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Weaving Technology based Automated Production Processes in the Composite Industry (We TAP IN)

Periodic Reporting for period 1 - We TAP IN (Weaving Technology based Automated Production Processes in the Composite Industry (We TAP IN))

Reporting period: 2015-07-01 to 2016-01-31

The feasibility study of the project We TAP IN (Weaving Technology based Automated Production processes in the composite INdustry) intended to investigate the commercial viability of a high quality unidirectional tape manufacturing process.
A high level summary of the results of the feasibility study is provided in the following paragraphs.

On the market side there is a high worldwide growth in the usage of composite materials. Carbon fiber based reinforced plastics have the highest growth rates. The key driver for the increased usage of carbon is the automotive industry. The reason why the automotive industry in focus so much on the increased usage of carbon fiber materials is simple: weight reduction. The automotive industry is faced with a worldwide governmental based induced targets to reduce the CO2 level per km over the coming year at a fast pace.
The use carbon based composite is still a fraction of glass fiber reinforced plastic market demand. Where the Global demand of carbon fibers amounted to 65 kilotonnes in 2015, only the European production volume of glas reinforced plastics amounted 1.065 kilotonnes in 2016. In other words, in 2015 the Global amount of carbon fiber amounted to 6% of the European production of glass fiber based composite industry. Besides the volume based benefit of focusing on high quality glass fiber UD tapes, the usage of glass fiber UD tapes provides significant benefits for specific applications in the automotive industry.

It is remarkable that all major carbon fiber manufacturers have established partnerships in the automotive industry. On the glass fiber thermoplastic side, 2015 turned out to be full of strategic activities. Three European Chemical giants all acquired a small company with thermoplastic fiber (tape) expertise. It is likely that getting grip on specific knowledge to realize a position in the market was the key decision parameter for the acquisitions, not the profitability of the company as such.

During the feasibility study a set of technical drawings of the envision UD tape production line has been realized. Quotations from a number of different companies have been obtained, throughput capacities and critical stages have been analyzed. Product specification by potential clients, product market combinations and minimal viable products have been defined.

Based on scenario analyses the commercial viability has been analyzed. Depending on the scenario a gradual growth in production capacity is foreseen up to 3.500 – 5.000 tonnes on an annual basis. When effectuated a solid business case with a double digit million net present value can be realized. An investment horizon of over 5 years is desired to capitalize most on the investments.

In order to establish a position in the market a profound backbone is required. Small startups without any group ties or strategic partnership with incumbent organizations do not play a significant role on the long run. Their ‘best’ contribution is an acquisition by a large incumbent organization. Dedicated in-depth technology to meet the changing and specific requirements of UD tapes is a necessity to match the demands of the market. However, technological insights is not enough. Turning a UD tape “recipe” into a production process which is optimized for large volumes is a second requirement. Next to that the bargaining power of incumbent manufacturing companies, especially multinationals cannot be overestimated. Purchase power and procurement strategy brings costs significantly down. Once established, scaling up is the next strategic priority. Not having to go through an investment round of a couple months is a huge advantage in order to enable high growth rates in a short period of time.
A strategic collaboration or a joint venture from day one is a very much valued organizational objective.
At the start of the grand submission for the feasibility study a close relation and tight co-development was foreseen with an incumbent organization. The technical textile manufacturing company had an outspoken intention to enter the composite industry. The feasibility study provided momentum and priority to make joint progress. As a result:
 Key activities, focus areas and responsibilities were A
 A plan of action has been constructed
 Negotiation have successfully been managed in order to prepare for a joint ventur
 An preliminary agreement for the joint venture has been constructed and verbally approved by management / shareholders of both companies
Then, out of the blue the co-development partners announced that they had to end the cooperation. Reason being a hard downturn in sales volumes in export markets due to pan European developments and and international supplier which could no longer provide the requires products. All in all a situation which required all attention and priority. Hence there was no longer place for new business development and an investment trajectory. This news can by the end of the summer.

The event was a serious setback. Having said so we went on and sought contact with relevant organizations matching the profile. In our quest for a new strategic partner we had meetings with three multinationals in:
 The Netherlands,
 Belgium, and
 Germany

The Belgium based organization turned out to be the best match (ambition, strategy, focus, culture) for a joint continuation of the feasibility trajectory. After a first meeting:
 a NDA has been signed after which we could get into more details of the envisioned production line for thermoplastic UD tapes. After a reflection,
 the Belgium based company decided to continue a joint feasibility search on the technical, commercial and practical possibilities to produce and commercialize UD tapes to the market under a co-development trajectory, and
 explore the possibilities for a joint venture

In order to get the required insights for the feasibility study the following activities have been executed:
 Desk search
 Attending a composites conference
 B2B matchmaking (through Europe Enterprise Network)
 Company visits (in The Netherlands, Belgium, England, Germany)
 set of technical drawings have been constructed for the UD tape production line
 Quotations for the realization of the UD tape production line
 An extensive business plan with financial paragraph has been realized
The feasibility study provides a better negotiation position and a higher degree of trust worthiness. It provides the insights to indicated what the business case is, how much investment capital is required, what the payback time is, what the strategy and market demands are, etc.

The withdraw of the co-development partner was a setback and resulted in inevitable delays. Both during the feasibility study as in the level of commitment and progress towards an operational UD tape production line and associated commercial exploitation activities. The feasibility study is finished with the realization of a business plan. Bringing the new business activities to practice depends on an agreement to be realized with an incumbent organization.
Sketch impression of the UD production line