High fiber good for business

Vermont Business Magazine, Jan 01, 2004 by Brush, Cassandra Hemenway

What do an air filter in an Audi; an Oscar de la Renta box for men's cologne; the Lord of the Rings book, box and slipcase; sandpaper; and a US passport have in common? The answer is simple: fiber.

FiberMark fiber, to be exact.

With its corporate headquarters in Brattleboro, FiberMark, Inc.'s $394 million business makes high-end paper products used in everything from the box to a premium quality jewelry box, to a special latex-saturated wallpaper. FiberMark uses everything from cotton to synthetics in its fibers, which it sells to companies that turn it into high quality book covers, boxes, binding tapes, air filters, menus, albums, date books, and even US passports. It also has a long list of technical applications, including electronic photographic printing, security, and filtration uses.

FiberMark, Inc. operates 11 facilities, seven in the eastern U.S., one in the United Kingdom, and three in Germany, where it employs one-third of its workforce. It has gone through several acquisitions and consolidations over the past decade, closing two plants and acquiring six. By the end of 2002, it had 1,853 employees, down from 2,061 in 2001.

While it sells a high quality product to other manufacturers, and boasts a sales increase from $325.3 million in 2000 to $394 million in 2003, the latest company figures aren't sunny.

It reported a net loss of $102.9 million for its third quarter 2003, compared with a net income of $1.1 million in 2002 third quarter. As much as $92.3 million of that loss can be attributed to a "goodwill write down" resulting from new accounting laws, said Janice Warren, Director of Investor Relations and Corporate Communications. She said the loss shows up because of a 2001 acquisition, which is worth less than its book value.

"It's been a challenging couple of years," Warren said. "The economy has been very weak."

Nonetheless, she said, FiberMark has several strategies for staying strong.

"We expect to achieve $18-20 million in annualized cost savings effective midyear 2004," said Warren. "We also completed a substantial new ($85 million) credit facility that gives us considerable financial flexibility. We will continue to work on operational improvements and new business development efforts to generate sales."

Indeed, FiberMark continues to develop new products. Right now, it's working on a fiber made with metal for aerospace and electrical applications. Warren said the metal fiber is a prototype, done as part of a project with NASA "and other people in the metal area."

FiberMark's history goes back 100 years and encompasses a variety of companies. It has been in Brattleboro since 1961, when the mill was built along the Connecticut River there. When it became an independent company in 1989, Brattleboro became corporate headquarters, and originally operated under the name Specialty Paperboard, Warren said.

It became public in 1993, and remains what Warren calls "one of a dwindling number" of Vermont's public companies. Its latest - and largest - acquisition came in April 2001, when it acquired Rexam DSI. FiberMark also sold its engine filtration business, which led to closure of its facilities in Richmond, VA and Rochester, MI. It consolidated plants by moving paper production to New Jersey, where it had a new paper machine, leading to the closure of its Fitchburg, MA plant.