Penfabric has been making top class materials for over 30 years. A wholly-owned subsidiary of Japanese global chemical conglomerate Toray, it has shown that reputation breeds success
Written by John O’Hanlon & Produced by Dan Story
The recent downturn hit the international textile industry hard, admits Penfabric Managing Director HS Teh, and his company was no exception – though it weathered the storm better than most. Between August 2008 and March 2009, the people who use specialty fabrics to make quality men’s shirts, schoolwear or uniforms simply stopped buying. In those circumstances they were not about to tie up cash in goods they might not be able to use for a while.
It speaks volumes for Penfabric that it was able to turn in a profit, albeit a reduced one, in that financial year but as that year turned, so did the order book. “It was a slow turn, but by April we began to see orders coming in again,” says Teh. “They had run down their inventories and needed to replenish them, but there was another factor. Some of our customers were big winners out of this recession: as the market picked up, they picked up market share from the people who didn’t make it.”
NORMAL TRADING
Teh expects this year to see a return to some kind of normalcy thanks to good housekeeping, a cost reduction program and, above all, having a good reputation in the market. Penfabric’s standing with its bankers is high because it is unleveraged, points out Associate Finance Director CW Ng. “The textile industry is not favored by the banks so when times were hard they came after our industry, but we weren’t bothered by that. On the contrary, because we were cash rich we could continue to pay our suppliers promptly, which was a bonus for them and helped us get good deals. We came out stronger than ever from this crisis.”
Direct customers include some of the largest makers of shirts in the US and Europe, notably Phillips-Van Heusen and Marks & Spencer. Other significant niche markets include manufacturers of workwear, overalls and uniforms – Penfabric is above all a specialty manufacturer.
The company was founded in 1973 and was acquired by Toray 10 years later. It operates four mills at Penang, Malaysia, which are dedicated to spinning, weaving, dyeing and finishing, and printing. “This is an integrated business,” says Teh. “We take raw materials, spin our own yarn, and carry out all the processes to make finished materials for our customers to turn into garments.” Penfabric operates as an autonomous business within the Toray group, though it does benefit from important synergies, notably group purchasing power and R&D. Though it has a large in-house research team, it also works with Toray’s labs in China when developing new products and processes.
THE KNOWLEDGE BASE
Innovation is at the center of Penfabric’s success, says SB Ho, Director and General Manager of Production for the weaving, dyeing and finishing operations. “Fifteen years ago we were the first company in the world to come up with a wrinkle-free polyester/cotton shirt material. The customers were lining up at our door trying to buy it and we could barely cope with the demand! Everyone wanted these wash-and-go shirts that you could wear straight from the spin dryer.”
Since then the company has extended wrinkle-free shirting to pure cotton. “We also have a process that gives the fabric a soft, absorbent feel on the inside with stain resistance on the outer layer,” says Ho. “It repels dirt and water, even oil and grease, but is still comfortable to wear.” That combination of course is ideal for workwear and helps explain why Penfabric supplies the largest global suppliers of overalls.
Penfabric can develop processes to suit whatever the market demands. In the pipeline is a multi-function fabric for the Japanese market that combines quick-drying with UV protection and stain resistance. At this rate you will only need to change your clothes once a year, Teh jokes – but he has a serious point. These materials do reduce maintenance costs for the end user. This gives Penfabric a decided edge in a very competitive industry.
Penfabric is always looking for new markets. As an example, Teh cites Australia, which used to be regarded as too small for a large capacity producer. “We are looking at that market again, and have realized there is a lot of business in workwear and specialty items. Then of course nobody can afford to ignore China – we have a small toehold there and we want to develop that.”
LEAN & HUNGRY
Continuous improvement is part of Penfabric’s culture, says CK Quah, Director and General Manager who runs the spinning and yarn dyeing operations. “Each year we review our capacity against the market, productivity figures and so on. We have a continuous renewal program for all our machines - so during the last five years we invested heavily in some very effective cotton treatment machinery.”
The same period saw a lot of money spent on training the entire workforce in lean manufacturing techniques such as waste minimization focus on 3M (Muda, Muri & Mura), preventive maintenance and process optimization. “We got very good results from this program,” he says. “In a single year we were able to reduce our fixed costs by ten percent and our variable costs substantially. That speaks for itself!”
A lot of waste has been identified and eliminated using the scamper (an acronym for Substitute; Combine; Adapt; Modify; Put to Another Use; Eliminate; Reverse) technique, adds Ho. “For example we found we could save energy by combining some processes. And in other cases we altered the process so that a lower temperature could be used – that reduced our cost and contributed towards our environmental performance, too.”
GREEN SHOOTS
Saving energy goes straight to the bottom line, agrees Teh, but Penfabric’s environmental credentials are vital in marketing too. It’s an accredited Euro Flower company - the independently tested eco-label launched in 1992 across the EU member states. Besides ISO 14001, it also participates in Öko-Tex, which focuses more on environmentally-friendly production processes and chemical use within the factory.
These programs are supported in-house by initiatives that enhance environmental awareness and excellence, says Teh. “At the same time green purchasing is very important for us. We are encouraging all our suppliers to help us promote a verifiable environmentally-friendly supply chain.” These green practices, and the group’s active focus on corporate social responsibility (CSR), are supported by Toray. One branch of Toray is at the forefront of water treatment, and the Penang facilities benefit from an advanced waste water treatment plant.
This matters to Penfabric’s customer brands, who like to market their products as green and to be able to claim green sourcing policies in their annual reports. “We are very clear with our suppliers on what we want,” says Sales Director H Ishii. “Price is only a small part of it: we tell them quality is the main thing, followed by reliability of delivery, repeatability, consistency and of course green sourcing.” The relationship is partnership – the old buyer-vendor model just doesn’t work anymore,
he emphasizes.
After the recession consumer spending patterns and way of life will have changed irreversibly, says Teh. As a quality, research-based producer, this ought to work in Penfabric’s favor: “I think consumers will buy less but they will insist more on quality and value. The days of the throwaway garments are over now!”
FACTS AT A GLANCE:
Company Name: Penfabric Textile Group
managing director: HS Teh
Operations: Textiles
Established: 1973
Employees: 2,000
Revenue: US $150 million
www.penfabric.com
View Digital Corporate Profile of Penfabric in Manufacturing Digital January 2010