baby boomer generation in the United States, adult incontinence brands are seeing an uptick in sales. Glatfelter already produces disposable materials used for female hygiene products and household cleaning products such as Swiffer, so it translated its industry know-how in absorbent, disposable materials into the adult hygiene market.
“We are not beholden to all mega trends, but when I think about the aging population and the fact that we have the technology already to address adult hygiene needs, then it’s simply a matter of taking our capabilities and know-how and adapting those technologies to produce a new but similar product,” Parrini says.
Another market Glatfelter is closely following is the alternative energy market. The company has been working with startup Dreamweaver International to develop and manufacture lithium ion battery separators. Dreamweaver uses Glatfelter’s capabilities and expertise in making advanced fiber-based engineered materials. In September, Glatfelter backed up its commitment to this emerging market by announcing an agreement to purchase the Germany-based Spezialpapierfabric Oberschmitten (SPO) for $11 million. SPO produces electrical paper products for a wide range of capacitors used in consumer and industrial products; insulation papers for cables and transformers; and materials for industrial power inverters, electromagnetic current filters and electric rail traction. SPO also produces glassline products used in cosmetic, food and pharmaceutical packaging.
“This acquisition will further our composite fibers business unit’s strategy of capitalizing on the fast-growing electrical market by expanding our electrical papers product platform,” Parrini says. “In addition to serving Europe, we intend to leverage Glatfelter’s growing presence in Asia to meet the needs of the high concentration of electrical customers in this region. As the demand for electronic devices continues to grow, Glatfelter is positioning itself to become a supplier of choice for electrical and electronics applications.”
Although these new markets are helping Glatfelter to thrive into the future, Parrini maintains there is still growth to be had in specialty printing. Rather than letting one industry go and jumping into another, Glatfelter’s strategy has been to diversify into new industries while maintaining old ones, and it’s paid off for the company. Parrini says most of the markets Glatfelter serves are growing by 3 to 8 percent each year, and although the printing market is in secular decline, Glatfelter has managed to grow marketshare by besting competition for the business that still exists.
“We’ve grown our free-sheet market for the past nine consecutive years and outperformed the broader market,” Parrini explains. “There are very few companies that are able to survive 150 years, let alone thrive, so that creates a huge sense of pride for me and all the Glatfelter people. It’s great to be in a position where we can expand on the progress of those who came before us and create profitable growth while also setting the company on a good path as we think about the future and the next 150 years.”