Geoffrey Owen of the Department of Management, London School of Economics presented a paper at SPRU in October this year entitled "Innovation in the man-made fibres industry: corporate strategy and national institutions." It is based on unpublished material made available to the author by Akzo Nobel, Lenzing and Courtaulds (amongst others) and is available in full here on the web as a PDF file. It contains excellent sections on Tencel lyocell development history, the third extract of which is reproduced below:
The first Tencel plant
The first Tencel plant
Meanwhile, Courtaulds had been pushing ahead fast. The pilot plant in Grimsby had worked well, and there was no doubt in the minds of Tencel’s supporters that the next step was to build a full-scale plant, either at Grimsby, next to the existing acrylic fibre plant, or at Mobile, Alabama, which was the site of a Courtaulds rayon factory. The case for going ahead was that Courtaulds had a technical lead in a product that not only had distinctive properties as a fibre but was also the only man-made fibre that could be produced from renewable resources by an environmentally friendly process.
When members of the Group Executive considered the proposal in April, 1990, they had before them a study from McKinsey, the management consultants, which supported the project. According to McKinsey, there would be sufficient demand, initially in industrial rather than textile markets, to absorb the output of the first plant at an acceptable price. Tencel’s high wet strength and absorbency would make it very suitable for wipes and other disposable products. One member of the Executive was doubtful, on the grounds that Tencel was a high-risk project with an uncertain payback. He acknowledged that Tencel was a potentially attractive fibre with some advantages over viscose, but it was not as novel or distinctive as polyester and nylon had been when they were introduced and sales projections were bound to be speculative. Spending on Tencel would absorb cash at a time when Courtaulds was trying to expand in non-fibre industries. In his view alternative strategies for Tencel should be considered, including partnership or licensing.
Despite these objections the majority of the committee took the view that Tencel was too good an opportunity to forgo. Apart from the merits of the new fibre, the project had the attraction of being based on in-house research and linked to Courtaulds’ long-established expertise in cellulosic fibres; it should be less risky, and less difficult to manage, than an acquisition. The initial plan was for the plant to be built at Grimsby, and the company hoped to get a government grant to support this investment. When the application was turned down, attention switched to Mobile. The state of Alabama was keen to attract the project and willing to offer financial support. The proposal was approved by the Board and the ground breaking ceremony at Mobile took place in September 1990. Production was scheduled to start in the summer of 1992, with an initial capacity from two production lines of 18,000 tonnes a year.
(More to come)
When members of the Group Executive considered the proposal in April, 1990, they had before them a study from McKinsey, the management consultants, which supported the project. According to McKinsey, there would be sufficient demand, initially in industrial rather than textile markets, to absorb the output of the first plant at an acceptable price. Tencel’s high wet strength and absorbency would make it very suitable for wipes and other disposable products. One member of the Executive was doubtful, on the grounds that Tencel was a high-risk project with an uncertain payback. He acknowledged that Tencel was a potentially attractive fibre with some advantages over viscose, but it was not as novel or distinctive as polyester and nylon had been when they were introduced and sales projections were bound to be speculative. Spending on Tencel would absorb cash at a time when Courtaulds was trying to expand in non-fibre industries. In his view alternative strategies for Tencel should be considered, including partnership or licensing.
Despite these objections the majority of the committee took the view that Tencel was too good an opportunity to forgo. Apart from the merits of the new fibre, the project had the attraction of being based on in-house research and linked to Courtaulds’ long-established expertise in cellulosic fibres; it should be less risky, and less difficult to manage, than an acquisition. The initial plan was for the plant to be built at Grimsby, and the company hoped to get a government grant to support this investment. When the application was turned down, attention switched to Mobile. The state of Alabama was keen to attract the project and willing to offer financial support. The proposal was approved by the Board and the ground breaking ceremony at Mobile took place in September 1990. Production was scheduled to start in the summer of 1992, with an initial capacity from two production lines of 18,000 tonnes a year.
(More to come)
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