It was the Fall of 2008. The country’s economic foundation and confidence were shaken by Wall Street failures, bailouts, and various financial shenanigans. Newspaper headlines across the country spoke of a crisis that, most would agree, is still in our midst. So Ken Baker, CEO of a venerable extrusion company called NewAge Industries (newageindustries.com) decided he needed to get together with his executive team at their office and plant in Southampton, Pa., and put together a plan that would allow the 54-year-old company to survive the future.
Their plan of attack was a bit unusual. Among their first decisions was to increase production capacity. Yes, at a time when most of its competitors—indeed a majority of the plastics processing industry—were laying off people and shutting down extrusion lines, NewAge decided to ramp up production of its extensive product line of tubing, hoses, and fittings. Moreover, Baker and his colleagues also decided they needed more people; in fact they’ve hired 23 employees over the last two years.
That strategy, together with a decision made in the early 2000s to expand beyond tubing and hose for industrial fluid-transfer applications into a line of highly technical, single-use, high-purity hoses for pharmaceutical and biotech applications, has helped drive NewAge’s sales from $22 million last year to a projected $28 million by the time they close the books on 2010.
“Our industrial product line certainly slipped last year, but our drop was much less than the 30% to 40% industrywide decline,” remarked Baker. “One of the reasons is that we decided not to reduce inventory when the economy crumbled. We keep on hand about 10 million ft of tubing and hose and about half a million fittings. We’re talking 38 different product lines. Most of our competitors shut down lines and depleted their inventory, but our stockpile allowed NewAge to maintain its commitment to ship 98% of orders the same day. It also meant that when order volume increased we didn’t have the two-week lead times our competition did.”
NewAge started out as just a distributor, importing product primarily from Europe for sale in the U.S. But it back-integrated into manufacturing in the 1980s when imported product quality started to decline and currency fluctuations became unfavorable. It started out with one production line for PVC and PUR braided and unbraided hoses.
Today, NewAge’s line of industrial hoses is considered among the most extensive in the industry. Sold worldwide, they are made in a wide range of sizes in materials that include PVC, PUR, silicone, nylon, and fluoropolymer. They have been a mainstay of its business since it first opened its doors. NewAge’s philosophy of maintaining healthy inventory levels and giving the customer what it wants—the first time—also hasn’t changed since Day 1.
NewAge is also far more than just a tube maker—its post-extrusion processes include a gamut of fabrication services such as printing and striping, overbraiding or jacketing, coiling, and heat forming.
NewAge became an employee-owned company in 2006 when it established an Employee Stock Ownership Plan (ESOP). It was a decision that Baker maintains has also contributed to the firm’s success. “When team members have a piece of the action and have compensation at risk, they become connected to the company they work for,” he says. “We spend too much time either at work or thinking about work not to have a connection.” The company’s employees are a loyal group as well. Of its 93 employees, 11 have been with NewAge at least 20 years, and 14 others another 10 years or more. The average sales manager has been with the processor 25 years.
NewAge is also old school when it comes to things many industrial companies have long abandoned. There is no automated telephone service; a receptionist answers the phone and directs callers to the appropriate party.
But that’s not to say NewAge is afraid of new things. And when it does venture into a new area, its commitment is full-bore. In 2002, NewAge responded to customer requests and ventured into the business of highly engineered, silicone-based, single-use tubing systems marketed under the tradenamed AdvantaPure (advantapure.com). The high-purity tubes are aimed at pharmaceutical and biotech firms for drug research and production.
The tubes themselves, made on extruders supplied by Davis-Standard LLC, Pawcatuck, Conn. (davis-standard.com), are just a part of what is normally a system consisting of as many as 20 different components. All are fabricated in one of five ISO Class 7 clean rooms NewAge has built since 2000. The company recently announced that construction is under way to add two more Class 7 clean rooms, expanding its overall production capacity to 45,000 ft².
NewAge actually designed and built several insert molding machines to support this venture. These presses are used to overmold liquid silicone manifolds that provide a seamless connection between tubes. The processor also has a 100-ton LSR press supplied by Engel Machinery Inc., York, Pa. (engelglobal.com/na) to make stoppers and bio-closures.
The investment into the new product line is well into seven figures, Baker says, but this business currently accounts for more than 40% of NewAge’s overall sales volume. “Getting into high-purity tubing isn’t something you suddenly decide to do,” he states. “There is a tremendous amount that is involved: building a cleanroom, getting it third-party certified, buying the equipment (NewAge designs its own tooling for the silicone tubing), and spending hundreds of thousands of dollars to test our product to ensure the biocompatibility of our material to the drug.” To that end, NewAge has six employees dedicated exclusively to quality control.
NewAge has built a warehouse just for its high-purity line, and ships products to more than 35 countries around the world. “We built our way into this business,” Baker states. “Some others have bought their way into it (through acquisition). But we are not in the business of buying and selling companies. We are in the business of providing service and solutions to our customers.”