Robert Clippard, Chief Marketing Officer, Clippard Instrument Laboratories and Abigayle Bessman, General Manager, Compact Automation.
Last week, ITT’s Compact Automation announced that it has acquired Clippard Instrument Laboratories’ product lines of interchangeable pneumatic cylinders. The company said that the purchase will expand its offering of air cylinders, as well as linear and rotary actuators used in applications such as robotics, packaging, and automation. For Clippard, the sale was emotional, as the cylinder product line was a real legacy — but as the company’s focus has shifted to markets such as medical, there’s been a need for more growth in the new areas.
Paul Heney, the VP, Editorial Director for both Design World and Fluid Power World, was given exclusive access to executives from both companies in the days before the acquisition was announced. Here’s his Q&A with Robert Clippard, Chief Marketing Officer, Clippard Instrument Laboratories and Abigayle Bessman, General Manager, Compact Automation
DW/FPW: The medical and life science segments have been a growth area for Clippard. How have Clippard’s customers and products been changing over the last few years?
Robert: The pivot that we have made over the years is from a mindset of being a general pneumatic supplier — just a supplier of pneumatic components, period. For our company, competing with billion-dollar international corporations was something where we recognized that we needed to build specific expertise to really carve out our niche. We’ve always claimed the niche of miniature, having been the pioneers, the inventors of miniature pneumatic. But over the years, as people have miniaturized their products, it’s hard to still stake that claim.
This really began in 2015; that was the real push and emphasis for pivoting the product line. We’re still offering all the same great products and everything else in terms of our valve lines, but we’ve added the Teflon products — our NR series. Again, it was a big jump for us because we’re now machining exotic plastics and we’re doing it to tens of a thousandths, as opposed to the thousandths that we would normally do with brass. The complexity of that type of product really opened our eyes to the advantages of having that higher value, higher expertise in specific markets, as opposed to being that jack of all trades, master of none.
We’re not going to survive being a jack of all trades against people who are more competitive on price or have a broader offering. So, the Teflon products were one of the first steps. But our strategic plan really calls out three expertise areas and that’s ultra-low leak, precision pressure control, and high-resolution flow control. The products that we’ve added over the last four or five years all fall into one of those three — or multiples — in terms of that expertise.
Cordis, our pressure controller series, is going gangbusters right now. Our supply chain headaches are just immense — we’re quoting 52 weeks on lead times. It’s crazy. We’re ahead of the game against all of our competition on our standard lead times, but on that particular product line with the microchips, it’s a nightmare. Anyway, the whole product pivot for us is really just becoming experts in those three specific areas.
DW/FPW: Tell me about how the decision to sell the cylinder line came about? And can you provide more on the history of that line at Clippard?
Robert: Sure, I’ll start with a brief history; it started in 1949. It was the first miniature rolled pneumatic cylinder in the world. We started that miniature pneumatic market. And that was the very first product that we did, first pneumatic product that we did. And that was a 3/8-in. bore, 1/2-in. stroke cylinder that we use for testing electronic devices.
Then we created the valves and fittings and little things to go with it, because they didn’t exist. [Those products] weren’t in the marketplace. That eventually became the lead of what we do in our business. Over the years, we’ve developed cylinders and had a really strong business. We’ve always, always been touted for our quality over others in the industry. We’ve always been touted for our lead times being very strong. We’ve been competitive on price.
But as things change and as we move forward, we see the opportunities in valves being the bulk of our business growth. And we’re at a point now where over the last three years, it’s been double digit growth, year over year. In fact, this year, it’s 24% for the first six months.
The growth that we’re experiencing is just phenomenal. We’re blessed and thankful for that — but because of that, we need as many resources pointed in that direction as possible for where we’re growing and having these opportunities. Cylinders was a hybrid in that somebody would call — and you’d have to be able to make one or make a thousand. So, whether it’s an MRO application or an OEM application, the responsiveness in cylinders would actually pool our resources from that OEM-driven mindset that we want our sales team to have, which would then trickle through the whole organization. From a marketing perspective, we step back, we look at cylinders, and it doesn’t fall under those three categories. And those three categories are what we identify as being our strengths, our biggest growth opportunities. It’s more of a niche. They’re smaller markets than what cylinders are. But our percent win rate and success rate in those areas is much higher.
With that growth that we’re having, we need floor space, we need machines, we need people, we need all those things. So, we look at cylinders with a very heavy heart because we love cylinders and the legacy of the line and what it did for the company is just tremendous. From Bill Clippard to the board to the employees on that line, it was an extremely difficult decision to make. But to us, it’s a strategic move for growth. It’s a divestment, but it is positioning us for even better focus, more intentional efforts towards where we’re winning the most. We love cylinders. It’s a great market. We hate to see it go. But we have found an excellent partner that has the exact same strategy on the actuating side, on the cylinder side, because we could not continue to grow and sell cylinders the way we want to without additional cylinder lines to support it.
Then there’s ITT Compact Automation, which has all these cylinder lines; they would like more cylinder lines to further bolster their sales. So, it’s not just a strategic product win-win, but finding a company that has the same mindset for people first, the same values, the ease of doing business has been tremendous.
DW/FPW: Abigayle, how do you see the pneumatic cylinder line fitting into Compact Automation’s portfolio?
Abigayle: This is a great addition for us. We have our original Compact Automation inch and metric lines. We’ve got slides. We’ve got grippers. We have all these different actuation products, such as our Turn-Act rotary lines, which are very, very popular. A great part of our portfolio and one of our selling points is that our products are small, powerful, configurable, and repairable. But we do not have anything non-repairable in our current line. And that’s what the Clippard product has.
We’ve actually, for several years, been in a partnership with Clippard to do a private label. Adding some non-repairable products to our product line is something that we’ve been interested in for a while. And we really liked Clippard’s products. They have a great reputation. They have a really nice design. They have, as Rob mentioned, a good reputation for quality and lead time. They fit really well with our business model. So, when the opportunity came to make it a full part of the Compact Automation family, that was a no brainer. It’s a great addition to the lines that we have.
DW/FPW: In parallel with what I asked Robert, can you tell me how your company has grown and changed in the last few years? Has your customer base changed? What are the trends that you’re seeing at Compact Automation?
Abigayle: Automation is a great market to be in right now. Even through the last few years, which have had a lot of upheaval, there’s a lot of interest in continuing to automate our manufacturing processes. All of the disruptions in supply chain, all of the disruptions and shortages of labor are problems that in the short- to mid-term can be solved by automation. It’s a really exciting space to be in. Compact has spent the last eight to 10 years finding the right focus and strategy to really grow our business, to get the right resources in place, to be focused on our customer’s needs. Meeting every need that a customer has, having really excellent engineering resources, being very easy to do business with — including those one-piece orders, which a lot of our competitors find challenging.
There’s no minimum order quantities with Compact Automation. We understand that customers have different needs in different environments. We are striving to be really high performing in a high-mix manufacturing environment. And that’s something that there is definitely a need for in the market — and that our customers value. The addition of the non-repairable line for us is going to fit really well with that existing strategy.
DW/FPW: For customers who are currently using Clippard’s cylinders, how is the transition going to look for them? And how would you describe the timing on everything?
Abigayle: We’re making an effort to make this as seamless as possible. The products are currently sold through distribution. We will maintain the existing distribution network. So, if customers are using Clippard’s cylinders and they buy it from their local distributor up the road, they will continue to buy it from that distributor. They won’t really see a difference other than the logo on the outside of the cylinder is going to look different. It shouldn’t be a big impact to the customer base. We want to continue serving them in the way that they’ve always done business. The timing: we’re in the middle of our transition already. We’re working through it. But the manufacturing is going to relocate from the Clippard facilities in Ohio to the Compact Automation plant in Westminster, South Carolina at the beginning of September. And so, starting mid-September, we will be producing all of the cylinder lines in South Carolina.
DW/FPW: Abigayle, how do you see the cylinder line growing or evolving in the next five years? Do you already have plans or are you going more with like a wait and see game, focusing on the transfer?
Abigayle: We do have some plans. There are some choices that Clippard has made as part of their strategic plan over the last three to five years in terms of making it fit well with their business. That we will reevaluate. There are some different options and configurations that are no longer available. And there are some product lines that are part of their cylinder business that were designed and either not launched or launched and discontinued shortly. And we think that those are great products. The design basis is there. We think Compact Automation’s business model is better suited to support those product lines. So, we will be looking at bringing back some things that didn’t make sense for Clippard — but that are great products.
DW/FPW: Who initiated the transaction?
Robert: I think it was Clippard. Again, there was a relationship established already. So that obviously made it easy to bounce ideas off the wall and see which ones would stick. But again, we reached a point in our growth and capacity where we were forced, essentially, to have to start making some tough decisions. Like I said earlier, it’s not a decision we necessarily wanted to make. But it’s just one of those things in business. And it was quite interesting because it was on paper. It made perfect sense. It was a strategic move where nobody could argue the validity of the business decision. It was such an emotional decision for us; having that line do what it has done for our company, it almost felt like we were betraying that line in some regards.
That line’s been good to us over the years. And it’s funny — you start talking to it as if it’s a person or a pet, not a product. But it just shows the care, the devotion, the attention to design and craftsmanship, and all the employees who put so much effort into it over the years. It was a difficult decision. But having that conversation with Compact, Abigayle and her team made that easy for us because they got it. They understood that.
Abigayle: We’re really proud to be entrusted with the product line. It’s got a great legacy, and we think that it has great future. We’re really, really excited to have the opportunity to carry it through its next phase.
Robert: It was said in one of our board meetings that it is the end of an era for Clippard on cylinders. And especially, a market that we began. So yes, it’s the new era that we’re doing it for, and we’re excited about the future.
DW/FPW: Can you provide any financial aspects to the sale?
Robert: It’s definitely a significant part of our business. But again, we are more than replacing the value of that business within about 18 months. Its timing makes good sense for us. We’ve surpassed what we’re divesting just this year on it. So again, with that growth rate that we have, it’s the right time to do it because we need the resources to move forward.
DW/FPW: Is this a one-off transaction, or do you expect future cooperation or transaction between the two companies?
Abigayle: We’ve been working closely together for several years already and there are synergies between the products that Clippard will still be making and the products that we produce. So, I expect that we’ll continue to have a close business relationship and opportunities to collaborate in the future.
Robert: Yes. It’s producing cylinders and then having this company down in South Carolina that also produces cylinders … you could argue that we were pseudo competitors. But this actually positions both of us to have unique focuses where we can support each other with opportunities and different things in the future. So yes, it’s a definitely a win-win.
Filed Under: Uncategorized
