For anyone lamenting the decline of big U.S. innovators like Kodak or worried that U.S. industry is losing its creative mojo, we bring you this good-news story—a reminder that some manufacturers have gotten innovation right:
Milliken & Co. of Spartanburg, S.C., arguably should have been crushed by global competition, just like Kodak. Its roots are in the textile industry, a labor-intensive business that long ago decamped for lower wages abroad, leaving abandoned mills throughout the Southeast.
And yet a visit to Milliken's vast campus finds the company thriving.
"All of Milliken's traditional textile competitors are gone," says John Fly, a top executive who just wrapped up 45 years at the company. "They're out of business. And Milliken is having the best economic performance it's ever had. It's clear we did something different."
What Milliken did was first try to hold back the flood of cheap imports—a strategy that chewed up management time and ultimately failed. But then it diversified rapidly out of traditional textiles and moved deeper into niche products that built off its knowledge of textiles and specialty chemicals. And it bore down on scientific research and manufacturing innovation.
Today, Milliken makes the fabric that reinforces duct tape, the additives that make refrigerator food containers clear and children's art markers washable, the products that make mattresses fire resistant, countertops antimicrobial, windmills lighter, and combat gear protective.
Along the way it has amassed thousands of patents, focusing on specialty fabrics and chemicals, floor coverings and performance products. Milliken boasts that we come in contact with its many products almost 50 times a day.
"They were different because of their willingness to change," says Bill Fischer, co-author of "The Idea Hunter" and an expert on innovation. "And they moved fast."
Milliken trumpets the transformation. "We're an innovation company," says Joe Salley, chief executive. Printed on the side of Milliken trucks barreling down the interstate is this mantra: "Quality Leadership Through Research." Two division presidents and the CEO have Ph.D.s. Milliken has 7,000 employees in manufacturing operations around the world, and 350 of its management staff have advanced degrees, more than a third of those Ph.D.s.
Milliken eventually opened a business that teaches other companies about product and manufacturing innovation. Awards from peer groups rolled in, and Fortune magazine named Milliken one of its "best companies to work for."
Up in the labs, Chris DeSoiza, the head of research, explains why. Milliken, he says, is able to nab graduates from the best schools because they can do deep science at the company. Walking down Milliken's Innovators Hall of Fame, where employee names are posted alongside patents, Mr. DeSoiza says researchers can use 15% of their time to investigate whatever they like. Proven innovators get 50%.
The idea is to let researchers follow their curiosity to a marketable end. And if the boss doesn't like your idea, there are other venues in the organization you can petition—and that have the power to greenlight your project. Every month, Milliken also brings in outside experts to share ideas and stir the pot.
Some recent speakers: top researchers from Corning, 3M, IBM and the Massachusetts Institute of Technology.
"Culture is everything," says Mr. DeSoiza.
Roger Milliken, the patriarch of the closely held company, is credited by people inside and outside Milliken with creating that culture. Mr. Milliken, who died at the age of 95 in 2010, pounded the drum for new products, new ideas and better manufacturing techniques—vision from the top that's evident at other innovative companies, both public and private.
He was also an old-fashioned protectionist, wielding his influence in politics like a meat ax. He criticized Nafta and other free-trade accords as dangers to American manufacturing. He also sponsored politicians who backed his efforts to block imports of textiles and condemned those who didn't.
But his was a finger in a leaky dike. Mr. Milliken lost his battle to win tariffs that might have protected his business and the status quo. As cheap textiles flooded into the U.S., he was forced to close plants. The company turned instead to its climb up the value curve, making a virtue of necessity.
While Milliken doesn't disclose its financial data, Mr. Fly says revenue and profit have been rising steadily. Mr. Salley says the company is also debt free, has double-digit returns on invested capital, and has increased in value more than 30% since 2007 alone.
Not bad for a company caught in some of the worst turbulence of the new global economy. And not a bad example for stragglers in the rest of U.S. industry.
