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Kimberly-Clark Corporation

Kimberly-Clark Corporation

P.O. Box 619100
Dallas, Texas 75261-9100
U.S.A.
Telephone: (972) 281-1200
Fax: (972) 281-1490
Web site:http://www.kimberly-clark.com

Public Company
Incorporated:
1880 as Kimberly & Clark Company
Employees: 66,300 (2000)
Sales: $13.98 billion (2000)
Stock Exchanges: New York Midwest Pacific
Ticker Symbol: KMB
NAIC: 313230 Nonwoven Fabric Mills; 322121 Paper (Except Newsprint) Mills; 322291 Sanitary Paper Product Manufacturing; 339112 Surgical & Medical Instrument Manufacturing

Over 130 years since its founding, Kimberly-Clark Corporation is one of the worlds leading producers of tissue, personal care products, and health care products. The company sells its products in 150 countries and maintains manufacturing operations in 41 countries. In addition to its market leaders in tissues and feminine-, child-, and incontinence-care products (which include the brands Huggies, Kotex, Depend, Kleenex), Kimberly-Clark is also a major producer of premium business, correspondence and technical papers. The company is also the market leader in health care products such as facemasks, surgical gowns, and sterilization wrap, and, with its 1999 acquisition of Safeskin, Kimberly-Clark is currently the number one producer of examination gloves in the United States.

Early History

Kimberly, Clark & Company was founded in Neenah, Wisconsin, in 1872 as a partnership of four men: John A. Kimberly, Charles B. Clark, Frank C. Shattuck, and Kimberlys cousin, Havilah Babcock. The company began the first paper mill in Wisconsin. Its initial product was newsprint made from linen and cotton rags. Within six years, the company expanded by acquiring a majority interest in the nearby Atlas paper mill, which converted ground pulpwood into manila wrapping paper. The business was incorporated in 1880 as Kimberly & Clark Company, with John Kimberly as president. In 1889, the company constructed a large pulp- and paper-making complex on the Fox River. The community that grew up around the factory was named Kimberly, in honor of John Kimberly.

Among the companys early innovations was the paper used for rotogravure, a procedure for printing photographs with a rotary press. In 1914, researchers working with bagasse, a pulp by-product of processed sugar cane, produced creped cellulose wadding, or tissue. During World War I, this product, called cellucotton, was used to treat wounds in place of scarce surgical cottons. At that time field nurses also discovered that cellucotton worked well as a disposable feminine napkin. The company later recognized the commercial potential of this application and, in 1920, introduced its Kotex feminine napkin.

In 1924, the company introduced another disposable tissue product, Kleenex, to replace the face towels then used for removing cold cream. A survey showed, however, that consumers preferred to use Kleenex as a disposable handkerchief, prompting the company to alter its marketing strategy entirely. Nationwide advertisements promoting Kleenex for its current use began in 1930, and sales doubled within a year. Uncomfortable marketing such personal-care items as feminine napkins, Kimberly & Clark had created a separate sales company, International Cellucotton Products, which it contracted to manufacture Kotex and Kleenex.

Expansion from 1920s to 1960s

During the 1920s the company built a Canadian pulp mill and power plant called Spruce Falls Power and Paper Company in Kapuskasing, Ontario. In 1925 the company formed what would become Canadian Cellucotton Products Limited, for marketing cellucotton products internationally. The following year Kimberly & Clark, in partnership with the New York Times Company, added a newsprint mill to the Spruce Falls complex and expanded its pulping capacity.

The company was reorganized and reincorporated in 1928 as Kimberly-Clark Corporation. That same year, as shares of Kimberly-Clark were being traded on the New York and Chicago stock exchanges for the first time, John Kimberly died. He was 90 years old and still president at the time of his death.

In the 1930s, Kimberly-Clark concentrated on marketing its new products. During World War II, the company devoted many of its resources to the war effort. The company also contracted Margaret Buell, creator of the cartoon strip Little Lulu, to promote Kleenex. Buell and Little Lulu continued to promote Kleenex for Kimberly-Clark into the 1960s.

After the war, Kimberly-Clark initiated a growth program to handle revived consumer product demand. Facilities were built or acquired in Balfour, North Carolina, and Memphis, Tennessee, in 1946, and in Fullerton, California, and New Milford, Connecticut, in the late 1950s. Pulp production at Terrace Bay, Ontario, was launched in 1948, and in 1949 the company, along with a group of investors and newspaper publishers, began the large Coosa River Newsprint Company in Coosa Pines, Alabama. Kimberly-Clark acquired the Michigan-based Munising Paper Company in 1952, Neenah Paper Company in 1956, Peter J. Schweitzer, Inc.which had mills in France and the United Statesin 1957, and the American Envelope Company in 1959. International Cellucotton Products Company formally merged with its parent company in 1955, as did Coosa River Newsprint Company in 1962.

Throughout the 1960s the tampon, first manufactured by Tampax, gained favor among women and ate into Kotexs market share. Kimberly-Clark turned its attention to new products. In 1968 the company introduced Kimbies, a disposable diaper with tape closures. Initial sales were strong despite competition from Procter & Gambles Pampers. While Kimberly-Clark tended to its diverse operations, however, it failed to keep up with early disposable diaper improvements and market innovations. As a result of continued poor sales and leakage problems, Kimbies were withdrawn from the market in the mid-1970s. Competition in the infant-care product industry caused Kimberly-Clark to reevaluate the balance between its consumer products and lumber and paper products divisions.

Restructuring in the 1970s

Darwin E. Smith, who was elected president of Kimberly-Clark in 1971, took on Procter & Gambles challenge. Smith decided that to compete properly in consumer product markets Kimberly-Clark had to prune its coated-paper business. Within one year of taking control of the company, Smith initiated changes that included the sale or closure of six paper mills and the sale of more than 300,000 acres of prime northern California land. With cash reserves of more than $250 million, primarily from the land sale, Smith then inaugurated an aggressive research campaign. He assembled a talented research and development team by hiring specialists away from competitors. The companys advertising budget was increased substantially, and plans were made for the construction of additional production facilities.

Marketing was central to Smiths strategy for growth, as Kimberly-Clark emphasized its commitment to consumer products. Research and development efforts enlarged the companys technological base from traditional cellulose fiber-forming technologies to lightweight nonwovens utilizing synthetic fabrics.

A new premium-priced diaper in an hourglass shape with refastenable tapes was introduced in 1978 under the name Huggies. By 1984, Huggies had captured 50 percent of the higher quality disposable diaper market. The sudden popularity of the product caught Kimberly-Clark by surprise, and it was forced to expand production to meet consumer demand.

Diversification in the 1980s

Facial tissue and feminine-care products were also part of Kimberly-Clarks growing consumer product operations. In 1984, it was estimated that the companys Kleenex brand held 50 percent of the tissue market. A chemically-treated virucidal tissue called Avert was test-marketed that same year, but the higher price and limited utility of the product prevented it from gaining widespread popularity. Aimed at health care institutions and at companies as a product to reduce absenteeism, Avert never really got off the ground, and in 1987 Kimberly-Clark decided not to mass market the product.

The 1980, toxic shock syndrome scare caused a slump in tampon sales. Kimberly-Clark began an aggressive advertising campaign on television for Depend incontinence products in the early 1980s. At the time, incontinence products were as unmentionable as feminine-care products had been some 60 years earlier. The promotion resulted in Depend gaining a profitable share of the incontinence products market, and it quickly became the best-selling retail incontinence brand in the United States. In an effort to broaden its position in therapeutic and health care products, Kimberly-Clark acquired Spenco Medical Corporation in Waco, Texas, that same year.

Company Perspectives:

Kimberly-Clark is a leading global manufacturer of tissue, personal care, and health care products with manufacturing facilities in 41 countries and product sales in more than 150. Employing more than 66,000 people worldwide, Kimberly-Clark posted sales of nearly $14 billion in 2000. We are home to some of the worlds most trusted and recognized brands including Kleenex, Kotex, Scott, Depend, Huggies, and Pull-Ups. In 76 countries, our products are No. 1 or No. 2 in market share. Nearly one-fourth of the worlds population, or 1.3 billion people, use Kimberly-Clark products each year. We are one of the leading tissue manufacturers in the world and are the second largest household and personal care products company in the U.S. We are a large and diverse community of individuals who trust and respect one another as we work to enhance the quality of life for people around the world. We are motivated to continually deliver superior products and exceed the expectations of our shareholders, our customers, and ourselves.

Although sales from primary growth operationspersonal-care productswere increasing, approximately 25 percent of Kimberly-Clarks sales continued to come from the pulp, newsprint, and paper businesses. The company further diversified its operations in 1984 by converting its regularly scheduled executive air-shuttle service into a regional commercial airline.

The companys foray into aviation was initiated by the purchase of a six-seat plane in 1948 to shuttle executives between company headquarters in Wisconsin and Kimberly-Clark factories around the country. With six planes in 1969, Smith, then an executive vice-president for finance, suggested that company air travel be converted from a cost center into a profit center by offering corporate aircraft maintenance services. K-C Aviation, as the subsidiary was called, later remodeled three DC-9s and in June 1984 initiated flight service between Appleton and Milwaukee, Wisconsin; Boston; and Dallas, Texas. The fledgling airline, operated under the name Midwest Express, got off to a rocky start with a 1985 crash in Milwaukee, planes flying 80 percent empty, and large operating losses. By 1989, however, the operation was in the black, with planes at 66 percent capacity; a $120 million expansion increased the number of destinations to 15 cities and the airline boasted a fleet of 11 DC-9s.

In 1985, stating that the state had a bad climate for business, Smith relocated Kimberly-Clarks headquarters from Wisconsin to Texas. Just before this move Kimberly-Clark was sued by Procter & Gamble, who claimed that Kimberly-Clark had unlawfully infringed on its patented disposable diaper waistband material. Huggies had increased its market share to 31 percent, upsetting Procter & Gambles Pampers. After nearly two years of litigation, a federal grand jury ruled against Procter & Gamble. Kimberly-Clark enjoyed further successes in its ongoing diaper rivalry with Procter & Gamble later in the decade when it introduced the extremely popular Huggies Pull-Ups disposable training pants in 1989. This product extension helped Kimberly-Clark trim Procter & Gambles market share lead, as well as propel Huggies into the number one position in the disposable diaper market.

1990s and Beyond

Starting in the late 1980s, Kimberly-Clark began another diversification programthis time geographically, targeting Europealthough the companys largest international growth would come in the early and mid-1990s. To keep the company growing at a healthy pace, Smith began to increase Kimberly-Clarks presence in Europe in 1988. From that year to 1992, the company invested nearly $1 billion in European plants. Although revenues from its European operations increased steadily, the huge investments (totaling $700 million in 1993 alone) and restructuring charges that went along with them began to affect the companys profits. Net income of $435.2 million in 1991 fell to $150.1 million in 1992 before recovering slightly to $231 million in 1993.

Meanwhile, the company further reduced its commodity papers operation in 1991 when it sold Spruce Falls Power and Paper. The following year, Smith, the architect of Kimberly-Clarks restructuring and diversification efforts since 1972, retired as chairman and was succeeded by Wayne R. Sanders. The new chairman had worked his way up the ranks and had spearheaded the risky endeavor of developing Huggies Pull-Ups. The year 1992 also saw the introduction of Huggies Ultra Trim diapers.

Under Sanderss leadership, it appeared as if the company would divest itself completely of its commodity papers roots. Kimberly-Clark announced in late 1994 that it would explore the sale of its North American pulp and newsprint operations. The following year, however, the company decided not to sell because pulp and newsprint prices rose so high it no longer made economic sense to do so. Kimberly-Clark did divest its cigarette papers business in mid-1995 by spinning it off into a company called Schweitzer-Maudit International Inc. after shareholders initiated a proxy fight in 1994, concerned about the potential costs of liability lawsuits against tobacco, which were then beginning to gain strength.

Key Dates:

1872:
Company founded as Kimberly, Clark & Company in Neenah, Wisconsin.
1880:
Company incorporated as Kimberly & Clark Company.
1920:
Company introduces Kotex feminine napkins.
1924:
Company introduces Kleenex tissues.
1928:
Company reorganized and reincorporated as Kimberly-Clark Corporation.
1942:
Company produces M-45 anti-aircraft gun mounts for the Armed Forces in World War II.
1948:
Company launches pulp production in Ontario.
1949:
Company helps found the Coonsa River Newsprint Company.
1952:
Company acquires Munising Paper Company.
1956:
Company acquires Neenah Paper Company.
1957:
Company acquires Peter J. Schweitzer, Inc.
1959:
Company acquires American Envelope Company.
1968:
Company enters disposable diaper market with its Kimbies product.
1978:
Company introduces Huggies disposable diapers.
1980:
Company introduces Depend incontinence products.
1985:
Company relocated from Wisconsin to Dallas, Texas.
1995:
Company merges with Scott Paper Co.
1997:
Company acquires Tecnol Medical Products.
1999:
Company acquires Attisholz Holding and Ballard Medical Products.
2000:
Company acquires S-K Corporation.
2001:
Company introduces Cottonelle Fresh Rollwipes.

In 1995 Sanders engineered the deal that would usher in a new era for the company: the merger of Kimberly-Clark with the Scott Paper Co. The deal was the logical culmination of Kimberly-Clarks international expansion, since Scott was globally strong and held the number one position in tissue in Europe. The $9.4 billion deal led to a 1995 charge of $1.4 billion for Kimberly-Clark to consolidate the merger, which led to the layoff of 6,000 workers and the sale of several plants. To pass antitrust muster, Kimberly-Clark had to sell the Scotties facial tissue operation, two of four tissue plants in the United States, and its Baby Fresh, Wash-a-Bye Baby, and Kid Fresh brands (which it sold to Procter & Gamble).

The merger with Scott solidified Kimberly-Clarks position as the number two player in the paper products industry and nearly doubled the companys revenues. The merger also marked a change in direction for the company from a focus on low-margin paper and pulp production to higher-profit consumer products. Realizing that its entry into the diaper wars with Proctor & Gamble would require streamlined operations, Kimberly-Clark began to divest itself of its pulp and paper manufacturing business in late 1996. The company shut down mills in Alabama, Canada, and Spain. By the end of 1997, pulp production fell to 30 percent of the companys worldwide consumption, down from 80 percent at the beginning of that year.

The company also began to expand its line of professional health care products. In 1997, Kimberly-Clark acquired Tecnol Medical Products, manufacturer of half of all surgical masks used in U.S. hospitals. In 1998, the company restructured its tissue business to consolidate manufacturing operations. The restructuring resulted in the closure of mills, including those in Maine and Wisconsin, and the loss of some 5,000 jobs. In 1999, Kimberly-Clark further divested its pulp business when it sold its Southeast Timberlands, which supplied wood to many of its defunct pulp mills.

In 1999, the company expanded its tissue operations in Europe with its acquisition of the Swiss Company Attisholz. The acquisition nearly tripled Kimberly-Clarks tissue sales in Germany, Switzerland, and Austria. That year, Kimberly-Clark continued its foray into medical and health care products by purchasing Ballard Medical Products, adding such products as respiratory suction catheters, defibrillator pads, and foam-dispensed soap to its line. That acquisition was followed later that year by the purchase of Safeskin, which gave the company the leading spot in the production of disposable surgical gloves.

The turn of the century saw the company continuing its rapid expansion through acquisitions. In 2000, the company grew its Asian markets when it acquired the Taiwanese company S-K Corporation and the Taiwan Scott Paper. In 2001, Kimberly-Clark bought the Italian company Linostar, the second largest diaper manufacturer in Italy. In 2000, the company achieved sales of nearly $14 billion. The annual report for that year reported that in coming years the company would focus on product innovation, strategic acquisitions, and geographic expansion, especially introducing Kimberly-Clark products into countries where they were not currently sold.

Principal Subsidiaries

Avent, Inc.; Ballard Medical Products; Colombiana Kimberly Colpapel S.A. (Colombia; 69%); Hakle-Kimberly Switzerland; Hakle-Kimberly Deutschland; Hogla-Kimberly (Hadera, Israel; 50.1%); Housing Horizons, LLC; Kimberly-Clark Argentina S.A.; Kimberly-Clark a.s. (Czech Republic); Kimberly-Clark Austria Holdings Pty. Ltd.; Kimberly-Clark B.V. (Netherlands); Kimberly-Clark CBG Hygenic Products company Limited (China); Kimberly-Clark Canada Inc.; Kimberly-Clark Central American Holdings (Panama; 81%); Kimberly-Clark de Centro America, S.A. (El Salvador, 81%); Kimberly-Clark Chile (60%); Kimberly-Clark do Brasil Limitada; Kimberly-Clark Ecuador S.A. (69%); Kimberly-Clark Holding Ltd. (United Kingdom); Kimberly-Clark (Hong Kong) Limited; Kimberly-Clark International, S.A. (Panama); Kimberly-Clark Japan Limited; Kimberly-Clark Kenko Industria e Comércio Ltda. (Brazil); Kimberly-Clark Lda. (Portugal); Kimberly-Clark Luxembourg S.A.R.L.; Kimberly-Clark Malaysia Sendirian Berhad; Kimberly-Clark N.V. (Belgium); Kimberly-Clark ooo, (Russia); Kimberly-Clark Paper (Guangzhou) Company Ltd. (China); Kimberly-Clark Paper (Shanghai) Company Ltd. (China); Kimberly-Clark Paraguay, S.A. (92%); Kimberly-Clark Personal Hygienic Products Co., Ltd. (China); Kimberly-Clark Personal Hygienic Products (Nanjinng) Co., Ltd. (China); Kimberly-Clark Peru, S.A. (33%); Kimberly-Clark Philippines Inc. (87%); Kimberly-Clark Poland Sp. z.o.o.; Kimberly-Clark Printing Technology, Inc.; Kimberly-Clark Products (Malaysia) Sdn., Bhd.; Kimberly-Clark Pudumjee Limited (India; 51%); Kimberly-Clark Puerto Rico, Inc. (Delaware); Kimberly-Clark S.L. (Spain); Kimberly-ClarkSID, S.A. (Dominican Republic; 80%); Kimberly-Clark Singapore Pte. Ltd.; Kimberly-Clark S.N.C. (France); Kimberly-Clark Southern Africa (Holdings) (Pty) Ltd. (South Africa; 50% plus one share); Kimberly-Clark S.p.A. (Italy); Kimberly-Clark Technical Paper, Inc.; Kimberly-Clark Thailand Limited; Kimberly-Clark Tissue Company (Pennsylvania); Kimberly-Clark Ukraine LLC; Kimberly-Clark Uruguay, S.A.; Kimberly-Clark Venezuela, C.A. (69%); Kimberly-Clark Vietnam Co., Ltd.; Kimberly-Clark Worldwide, Inc. (Delaware); KIMNICA, S.A. (Nicaragua; 81%); Ovisan Turkey (50.1%); Papeles Absorbentes, S.A. (Guatemala 75%); P.T. Kimberly-Lever Indonesia (50% plus one share); S-K Corporation (Taiwan); Safeskin Corporation (Florida); Scott Paper Company de Costa Rica, S.A. (81%); Scott Paper CompanyHonduras, S.A. de C.V. (81%); Scott S.A. (France); Taiwan Scott Paper Corporation; Tecnol, Inc.; YuHan-Kimberly, Limited (South Korea, 70%).

Principal Operating Units

Tissue; Personal Care; Health Care.

Principal Competitors

Georgia-Pacific Corporation; Playtex; Proctor & Gamble.

Further Reading

Benady, David, Kimberly-Clark Brings in US Chief, Marketing Week, July 23, 1998, p. 9.

Byrne, Harlan S., Keeping the Faith, Barrons, December 16, 1996, p. 15.

_, Paper Profits, Barrons, January 10, 2000, p. 20.

_, Strength Ahead?, Barrons, July 28, 1997, p. 13.

Byrne, John A., and Weber, Joseph, The Shredder: Did CEO Dunlap Save Scott PaperOr Just Pretty It Up?, Business Week, January 15, 1996, pp. 56-61.

Cheverton, Richard E., The Maverick Way: Profiting from the Power of the Corporate Misfit, La Palma, CA: Waypoint Books, 2000.

Cody, Harold M., Consolidation Produces Giants Hoping for Better Performance, Pulp & Paper, November 2000, pp. 37-44.

Collins, Glenn, Kimberly-Clark Plans Split of Stock and Sale of 3 Mills, Stronger Position Sought against P.& G., The New York Times, February 26, 1997, p. C2.

Forest, Stephanie Anderson, and Heidi Dawley, Pulp Fiction at Kimberly-Clark, Business Week, February 23, 1998, p. 90.

Forest, Stephanie Anderson, and Maremont, Mark, Kimberly-Clarks European Paper Chase, Business Week, March 16, 1992, pp. 94, 96.

Frankovich £ Mike, Early Intervention, Security Management, April 2000, pp. 22-24.

Freeman, Laurie, Kimberly Holds Its Own Against Giants, Advertising Age, November 19, 1984.

Glowacki, Jeremy J., Kimberly-Clark Corp.: Accelerates Global Expansion with Scott Merger, Pulp & Paper, December 1995, pp. 3435.

Goldstein, Alan, Learning a New Set of Rules: How Kimberly-Clark Adapted When E-Business Era Arrived, Knight-Ridder/Tribune News Service, January 10, 2001.

Gulfstream Buying Kimberly-Clark Aviation Unit, The New York Times, July 25, 1998, p. B3.

Hackney, Holt, Kimberly-Clark: No Escaping a Messy Diaper (Business), Financial World, April 27, 1993, p. 16.

Ingham, John N., ed., Kimberly, John Alfred, in Biographical Dictionary of American Business Leaders, Vol. II, Westport, Conn.: Greenwood, 1983.

Kaplan -Leiseron, Eva, The Maverick Way Profiting From the Power of the Corporate Misfit, Training & Development, January 2001, p. 66.

K-C Announces Global Restructuring, Pulp & Paper, January 1998, p. 23.

K-C O pts for Recycled, to Shut Mobile Mill, Pulp & Paper, July 1998, p. 23.

K-C Takes Cool Approach to its Newest Operating Room Apparel, Health Industry Today, December 1998, pp. 45.

Kimberly-Clark Acquires Tecnol, The Wall Street Journal, December 19, 1997, p. B2.

Kimberly-Clark Awards Options, The New York Times, October 23, 1997, p. C26.

Kimberly-Clark Corp., The New York Times, April 1, 1997, p. C4.

Kimberly-Clark Has Plans to Restructure Operations in Europe, The Wall Street Journal, July 7, 2000, p. A6.

Kimberly-Clark is Selling 460,000 Acres of Timberland, The New York Times, June 11, 1999, p. C4.

Kimberly-Clark Kicks in with Restructuring Plan, PPI, January 1998, p. 9.

Kimberly-Clark Plans to Increase Prices 5% for Huggies Diapers, The Wall Street Journal, April 16, 1998, p. A4.

Kimberly-Clark Revises Structure, The New York Times, December11, 1998, p. C2.

Kimberly-Clark Selling Southeast Timber, Pulp & Paper, March 1999, p. 25.

Kimberly-Clark Snatches Attisholzs Tissue Unit, PPI, June 1999, p. 15.

Kimberly-Clark Suit Alleges Infringement of Its Diaper Patents, The Wall Street Journal, March 21, 2000, p. B8.

Kimberly-Clark to Acquire Tecnol for 19 Times, Earnings, Weekly Corporate Growth Report, September 15, 1997.

Kimberly-Clark to Buy Italian Diaper Manufacturer, The New York Times, January 25, 2001, p. C4.

Kimberly-Clark to Close Pulp Mill and Cut 450 Jobs, The New York Times, May 6, 1998, p. C3.

Kimberly-Clark to Sell Lines, The Wall Street Journal, May 19, 1999, p. C27.

Kimberly-Clark Will Cut Staff 15% in Europe, Wall Street Journal, January 29, 1996, p. B2.

Kimberly-ClarkDown the Pan?, Marketing Week, April 9, 1998, p. 3.

Kimberly-Clarks Deal for Ballard Expands Industry Acquisition Trend, Health Industry Today, February 1999, pp. 1, 4.

Kruger Agrees to Buy Kimberly-Clark Unit for $256.8 Million, The Wall Street Journal, March 5, 1997, p. B2.

Lenzner, Robert, The Battle of the Bottoms, Forbes, March 24, 1997, pp. 98103.

Lieber, Ronald B., Storytelling: A New Way to Get Close to Your Customer, Fortune, February 3, 1997, pp. 102108.

Murray, Matt, Kimberly-Clark To Take Charge of $ 1.4 Billion, Wall Street Journal, December 14, 1995, pp. A3, A8.

Narisetti, Raju, For Sanders, Getting Scott Is Only the Start, Wall Street Journal, December 5, 1995, pp. B1, B12.

Neff, Jack, Kimberly-Clark Finally Reaps Boon from Scott, Advertising Age, November 8, 1999, p. 24.

Nelson, Emily, Kimberly-Clark Posts 7.8% Drop in Net, Lowers Forecast for the Rest of the Year, The Wall Street Journal, April 24, 2001, p. B8.

Parker-Pope, Tara, Contrite, Kimberly-Clarks CEO Promises to Mop Up, The Wall Street Journal, June 1, 1998, p. B1.

Pearson, John, Reforms are Bearing Fruit, Business Week, July 8, 1996, p. 86.

Purchase of Added 5% Stake in Australian Venture is Set, The Wall Street Journal, May 8, 2001, p. A14.

Richards, Amanda, Unite and Conquer, Marketing, September 18, 1997, pp. 2425.

Sheridan, John H., Going for Growth, Industry Week, June 9, 1997, pp. 3244.

Spector, Robert, Shared Values: A History of Kimberly-Clark, Lyme,CT: Greenwich Publishing Group, Incorporated, 1997.

Star, Marlene Givant, Proxy Fight at Kimberly-Clark: Investors Request Tobacco Spin-Off, Pensions & Investments, March 6, 1995, pp. 2, 41.

The Kimberly-Clark Corp to Purchase the Safeskin Corp for 3.19 Times, Revenue, Weekly Corporate Growth Report, November 29, 1999.

Useem, Jerry, Most Admired: Conquering Vertical Limits, Fortune, February 19, 2001, pp. 8496.

Wayne R. Sanders, Business Week, January 8, 2001, p. 69.

Carol I. Keeley

updates: David E. Salamie, Lisa Whipple

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Kimberly-Clark Corporation

Kimberly-Clark Corporation

P.O. Box 619100
Dallas, Texas 75261-9100
U.S.A.
(214) 281-1200
Fax: (214) 281-1289

Public Company
Incorporated:
1880 as Kimberly & Clark Company
Employees: 55,341
Sales: $13.79 billion (1995)
Stock Exchanges: New York Midwest Pacific
SICs: 2297 Nonwoven Fabrics; 2381 Dress & Work Gloves, Except Knit & Leather; 2621 Paper Mills; 2676 Sanitary Paper Products; 3841 Surgical & Medical Instruments & Apparatus; 4581 Airports, Flying Fields & Airport Terminal Services

With its 1995 merger with Scott Paper Co., Kimberly-Clark Corporation solidified its position as the number two player in the paper products industry and aimed its sights on number one, Procter & Gamble. The combined Kimberly-Clark and Scott operations created a giant, with manufacturing operations in 33 countries; the company includes more than 150 countries in its sales efforts. In addition to its powerful consumer paper products business, which includes market leaders in tissues and feminine-, child-, and incontinence-care products, Kimberly-Clark also continues to operate pulp and newsprint operations (the companys original areas of operation) and an aircraft services and air transportation unit, headed by Midwest Express Airlines.

Early History

Kimberly, Clark & Company was founded in Neenah, Wisconsin, in 1872 as a partnership of four men: John A. Kimberly, Charles B. Clark, Frank C. Shattuck, and Kimberlys cousin, Havilah Babcock. The company began the first paper mill in Wisconsin. Its initial product was newsprint made from linen and cotton rags. Within six years the company expanded by acquiring a majority interest in the nearby Atlas paper mill, which converted ground pulpwood into manila wrapping paper. The business was incorporated in 1880 as Kimberly & Clark Company, with John Kimberly as president. In 1889 the company constructed a large pulp- and paper-making complex on the Fox River. The community that grew up around the factory was named Kimberly, in honor of John Kimberly.

Among the companys early innovations was the paper used for rotogravure, a procedure for printing photographs with a rotary press. In 1914 researchers working with bagasse, a pulp by-product of processed sugar cane, produced creped cellulose wadding, or tissue. During World War I this product, called cellucotton, was used to treat wounds in place of scarce surgical cottons. At that time field nurses also discovered that cellucotton worked well as a disposable feminine napkin. The company later recognized the commercial potential of this application and, in 1920, introduced its Kotex feminine napkin.

In 1924 the company introduced another disposable tissue product, Kleenex, to replace the face towels then used for removing cold cream. A survey showed, however, that consumers preferred to use Kleenex as a disposable handkerchief, prompting the company to alter its marketing strategy entirely. Nationwide advertisements promoting Kleenex for its current use began in 1930, and sales doubled within a year. Uncomfortable marketing such personal-care items as feminine napkins, Kimberly & Clark had created a separate sales company, International Cellucotton Products, which it contracted to manufacture Kotex and Kleenex.

Expansion from 1920s to 1960s

During the 1920s the company built a Canadian pulp mill and power plant called Spruce Falls Power and Paper Company in Kapuskasing, Ontario. In 1925 the company formed what would become Canadian Cellucotton Products Limited, for marketing cellucotton products internationally. The following year Kimberly & Clark, in partnership with the New York Times Company, added a newsprint mill to the Spruce Falls complex and expanded its pulping capacity.

The company was reorganized and reincorporated in 1928 as Kimberly-Clark Corporation. That same year, as shares of Kimberly-Clark were being traded on the New York and Chicago stock exchanges for the first time, John Kimberly died. He was 90 years old and still president at the time of his death.

In the 1930s Kimberly-Clark concentrated on marketing its new products. During World War II the company devoted many of its resources to the war effort. The company also contracted Margaret Buell, creator of the cartoon strip Little Lulu, to promote Kleenex. Buell and Little Lulu continued to promote Kleenex for Kimberly-Clark into the 1960s.

After the war, Kimberly-Clark initiated a growth program to handle revived consumer product demand. Facilities were built or acquired in Balfour, North Carolina, and Memphis, Tennessee, in 1946, and in Fullerton, California, and New Milford, Connecticut, in the late 1950s. Pulp production at Terrace Bay, Ontario, was launched in 1948, and in 1949 the company, along with a group of investors and newspaper publishers, began the large Coosa River Newsprint Company in Coosa Pines, Alabama. Kimberly-Clark acquired the Michigan-based Munising Paper Company in 1952, Neenah Paper Company in 1956, Peter J. Schweitzer, Inc.which had mills in France and the United Statesin 1957, and the American Envelope Company in 1959. International Cellucotton Products Company formally merged with its parent company in 1955, as did Coosa River Newsprint Company in 1962.

Throughout the 1960s the tampon, first manufactured by Tampax, gained favor among women and ate into Kotexs market share. Kimberly-Clark turned its attention to new products. In 1968 the company introduced Kimbies, a disposable diaper with tape closures. Initial sales were strong despite competition from Procter & Gambles Pampers. While Kimberly-Clark tended to its diverse operations, however, it failed to keep up with early disposable diaper improvements and market innovations. As a result of continued poor sales and leakage problems, Kimbies were withdrawn from the market in the mid-1970s. Competition in the infant-care product industry caused Kimberly-Clark to reevaluate the balance between its consumer products and lumber and paper products divisions.

Restructuring in the 1970s

Darwin E. Smith, who was elected president of Kimberly-Clark in 1971, took on Procter & Gambles challenge. Smith decided that to compete properly in consumer product markets Kimberly-Clark had to prune its coated-paper business. Within one year of taking control of the company, Smith initiated changes that included the sale or closure of six paper mills and the sale of more than 300,000 acres of prime northern California land. With cash reserves of more than $250 million, primarily from the land sale, Smith then inaugurated an aggressive research campaign. He assembled a talented research and development team by hiring specialists away from competitors. The companys advertising budget was increased substantially, and plans were made for the construction of additional production facilities.

Marketing was central to Smiths strategy for growth, as Kimberly-Clark emphasized its commitment to consumer products. Research and development efforts enlarged the companys technological base from traditional cellulose fiber-forming technologies to lightweight nonwovens utilizing synthetic fabrics.

A new premium-priced diaper in an hourglass shape with refastenable tapes was introduced in 1978 under the name Huggies. By 1984, Huggies had captured 50 percent of the higher quality disposable diaper market. The sudden popularity of the product caught Kimberly-Clark by surprise, and it was forced to expand production to meet consumer demand.

Diversification in the 1980s

Facial tissue and feminine-care products were also part of Kimberly-Clarks growing consumer product operations. In 1984, it was estimated that the companys Kleenex brand held 50 percent of the tissue market. A chemically treated virucidal tissue called Avert was test-marketed that same year, but the higher price and limited utility of the product prevented it from gaining widespread popularity. Aimed at health care institutions and at companies as a product to reduce absenteeism, Avert never really got off the ground, and in 1987 Kimberly-Clark decided not to mass market the product.

The 1980 toxic shock syndrome scare caused a slump in tampon sales. Kimberly-Clark began an aggressive advertising campaign on television for Depend incontinence products in the early 1980s. At the time, incontinence products were as unmentionable as feminine-care products had been some 60 years earlier. The promotion resulted in Depend gaining a profitable share of the incontinence products market, and it quickly became the best-selling retail incontinence brand in the United States. In an effort to broaden its position in therapeutic and health care products, Kimberly-Clark acquired Spenco Medical Corporation in Waco, Texas, that same year.

Company Perspectives

We are a company that consistently emphasizes quality, service and fair dealing. We are a team of people who take pride in exceeding the expectations of our customers, colleagues and shareholders. As we approach a new century, our goal is to become one of the handful of companies recognized as best in the world in terms of people, products and returns to shareholders. Our plan is to keep doing what we do besteffectively putting together Kimberly-Clarks four great strengths: superior products created through innovations in our core technologies: fibers, nonwovens and absorbency; enduring trademarks recognized and trusted around the world; growing consumer and away-from-home product franchises; and a worldwide team of talented, highly motived employees.

Although sales from primary growth operationspersonal-care productswere increasing, approximately 25 percent of Kimberly-Clarks sales continued to come from the pulp, newsprint, and paper businesses. The company further diversified its operations in 1984 by converting its regularly scheduled executive air-shuttle service into a regional commercial airline.

The companys foray into aviation was initiated by the purchase of a six-seat plane in 1948 to shuttle executives between company headquarters in Wisconsin and Kimberly-Clark factories around the country. With six planes in 1969, Smith, then an executive vice-president for finance, suggested that company air travel be converted from a cost center into a profit center by offering corporate aircraft maintenance services. K-C Aviation, as the subsidiary was called, later remodeled three DC-9s and in June 1984 initiated flight service between Appleton and Milwaukee, Wisconsin; Boston; and Dallas, Texas. The fledgling airline, operated under the name Midwest Express, got off to a rocky start with a 1985 crash in Milwaukee, planes flying 80 percent empty, and large operating losses. By 1989, however, the operation was in the black, with planes at 66 percent capacity; a $120 million expansion increased the number of destinations to 15 cities and the airline boasted a fleet of 11 DC-9s.

In 1985, stating that the state had a bad climate for business, Smith relocated Kimberly-Clarks headquarters from Wisconsin to Texas. Just before this move Kimberly-Clark was sued by Procter & Gamble, who claimed that Kimberly-Clark had unlawfully infringed on its patented disposable diaper waistband material. Huggies had increased its market share to 31 percent, upsetting Procter & Gambles Pampers. After nearly two years of litigation, a federal grand jury ruled against Procter & Gamble, Kimberly-Clark enjoyed further successes in its ongoing diaper rivalry with Procter & Gamble later in the decade when it introduced the extremely popular Huggies Pull-Ups disposable training pants in 1989. This product extension helped Kimberly-Clark trim Procter & Gambles market share lead, as well as propel Huggies into the number one position in the disposable diaper market.

1990s and Beyond

Starting in the late 1980s, Kimberly-Clark began another diversification programthis time geographically, targeting Europealthough the companys largest international growth would come in the early and mid-1990s. To keep the company growing at a healthy pace, Smith began to increase Kimberly-Clarks presence in Europe in 1988. From that year to 1992, the company invested nearly $1 billion in European plants. Although revenues from its European operations increased steadily, the huge investments (totaling $700 million in 1993 alone) and restructuring charges that went along with them began to affect the companys profits. Net income of $435.2 million in 1991 fell to $150.1 million in 1992 before recovering slightly to $231 million in 1993.

Meanwhile, the company further reduced its commodity papers operation in 1991 when it sold Spruce Falls Power and Paper. The following year, Smith, the architect of Kimberly-Clarks restructuring and diversification efforts since 1972, retired as chairman and was succeeded by Wayne R. Sanders. The new chairman had worked his way up the ranks and had spearheaded the risky endeavor of developing Huggies Pull-Ups. The year 1992 also saw the introduction of Huggies Ultra Trim diapers.

Under Sanderss leadership, it appeared as if the company would divest itself completely of its commodity papers roots. Kimberly-Clark announced in late 1994 that it would explore the sale of its North American pulp and newsprint operations. The following year, however, the company decided not to sell because pulp and newsprint prices rose so high it no longer made economic sense to do so. Kimberly-Clark did divest its cigarette papers business in mid-1995 by spinning it off into a company called Schweitzer-Maudit International Inc. after shareholders initiated a proxy fight in 1994, concerned about the potential costs of liability lawsuits against tobacco, which were then beginning to gain strength.

In 1995 Sanders engineered the deal that would usher in a new era for the company: the merger of Kimberly-Clark with the Scott Paper Co. The deal was the logical culmination of Kimberly-Clarks international expansion, since Scott was globally strong and held the number one position in tissue in Europe. The $9.4 billion deal led to a 1995 charge of $1.4 billion for Kimberly-Clark to consolidate the merger, which led to the layoff of 6,000 workers and the sale of several plants. To pass antitrust muster, Kimberly-Clark had to sell the Scotties facial tissue operation, two of four tissue plants in the United States, and its Baby Fresh, Wash-a-Bye Baby, and Kid Fresh brands (which it sold to Procter & Gamble).

The late 1990s would be a period of transition for Kimberly-Clark as it worked to integrate the Scott Paper operations into its own. The company hoped that its newfound international clout, however, would make it a more formidable rival of the industry leader, Procter & Gamble, for years to come.

Principal Subsidiaries

Avent, Inc.; Carlton Paper Corporation Limited (South Africa; 50%); Chengdu Comfort & Beauty Sanitary Articles Co., Ltd. (China; 98.1%); CPM Inc.; Handan Comfort & Beauty (Group) Co., Ltd. (China; 90%); Housing Horizons, LLC; Kimberly-Clark Inova a.s. (Czech Republic); K-C Aviation Inc.; Kimberly-Clark Argentina S.A. (51%); Kimberly-Clark Benelux Operations B.V. (Netherlands); Kimberly-Clark Canada Inc.; Kimberly-Clark de Centro America, S.A. (El Salvador, 75%); Kimberly-Clark Costa Rica, S.A. (75%); Kimberly-Clark Far East Pte. Limited (Singapore); Kimberly-Clark GmbH (Germany); Kimberly-Clark International, S.A. (Panama); Kimberly-Clark Limited (U.K.); Kimberly-Clark Malaysia Sendirian Berhad (51%); Kimberly-Clark Peru, S.A. (68%); Kimberly-Clark Philippines Inc. (87%); Kimberly-Clark Puerto Rico, Inc.; Kimberly-Clark Sopalin, S.A. (France); Kimberly-Clark Thailand Limited; Kunming Comfort & Beauty Hygienic Products Co., Ltd. (China; 97.9%); Nanjing Comfort & Beauty Sanitary Products Co., Ltd. (China; 97.9%); Scott Continental N.V. (Belgium); Scott GmbH (Germany); Scott Iberica, S.A. (Spain; 99.7%); Scott India; Scott Japan Limited; Scott Limited (U.K.); Scott Paper Indonesia; Scott Paper B.V. (Netherlands); Scott Paper Limited (Canada; 50.1%); Scott Paper Company; Scott Paper Company de Costa Rica, S.A. (51%); Scott Paper Company - Honduras, S.A. de C.V.; Scott Paper GmbH (Germany); Scott Paper (Guangzhou) Limited (China; 75%); Scott Paper (Hong Kong) Limited; Scott Paper (Malaysia) Sdn. Bhd.; Scott Paper Portugal Lda.; Scott Paper (Shanghai) Co., Ltd. (China; 56%); Scott Paper (Singapore) Pte. Ltd.; Scott S.N.C. (France); Scott S.p.A. (Italy); Taiwan Scott Paper Corporation (66.7%); Thai-Scott Paper Company Limited (Thailand; 99.6%); Venekim, C.A. (Venezuela; 60%); YuHan-Kimberly, Limited (South Korea, 60%).

Principal Operating Units

Health Care and Nonwovens Sector; Household Products Sector; International Consumer & Service Sector; Logistics Sector; North American Pulp & Paper Sector; Personal Care Sector; Service & Industrial Sector; U.S. Pulp and Newsprint.

Further Reading

Byrne, John A., and Weber, Joseph, The Shredder: Did CEO Dunlap Save Scott PaperOr Just Pretty It Up?, Business Week, January 15, 1996, pp. 5661.

Forest, Stephanie Anderson, and Maremont, Mark, Kimberly-Clarks European Paper Chase, Business Week, March 16, 1992, pp. 94,96.

Freeman, Laurie, Kimberly Holds Its Own Against Giants, Advertising Age, November 19, 1984.

Glowacki, Jeremy J., Kimberly-Clark Corp.: Accelerates Global Expansion with Scott Merger, Pulp & Paper, December 1995, pp. 3435.

Hackney, Holt, Kimberly-Clark: No Escaping a Messy Diaper (Business), Financial World, April 27, 1993, p. 16.

Ingham, John N., ed., Kimberly, John Alfred, in Biographical Dictionary of American Business Leaders, Vol. II, Westport, Conn.: Greenwood, 1983.

Murray, Matt, Kimberly-Clark To Take Charge of $ 1.4 Billion, Wall Street Journal, December 14, 1995, pp. A3, A8.

Narisetti, Raju, For Sanders, Getting Scott Is Only the Start, Wall Street Journal, December 5, 1995, pp. B1, B12.

, Kimberly-Clark Will Cut Staff 15% in Europe, Wall Street Journal, January 29, 1996, p. B2.

Star, Marlene Givant, Proxy Fight at Kimberly-Clark: Investors Request Tobacco Spin-Off, Pensions & Investments, March 6, 1995, pp. 2, 41.

Carol I. Keeley

updated by David E. Salamie

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Kimberly-Clark Corporation

Kimberly-Clark Corporation

P.O. Box 619100
DFW Airport Station
Dallas, Texas 75261
U.S.A.
(214) 830-1200
Fax: (214) 830-1289

Public Company
Incorporated: 1880 as Kimberly & Clark Company
Employees: 39,664
Sales: $5.73 billion
Stock Exchange: New York

While probably best known as the maker of industry-leading Huggies diapers and Kleenex tissues, Kimberly-Clark Corporations products and services range from cigarette papers to air transportation. Originally a small newsprint maker, Kimberly-Clark (K-C) is now a highly diversified, international company divided into three primary operations. The first and most profitable division includes consumer products, such as tissues and feminine-, child-, and incontinence-care products; the second division includes newsprint and printing papers as well as tobacco papers and technical and correspondence paper products. Aircraft services and air transport ion is the third divisionits best recognized asset is Midwest Express Airlines.

Kimberly, Clark & Company was founded in Neenah, Wisconsin, in 1872 as a partnership of four menJohn A. Kimberly, Charles B. Clark, Frank C. Shattuck, and Kimberlys cousin, Havilah Babcock. The company began the first paper mill in Wisconsin. Its initial product was newsprint made from linen and cotton rags. Within six years the company expanded by acquiring a majority interest in the nearby Atlas paper mill, which converted ground pulpwood into manila wrapping paper. The business was incorporated in 1880 as Kimberly & Clark Company, with John Kimberly as president. In 1889 the company constructed a large pulp- and paper-making complex on the Fox River. The community that grew up around the factory was named Kimberly, in honor of John Kimberly.

Among the companys early innovations was the paper used for rotogravure, a procedure for printing photographs with a rotary press. In 1914 researchers working with bagasse, a pulp by-product of processed sugar cane, produced creped cellulose wadding, or tissue. During World I this product, called cellucotton, was used to treat wounds in place of scarce surgical cottons. At that time field nurses also discovered that cellucotton worked well as a disposable feminine napkin. The company later recognized the commercial potential of this application, and in 1920 introduced its Kotex feminine napkin.

In 1924 the company introduced another disposable tissue product, Kleenex, to replace the face towels then used for removing cold cream. A survey showed, however, that consumers preferred to use Kleenex as a disposable handkerchief, prompting the company to alter its marketing strategy entirely. Nationwide advertisments promoting Kleenex for its current use began in 1930, and sales doubled within a year. Uncomfortable marketing such personal-care items as feminine napkins, Kimberly & Clark had created a separate sales companyInternational Cellucotton Productswhich it contracted to manufacture Kotex and Kleenex.

During the 1920s the company built a Canadian pulp mill and power plant called Spruce Falls Power and Paper Company in Kapuskasing, Ontario. In 1925 the company formed what would become Canadian Cellucotton Products Limited, for marketing cellucotton products internationally. The following year Kimberly & Clark, in partnership with The New York Times, added a newsprint mill to the Spruce Falls complex and expanded its pulping capacity.

The company was reorganized and reincorporated in 1928 as Kimberly-Clark Corporation. That same year, as shares of Kimberly-Clark were being traded on the New York and Chicago stock exchanges for the first time, John Kimberly died. He was 90 years old and still president at the time of his death.

During the 1930s Kimberly-Clark concentrated on marketing its new products. During World War II the company devoted many of its resources to the war effort. The company also contracted Margaret Buell, creator of the cartoon strip Little Lulu, to promote Kleenex. Buell and Little Lulu continued to promote Kleenex for Kimberly-Clark into the 1960s.

After the war, Kimberly-Clark initiated a growth program to handle revived consumer product demand. Facilities were built or acquired in Balfour, North Carolina, and Memphis, Tennessee, in 1946; and in Fullerton, California, and New Milford, Connecticut, in the late 1950s. Pulp production at Terrace Bay, Ontario, was launched in 1948, and in 1949 the company, along with a group of investors and newspaper publishers, began the large Coosa River Newsprint Company in Coosa Pines, Alabama. Kimberly-Clark acquired the Michigan-based Munising Paper Company in 1952, Neenah Paper Company in 1956, Peter J. Schweitzer, Inc.which had mills in France and the United Statesin 1957, and the American Envelope Company in 1959. International Cellucotton Products Company formally merged with its parent company in 1955, as did Coosa River Newsprint Company in 1962.

Throughout the 1960s the tampon, first manufactured by Tampax, gained favor among women, and the tampon ate into Kotexs market share. Kimberly-Clark turned its attention to new products. In 1968 the company introduced Kimbies, a disposable diaper with tape closures. Initial sales were strong despite competition from Procter & Gambles Pampers. While K-C tended to its diverse operations, however, it failed to keep up with early disposable diaper improvements and market innovations. As a result of continued poor sales and leakage problems, Kimbies were withdrawn from the market in the mid-1970s. Competition in the infant-care product industry caused Kimberly-Clark to re-evaluate the balance between its consumer products and lumber and paper products divisions.

Darwin E. Smith, who was elected president of Kimberly-Clark in 1971, took on Procter & Gambles challenge. Smith decided that in order to compete properly in consumer product markets Kimberly-Clark had to prune its coated-paper business. Within one year of taking control of the company, Smith initiated changes that included the sale or closure of six paper mills and the sale of more than 300,000 acres of prime northern California land. With cash reserves of more than $250 million, primarily from the land sale, Smith then inaugurated an aggressive research campaign. He assembled a talented research-and-development team by hiring specialists away from competitors. The companys advertising budget was increased substantially, and plans were made for the construction of additional production facilities.

Marketing was central to Smiths strategy for growth, as Kimberly-Clark emphasized its commitment to consumer products. Research-and-development efforts enlarged the companys technological base from traditional cellulose fiber-forming technologies to lightweight non-wovens utilizing synthetic fabrics.

A new premium-priced diaper in an hourglass shape with refastenable tapes was introduced in 1978 under the name Huggies. By 1984, Huggies had captured 50% of the higher-quality disposable diaper market. The sudden popularity of the product caught Kimberly-Clark by surprise, and it was forced to expand production to meet consumer demand.

Facial tissue and feminine-care products were also part of Kimberly-Clarks growing consumer product operations. In 1984, it was estimated that the companys Kleenex brand held 50% of the tissue market. A chemically treated virucidal tissue called Avert was test marketed that same year, but the higher price and limited utility of the product prevented it from gaining widespread popularity. Aimed at health-care institutions and at companies as a product to reduce absenteeism, Avert never really got off the ground, and in 1987 Kimberly-Clark decided not to mass market the product.

The 1980 toxic shock syndrome scare caused a slump in tampon sales. Kimberly-Clark began an aggressive advertising campaign on television for Depend incontinence products in the early 1980s. At the time, incontinence products were as unmentionable as feminine-care products had been some 60 years earlier. The promotion resulted in Depend gaining a profitable share of the incontinence-products market, and it quickly became the best-selling retail incontinence brand in the United States. In an effort to broaden its position in therapeutic and health-care products, Kimberly-Clark acquired Spenco Medical Corporation in Waco, Texas, that same year.

While sales from primary growth operationspersonal-care productswere increasing, approximately 25% of Kimberly-Clarks sales continued to come from the pulp, newsprint, and paper businesses. The company further diversified its operations in 1984 by converting its regularly scheduled executive air-shuttle service into a regional commercial airline.

The companys foray into aviation was initiated by the purchase of a six-seat plane in 1948 to shuttle executives between company headquarters in Wisconsin and Kimberly-Clark factories around the country. With six planes in 1969, Smith, then an executive vice president for finance, suggested that company air travel be converted from a cost center into a profit center by offering corporate aircraft maintenance services. K-C Aviation, as the subsidiary was called, later remodeled three DC-9s and in June 1984 intitiated flight service between Appleton and Milwaukee, Wisconsin; Boston; and Dallas, Texas. The fledgling airline operated under the name Midwest Express. Despite a 1985 crash in Milwaukee, Midwest Express remains a modest but successful venture for Kimberly-Clark.

In 1985, stating that the state had a bad climate for business, Smith relocated Kimberly-Clarks headquarters from Wisconsin to Texas. Just before this move Kimberly-Clark was sued by Procter & Gamble, who claimed that Kimberly-Clark had unlawfully infringed on its patented disposable diaper waistband material. Huggies had increased its market share to 31%, upsetting Procter & Gambles Pampers. After nearly two years of litigation, a federal grand jury ruled against Procter & Gamble.

During the 1980s Kimberly-Clark met the challenges of its competitors in the consumer products industry by relinquishing some of its paper interests. The diaper wars have proven profitable for Kimberly-Clark; the company has been forced to market aggressively and to concentrate on its own strengthsconsumer markets in which its well-recognized trademarks reign. Since restructuring and focusing on marketing and investment in technological growth and innovation, Kimberly-Clark has enjoyed steady growth.

Principal Subsidiaries

Avent, Inc.; Avent, S.A. de C.V. (Mexico); K-C Advertising, Inc.; K-C Aviation Inc.; K-C do Brasil Ltda. (Brazil); Kimberly-Clark Benelux Operations B.V. (Netherlands); Kimberly-Clark Canada Inc.; Kimberly-Clark Computer Services, Inc.; Kimberly-Clark de Centro America, S.A. (El Salvador, 39.6%); Kimberly-Clark France S.A.R.L.; Kimberly-Clark GmbH (Germany); Kimberly-Clark Integrated Services Corporation; Kimberly-Clark International, S.A. (Panama); Kimberly-Clark International Services Corporation; Kimberly-Clark Limited (U.K.); Kimberly-Clark Philippines Inc. (87%); Kimberly-Clark Puerto Rico, Inc.; Kimberly-Clark Sales Corporation (Netherlands); Kimberly-Clark Technical Products, Inc.; Kimberly-Clark Thailand Limited (60%); Kimfibers Ltd.; LTR Industries S.A. (France, 72%); Ridgeway Insurance Company Limited (Bermuda); Spenco Medical Corporation; Spruce Falls Power and Paper Company, Limited (Canada, 50.5%); SYZYGY, Inc.; YuHan-Kimberly, Limited (South Korea, 60%).

Further Reading

Kimberly, John Alfred, in Biographical Dictionary of American Business Leaders, Volume II, edited by John N. Ingham, Westport, Connecticut, Greenwood, 1983; Freeman, Laurie, Kimberly holds its own against giants, Advertising Age, November 19, 1984.

Carol I. Keeley

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Kimberly-Clark Corporation

KIMBERLY-CLARK CORPORATION


Kimberly-Clark Corporation was established in 1872 in Neenah, Wisconsin, as Kimberly, Clark, and Company. The business was a partnership of four menJohn A. Kimberly, Charles B. Clark, Frank C. Shattuck, and Kimberly's cousin, Havilah Babcock. The company established its first paper mill in Wisconsin; their first product was newsprint made from linen and cotton rags. Within six years the company expanded by acquiring a majority interest in the nearby Atlas paper mill, which converted ground pulpwood into manila wrapping paper. The business was incorporated in 1880 as Kimberly and Clark Company. In 1889 the company constructed a large pulp and paper-making complex on the Fox River.

In 1906, after the deaths of three of the four founders, the company was reorganized and renamed Kimberly-Clark Company. In 1914 researchers working with bagasse, a pulp byproduct of processed sugar cane, produced creped cellulose wadding, or tissue. During World War I (191418) this product, called cellucotton, was used to treat wounds in place of scarce surgical cottons. At that time field nurses also discovered that cellucotton worked well as a disposable feminine napkin. The company later recognized the commercial potential of this application and in 1920 introduced its Kotex feminine napkin.

Four years later the company introduced another disposable tissue product, Kleenex, to replace the face towels then used for removing cold cream. A survey showed, however, that consumers preferred to use Kleenex as a disposable handkerchief, prompting the company to alter its marketing strategy entirely. Nationwide advertisements promoting Kleenex for use as a facial tissue began in 1930; sales doubled within a year. In 1928 the company was reincorporated as Kimberly-Clark Corporation and became a publicly traded firm. During World War II (19391945) Kimberly-Clark contributed to the war effort by making M-45 anti-aircraft gun mounts, fuses for heavy shells, and other military products.

Introduced in 1968, Kimberly-Clark's first foray into the disposable diaper market, Kimbies, was withdrawn from the market in the mid-1970s because of poor sales and leakage problems. Much more successful were Huggies, the premium diaper introduced by Kimberly-Clark in 1978. Featuring an hourglass shape, elastic at the legs, and refastenable tapes, Huggies were an instant hit and had captured 50 percent of the higher quality disposable diaper market by 1984.

In 1980 Kimberly-Clark launched its Depend line of adult incontinence products through an aggressive television advertising campaign. Just as it had decades before through its promotion of once unmentionable feminine hygiene products, Kimberly-Clark again took on a taboo subject. The company was once again successful. Depend quickly became the best-selling retail incontinence brand in the United States and Kimberly-Clark now had a line of products serving the needs of absorbing bodily fluids which stretched from cradle to grave.

In 1985 Kimberly-Clark relocated its headquarters from Wisconsin to Texas. The company found new product success again in 1989, when Huggies Pull-Ups disposable training pants were introduced. Pull-Ups helped propel Huggies into the number one position in the disposable diaper market. In 1995 Kimberly-Clark merged with Scott Paper Co. in a $9.4 billion deal that created a global consumer products company with annual revenue of more than $13 billion. The new Kimberly-Clark emerged from their union with Scott with a roster of leading consumer brands, including Kleenex, Huggies, Kotex, Depend, Pull-Ups, and the Scott brand of bathroom tissue and paper towels.


FURTHER READING

Briggs, Jean A. "The Paper Chase." Forbes, November 10, 1980.

Forest, Stephanie Anderson, and Mark Maremont. "Kimberly-Clark's European Paper Chase." Business Week, March 16, 1992.

Glowacki, Jeremy J. "Kimberly-Clark Corp.: Accelerates Global Expansion with Scott Merger." Pulp and Paper, December, 1995.

Ingham, John N., ed. Biographical Dictionary of American Business Leaders, vol. 2. Westport, CT: Greenwood, 1983, s.v. "Kimberly, John Alfred."

Spector, Robert. Shared Values: A History of Kimberly-Clark. Lyme, CT: Greenwich Publishing, 1997.

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Kimberly-Clark Corporation

Kimberly-Clark Corporation

351 Phelps Drive
Irving, Texas 75038
USA
Telephone: (972) 281-1200
Fax: (972) 281-1490
Web site: www.kimberly-clark.com

KLEENEX ANTI-VIRAL CAMPAIGN

OVERVIEW

The Kimberly-Clark Corporation, in business since the 1870s, had long been servicing the sick with its medical supply brands and consumer paper brands. By the first years of the twenty-first century health and infectious illness had become a hot global topic. In 2004 a flu vaccine shortage was predicted for the United States. It was at this time that one of the Irving, Texas, company's top brands, Kleenex, was serendipitously poised to introduce a new entrant into the facial-tissue market. Kleenex Anti-Viral tissues hit store shelves in August 2004 in anticipation of the upcoming cold and flu season. The supporting campaign, released in October, was focused on getting the word out to consumers that the product could help stop the spread of seasonal illnesses.

To introduce Kleenex Anti-Viral to American families, the $30 million campaign used television, cinema, print, radio, and online advertisements as well as education programs, coupon inserts, and public relations. Ad agency J. Walter Thompson New York, part of communications conglomerate WPP Group, was responsible for the campaign. The most widely visible element, a humorous TV and cinema commercial called "Guru," came nearly a year after the product's introduction. In it a robed, spiritual-looking man walked through a scenic landscape. Gentle music played as he was shown saving small creatures from certain death. Back at home he sneezed and grabbed the Kleenex Anti-Viral tissue in front of him, only to be mortified when he saw that the tissue box stated that the product "kills 99.9 percent of cold and flu viruses."

Demand for the product exceeded Kimberly-Clark's expectations. In its first months as a retail offering, Kleenex Anti-Viral captured 4 percent of the $1.5 billon tissue market. Research showed that a third of the consumers who bought the product were new to the facial-tissue category. Major media outlets covered the product as a news story prior to its introduction. By the end of 2005 the product's market share was up another point to 5 percent.

HISTORICAL CONTEXT

Kimberly-Clark Corporation was founded in 1872 as a paper mill in Neenah, Wisconsin, but it soon branched out into product innovation. The company boasted a stable of brands, which by the year 2000 included national household names such as Scott, Huggies, and Kleenex. In the early years one of the company's most important innovations was a creped cellulose wadding called Cellucotton. A substitute for cotton bandages, it was used to treat wounded soldiers in World War I and soon afterward led to the development of Kotex feminine pads and Kleenex facial tissue. Kleenex, originally introduced in 1924 as a disposable towel for removing cold cream, became a cornerstone of the Kimberly-Clark paper and personal-product empire. Consumers quickly found another use for Kleenex, and in 1930 marketing was changed to show the products as disposable handkerchiefs. Sales skyrocketed. In 1932 print ads showed a homemaker uncomfortably holding by her fingertips a used cloth handkerchief that she was about to launder. The copy read, "World's Worst Job Ended."

The Kleenex name became synonymous with facial tissue, and the company dominated the new market that it had created. Through the years advertising included cartoon ads, the first of which appeared in 1941, when a contest called "True Confessions" was introduced. It challenged the public to come up with a new, creative use for Kleenex tissue; the winners' entries would appear in the comics section of their local papers. In the 1950s the popular cartoon character Little Lulu appeared in the product's first television commercials, giving her "timely tips" for tissue use and singing the jingle "Soft, Strong, Pops Up, Too." The strength of the tissue was the selling point in the 1960s, when Harry James, a well-known bandleader, was shown blowing on his horn with an intact Kleenex tissue secured around the bell. In the 1980s the product was promoted with an award-winning campaign called "Kleenex Says Bless You." Kleenex ColdCare tissues, the company's first significant tissue innovation, was introduced in September 1996 with a campaign created by ad agency Foote Cone & Belding of Chicago. These ultrasoft tissues with aloe and a menthol scent combated competitor Puffs' introduction in the late 1980s of tissues containing aloe lotion.

The 1995 merger of Kimberly-Clark with Scott Paper, a top producer of paper towels and toilet paper, cemented the company's place as the world's leading maker of paper products and put it on the global Fortune 100 list. Unfortunately for agency Foote Cone & Belding, the marriage with Scott also precipitated a change in advertising strategy. The ad agency J. Walter Thompson, or JWT, had already done creative work for the Scott brand when it won the $100 million tissue account for Kleenex and sister brands Scottex and Andrex in North America and Europe in 1999. Kleenex moved on to a new slogan, "Thank Goodness for Kleenex," and was working on making an emotional connection to consumers with a promotion called "Kleenex Moments" to be tied into the upcoming 2004 Olympics. Kimberly-Clark's medical-supply business was also increasing during this time. At the start of the new millennium, consciousness about germs was on the rise, and there was a corresponding increase in the number of hand-sanitizing products and antibacterial soaps. In response to this growing health-focused trend, in 2004 Kimberly-Clark was set to introduce the next big Kleenex extension product.

TARGET MARKET

Kleenex began as a cold-cream-removal product that was originally aimed exclusively at women. Once the product changed its focus, families became its primary target. Kleenex Anti-Viral was no exception. Because Kimberly-Clark's research revealed that families with children were more likely than those without kids to develop colds throughout a season, the new product was designed with family needs in mind. In the press release announcing the launch of Kleenex Anti-Viral, Robert P. van der Merwe, group president of Kimberly-Clark's North Atlantic Family Care division, said, "Through research, we learned that it's increasingly important to consumers to protect their families against common cold and flu viruses." As the major purchasers of household and personal-care items, women, or more specifically mothers, were secondarily targeted by the Anti-Viral campaign. The company saw women as the primary caregivers, often the ones responsible for doctor visits and health maintenance. The Kleenex website thus provided "Mom's Stay-Well Tips" and "Mom's Remedies" as well as recipes, symptom lists, and scenes of caring family interaction.

COMPETITION

Global consumer-products giant Procter & Gamble bought Charmin Paper Company in 1958 and then renamed its tissues Puffs in 1960. Since then Puffs had been a determined second in the race for facial-tissue market share. Even though the word "Kleenex" had long been synonymous with tissue, the supersoft Puffs developed a strong and loyal following. By 1996 it had a nearly 33 percent share of the market, compared to Kleenex's formidable 48 percent. Still, Procter & Gamble beat Kleenex to punch in 1987 with its line extension Puffs Plus with Lotion. With this new line Procter & Gamble began to dip into traditional Kimberly-Clark territory: product innovation.

When Kleenex added another specialized tissue, Kleenex Anti-Viral, to its roster in 2004, Puffs did not have an answer in the form of a competing product. Its parent company, Procter & Gamble, did, however, start what it called an "education campaign," according to an article published in the December 6, 2004, issue of the Toledo Blade. The article stated that Procter & Gamble had hired a public relations firm to spread the word that Kleenex Anti-Viral would probably not prevent colds and flu.

MARKETING STRATEGY

By the closing decades of the twentieth century, line extensions of core brands had become an increasingly important tool for companies such as Kimberly-Clark, whose Kleenex-brand tissues had dominated the market for 80 years. Kimberly-Clark was encouraged in its development of Kleenex Anti-Viral partly because of the growing popularity of germ-fighting soaps and other personal products. In August 2004 the company launched its Anti-Viral tissues, the first product of its kind. That October a $30 million campaign began; timed to coincide with the start of cold and flu season, it consisted of print ads, cable and network television spots, cinema and radio advertising, special events, consumer sampling, coupons, and educational programs. The initial emphasis was on the product and the science behind it. Packaging was an important element. An image of an undulating yellow banner wrapped every new box of Kleenex Anti-Viral, announcing "Kills 99.9 percent of cold & flu viruses." The tissue itself was designed to look effective, with blue dots making a subtle pattern on each sheet. Graphics on the Kleenex website magnified the blue-dotted middle layer, explaining that it was a unique moisture-activated system designed to trap and kill viruses.

Promotion and education was important for the Kleenex brand. Prior to the release of the campaign in October, Kimberly-Clark was successful in publicizing the attributes of the new Kleenex product through means other than advertising. In July 2004 media outlets such as USA Today and CNN's American Morning ran stories about the upcoming product. The cable news show featured its medical correspondent, physician Sanjay Gupta, demonstrating the actual Kleenex Anti-Viral tissues and packaging. Gupta stated that the tissues' ability to kill viruses would probably help to slow the spread of illness to others.

Television spots did not follow until October 2005, when the next cold and flu season began. JWT New York created a clever TV spot that aired on U.S. television and in cinemas and in the United Kingdom as well. Creative director Ty Montague oversaw the agency's production of the spot, called "Guru." In it a robed monk walked through a serene landscape rescuing tiny creatures, including a goldfish and a spider, from dire circumstances. Mystical-sounding music played as he arrived at his spartan domicile. He looked as if he were about to sneeze and then reached for a tissue as a voice-over stated, "Kleenex Anti-Viral tissues trap and kill 99.9 percent of cold and flu viruses in the tissue …" The guru sneezed into it and expressed relief until he read the virus-killing claim on the box. The narrator continued, "That's right, kills." The guru looked stunned and then gazed up to the sky as the voice-over concluded, "Thank goodness for forgiveness. Thank goodness for Kleenex."

UNMENTIONABLE PRODUCTS

Kimberly-Clark and Scott Paper, which eventually became one company in the 1990s, built their fortunes on products that everyone wanted and needed but that were not considered suitable for advertising. During World War I Kimberly-Clark discovered that army nurses were using the company's Cellucotton bandage products for feminine-hygiene purposes. As a result Kimberly-Clark developed Kotex feminine pads, but in the 1920s it faced opposition from many newspapers and magazines, which would not allow advertising for the product. Likewise, stores would not permit point-of-purchase advertising displays and even kept the product off shelves, stocking it behind the counter. Kimberly-Clark persisted and eventually broke those marketing barriers, creating another world-famous brand.

OUTCOME

When Kimberly-Clark bought Scott Paper for $9.4 billion in 1995, the company's market share in some products made great increases, but the merger put a strain on Kimberly-Clark as it tried to integrate the two operations. By 2004 it had gone through a reorganization and needed a winning new product. Hopes were high for Kleenex Anti-Viral, and early statistics indicated that the new product had contributed to improved overall sales for Kimberly-Clark. The company reported that its consumer-tissue revenues, which accounted for 36 percent of the company's total revenues, were a healthy $5.8 billion worldwide in 2005. In the August 6, 2005, issue of Grocer, Matt Muniz, Kleenex Anti-Viral brand manager, described a promising breakthrough: "In the U.S. we found that after six months 35 percent of Kleenex Anti-Viral tissues buyers were new to the facial tissue category." In its first months Kleenex Anti-Viral captured 4 percent of the $1.5 billon tissue market. As 2005 came to a close, the new product had increased its market share to 5 percent and had posted more than $50 million in sales, not counting those at the nation's largest retailer, Wal-Mart, or other discount outlets.

FURTHER READING

"Ad Notes…." Wall Street Journal, February 24, 1999, p. 1.

Bach, Pete. "Tissue, Paper Towel Making a Growing Business in Valley." Appleton (WI) Post-Crescent, February 5, 2006.

"Branding the Sneeze." Retail Merchandiser, August 2005, p. 28.

Kirsche, Michelle L. "Consumables: Reporter's Notebook." Drug Store News, August 23, 2004, p. 47.

Lewis, Diane E. "Flu-Wary Massachusetts Firms Attack Germs." Boston Globe, November 8, 2004.

Lindeman, Teresa F. "Retailers Scramble to Fill Gap Left by Flu Shot Shortage." Knight Ridder/Tribune Business News, October 12, 2004, p. 1.

Mehegan, Sean. "Tissue of Buys." Brandweek, September 2, 1996, p. 1.

Neff, Jack. "Flu Fear Equals Marketer Bonanza." Advertising Age, October 25, 2004, p. 8.

Raju, Narisetti. "Plotting to Get Tissues into Living Rooms." Wall Street Journal, May 3, 1996, p. 6.

Rosenwald, Michael S. "Fear of Flu Sparks Home-Remedy Sales." Washington Post, December 22, 2004. p. E01.

Wasserman, Todd. "A Fertile Environment for New Germ Killer PS." Brandweek, January 30, 2006, p. 5.

――――――. "Forget Tissues, Kleenex Is Branding 'Moments': Olympic Tie-In Will Include Plugs from Athletes' Moms." Brandweek, December 19, 2005, p. 9.

                                           Simone Samano

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