W.L. Gore & Associates, Inc.

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W.L. Gore & Associates, Inc.

551 Paper Mill Road
Newark, Delaware 19711
U.S.A.
Telephone: (302) 738-4880
Fax: (302) 738-7710
Web site: http://www.gore.com

Private Company
Founded: 1958
Employees: 6,000
Sales: $1.2 billion (2003)
NAIC: 325211 Plastics Material and Resin Manufacturing; 325212 Synthetic Rubber Manufacturing; 331222 Steel Wire Drawing; 334412 Printed Circuit Board Manufacturing; 334417 Electronic Connector Manufacturing; 334511 Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

W.L. Gore & Associates Inc. is a high-technology company that develops and manufactures fluoropolymer products used in aerospace, clothing, medical, automotive, chemical, electronic, and other applications. With operations spanning the globe, Gore's most notable product is Gore-Tex, a high-performance fabric developed in the late 1960s. All in all, the company has over 650 U.S. patents to its name. Known for its unique lattice system of management, W.L. Gore repeatedly has been cited as one of the best 100 companies to work for in the United States.

Origins

W.L. Gore & Associates is the progeny of renowned American entrepreneur, scientist, and inventor Wilbert L. (Bill) Gore. Gore began working for DuPont in 1941 when he was 29 years old. He helped to advance that company's research into polymers, resins, and plastics. On the advice of his wife, Vieve, Gore left his research job in 1958 to start his own company. Before his departure, Gore had been working on new DuPont-developed synthetic material called polytetrafluoroethylene (PTFE, or teflon). He hoped to build a company that developed and marketed new uses for the material. Gore and Vieve started the enterprise on a shoestring budget in the basement of their home.

Gore's first commercially viable products were wire and cable products insulated with teflon. Bill's son, Bob, was integral to those innovations. Bob, who was a chemical engineering student at the time, is credited with coming up with the concept that resulted in Gore's first patent for teflon-insulated wire and cable. For ten years, in fact, such products were the core of the Gore enterprise. The high-tech cables were respected in their industry niche and were even used in the Apollo space program for the first moon landing.

A Unique Management Philosophy

From their basement office, the Gores expanded into a separate production facility in their hometown of Newark, Delaware. Sales were brisk after initial product introductions. By 1965, just seven years after the business had started, Gore & Associates was employing about 200 people. It was about that time that Gore began to develop and implement the unique management system and philosophy for which his company would become recognized. Gore noticed that as his company had grown, efficiency and productivity had started to decline. He needed a new management structure, but he feared that the popular pyramid management structure that was in vogue at the time suppressed the creativity and innovation that he valued so greatly. Instead of adopting the pyramid structure, Gore decided to create his own system.

During World War II, while on a task force at DuPont, Gore had learned of another type of organizational structure called the lattice system, which was developed to enhance the ingenuity and overall performance of a group working toward a goal. It emphasized communication and cooperation rather than hierarchy of authority. Under the system that Gore developed, any person was allowed to make a decision as long as it was fair, encouraged others, and made a commitment to the company. Consultation was required only for decisions that could potentially cause serious damage to the enterprise. Furthermore, new associates joined the company on the same effective authority level as all the other workers, including Bill and Vieve. There were no titles or bosses, with only a few exceptions, and commands were replaced by personal commitments.

New employees started out working in an area best suited to their talents, under the guidance of a sponsor. As the employee progressed there came more responsibility, and workers were paid according to their individual contribution. "Team members know who is producing," Bill explained in a February 1986 issue of the Phoenix Business Journal. "They won't put up with poor performance. There is tremendous peer pressure. You promote yourself by gaining knowledge and working hard, everyday. There is no competition, except with yourself." The effect of the system was to encourage workers to be creative, take risks, and perform at their highest level. One of the key people to help the company succeed in the Apollo moon landing project, for example, came to Gore with only a sixth-grade education.

Gore reasoned that even under his management system organizations would begin to decline in effectiveness after reaching about 200 members. That was partly because too many people in a group caused a reduction in trust and cooperation. For that reason, he and Vieve decided to build a second manufacturing facility. In 1967, the company opened a new plant in Flagstaff, Arizona. The selection of Flagstaff reflected Gore's love of the outdoors, particularly in the western regions of the United States. The new plant helped the company to regain its productivity and creativity, and from that point forward Gore built a new facility each time the magic number of 200 was breached. Gore's unique and successful management system and philosophies proved valuable over time and became lauded as a model for management during the 1980s and 1990s.

Gore-Tex Leads to Explosive Growth: Late 1960s–1980s

The immense success of Gore's teflon-insulated wire and cable products, combined with savvy management during the middle and late 1960s, resulted in explosive growth at Gore. Indeed, during the late 1960s, Gore established manufacturing and sales operations in Arizona, Scotland, and Germany and even launched a venture partnership in Japan. The company continued to post big gains during the 1970s as well. Perhaps more important to Gore's success during the 1970s and 1980s than the company's management system, however, was a pivotal product innovation that would help to make Gore one of the most successful private companies in the United States. That innovation came in 1969, about the time that Bill's son Bob became president of the company (Bob and his mother, the secretary and treasurer of the company, were the only two employees in the company with job titles).

Bob, who had gone to work at Gore after receiving his Ph.D. in chemistry, discovered that teflon could be quickly stretched to produce a material with many of the properties that scientists had been trying for years to create. Under the right conditions, the product could be stretched to form a material that was as strong as the original teflon and laced with microscopic holes, the size of which could be adjusted in the manufacturing process. The breakthrough was momentous because of the numerous properties exhibited by the material. For example, it shed water droplets like other synthetic materials but was also breathable and would allow small airborne moisture particles and body heat to move through the fabric. The obvious advantage: stretched teflon could be used to make waterproof clothing that was also breathable.

W.L. Gore & Associates applied for a patent for their invention in May 1970. The Gores dubbed the new material Gore-Tex. The patent was granted in 1976, by which time Gore was already marketing a number of products made with Gore-Tex. Among other advantages, Gore-Tex was chemically inert and resistant to infection. That made it an excellent material for dozens of medical applications—artificial arteries made with Gore-Tex, for example, eventually accounted for about 85 percent of this market segment throughout the world. It was also beneficial for various uses ranging from household items to defense-industry goods. Gore-Tex was used to manufacture space suits and sporting apparel, as well as dental floss and telecommunications gear. By the late 1980s, filters made with Gore-Tex were being used in virtually every intravenous bag in the world. In fact, Gore-Tex became the fabric of choice in most applications that necessitated a high flow-rate along with maximum particle retention in both air and liquid filtration.

Gore experienced explosive growth during the 1970s and early 1980s, mostly as a result of the breakthrough success of Gore-Tex. The still-private company remained tight-lipped as always about its financial performance. Its success, though, was clearly evidenced by the rapid expansion of production facilities and sales and marketing offices. Gore was soon peddling its products throughout the world. Besides pushing Gore-Tex, the company continued to expand its other product lines and to develop new ideas. For example, Gore was called in to custom-manufacture teflon-insulated cable to help in the aftermath of the Three Mile Island nuclear accident. It also broadened its teflon-coated cable products to meet new needs in computer, telecommunications, aerospace, and medical industries. Still, Gore-Tex became the company's cash cow and eventually grew to represent more than 80 percent of the organization's revenues.

Company Perspectives:

W.L. Gore & Associates is a provider of unique, innovative, best-in-class, high value, high quality products that consistently do what we say they do. Gore was established for the purpose of developing and utilizing technology in the field of fluorocarbon polymers, especially polytetrafluoroethylene.

By the mid-1980s, Gore was churning out an estimated $200 million to $300 million in annual revenues and supporting a whopping 29 plants throughout the world; its workforce ballooned to 4,200 worldwide. In addition to his inventions, Bill Gore was being lauded as a leading contributor to the art and science of management. Bill Gore died on July 26, 1986, at the age of 74, of a heart attack suffered while hiking in the Wind River Range of Wyoming. Gore had been known for taking extended treks in the outdoors. On this particular occasion, he had been hiking with his wife and several grandchildren. "If a man could flow with the stream, grow with the way of nature, he'd accomplish more and he'd be happier doing it than bucking the flow of the water," Vieve Gore recalled of her husband's business philosophy.

Overcoming Patent Disputes

W.L. Gore & Associates continued to thrive following the death of its founder, despite ongoing disputes over its patent to Gore-Tex. Indeed, the company had been battling claims against its rights to the invention since the early 1970s. In 1982, in fact, a federal lawsuit in Cleveland resulted in the removal of Gore's patent rights, but the decision was soon overturned and the rights were restored. In 1984, Gore filed suit against a Tempe, Arizona, company called IMPRA Inc., claiming that IMPRA had violated Gore's patent in the manufacture of its artificial arteries. The judge's research showed that a Japanese company had tried to patent a material identical to Gore-Tex in 1963 and had gotten the patent in 1967. After several years of weighing the evidence, the judge decided in 1990 to terminate Gore's patent rights. Gore managed to keep patents for individual Gore-Tex products and manufacturing processes, however. At the time the decision was handed down, Gore was capturing an estimated $700 million annually from sales of Gore-Texrelated products.

The loss of the Gore-Tex patent predated the scheduled termination of patent rights by about three years. Thus, it opened the door for other companies to begin manufacturing Gore-Tex products earlier than they might have otherwise. Gore's product-development arm was healthy, though, and the company sustained its growth. In 1991, Gore announced plans to build two new 60,000-square-foot manufacturing facilities in Arizona at a cost of about $10 million. By the end of 1993, Gore was operating more than 40 facilities and employing about 6,000 workers. Interestingly, the plants were all located in non-metropolitan areas because the Gores believed that such locations offered a higher quality of life for their employees. Evidencing the success of Gore's overall management philosophy, the company was named as one of the 100 best companies to work for two years in a row—a feat accomplished by only nine other companies at the time.

Going into the mid-1990s, W.L. Gore & Associates was operating 45 manufacturing and sales offices throughout the United States and in Germany, Scotland, and Japan. Gore-Tex products still accounted for the bulk of its sales. New Gore-Tex products being developed and introduced in 1994 and 1995 included Intervent, an allergen exclusion technology used, for example, in bedding; various surgical sutures used in vascular, cardiac, and general surgical procedures; and protective gear designed to reduce the spread of diseases like AIDS. The company was also developing and manufacturing various teflonrelated electronics goods for industrial, defense, computer, telecommunication, and medical industries. Its four operating divisions at this time were Electronic Products, Fabric Products, Industrial Products, and Medical Products. The still-private company did not release financial information but claimed to have achieved compound sales and profit growth rates exceeding 20 percent annually between 1975 and 1995.

Innovation in the 1990s and Beyond

Gore's success continued into the late 1990s and beyond due mostly to the company's consistent drive to add innovative new products to its arsenal. In 1996 alone, the company was issued a record 89 U.S. patents. The company launched its Elixir line of guitar strings in 1997, and the brand quickly became the leader in the U.S. market. A new group of Gore-Tex fabrics made their debut the following year. Along with new product introductions in its medical division, Gore also became well known for its contributions in the development of fuel cell technology. In the mid-1990s, the company began developing Membrane Electrode Assemblies (MEAs), which were used in the polymer electrolyte, or proton exchange, membrane (PEM) fuel cell industry. The firm's first MEA was offered in 1995, followed by a second-generation launch two years later. Gore became the first commercial supplier in 2002 with the release of the Series 56 MEAs, which were used in stationary PEM fuel cells.

Gore entered the new century on solid ground. A March 2000 Industry Week article summed up the company's success with the statement that "few companies can claim that their products have orbited the earth, been on top of Mt. Everest, appeared on Seinfeld, and even helped mend some broken hearts." Indeed, with over 650 U.S. patents to its name and thousands across the globe, Gore's ability to cross over into cutting-edge technologies within the electronics and medical industries helped to secure its position as a leading privately held company. By this time, the company's medical products line, which included synthetic vascular grafts, interventional devices, surgical meshes used in hernia repair, and surgical sutures, had been used in over 7.5 million procedures.

While the company continued to develop new products, it also focused on cost-cutting measures and streamlining in order to maintain its remarkable financial track record. Fortune magazine reported in 2003 that Gore had posted a profit every year since its founding. In August 2002, the firm announced that it planned to sell off its fiber optic business. Gore sold its Glide Dental Floss unit to Proctor & Gamble the following year but continued to manufacture the product under the terms of the agreement.

Key Dates:

1958:: Wilbert L. Gore leaves his job at DuPont to start his own company.
1967:: A second plant goes online in Flagstaff, Arizona.
1970:: The company applies for a patent for Gore-Tex.
1976:: The patent for Gore-Tex is granted.
1990:: After years of legal battles, W.L. Gore loses some of its patent rights to Gore-Tex.
1995:: The company introduces a membrane electrode assembly, which is used in fuel cell technology.
1997:: The Elixir guitar strings line is launched.
2003:: W.L. Gore sells its Glide Dental Floss unit to Proctor & Gamble.

W.L. Gore & Associates attributed many of its achievements throughout its history to the unique management structure that empowered company associates worldwide. Although the business environment surrounding the firm had shifted dramatically since its founding in 1958, Gore's basic guiding ideology set forth by the founder himself remained unchanged. The firm continued to adhere to its values—fairness, encouragement, holding steadfast to commitments, and open communication among associates—and with many years of success behind it, W.L. Gore appeared to be on track for good fortune in the years to come.