CEO Message
EHS Update: Mexico
Financial Update
Sales and Marketing Update
Plant Update: Hungary
Plant Update: Mexico
Plant Update: St. Peters
Plant Update: Missouri Research Park
Plant Update: Engineering Technology Corporation
Human Resources Update
Engineering Update
Quality Update
Global Compliance
Global Operations Update
Procurement Update
PMP Update
Voices of Zoltek
Milestone Anniversaries

February 2022 Newsletter

CEO Message

Greetings,

It has been an eventful year at Zoltek; we have been developing new products and planning for our future. As you will see throughout this newsletter, many exciting changes have begun taking place, and many more are planned as we constantly strive for continued success.

As always, safety continues to be a priority for me. I believe that the safety of our employees is the greatest measure of our success. Therefore, I challenge you to remain steadfast in your commitment and continue to work together to develop and achieve new goals that make your work environment safer.

Soon, you will see construction of additional carbon fiber lines at our facility in Mexico. This will allow us to grow our global production capacity. This growth is crucial to our success as demand for our large tow carbon fiber continues to rise across a range of industries.

We are coming to the close of another outstanding year, and I would like to thank all of you for your part in that success. Your hard work and commitment to quality have truly set us apart in the industry. I look forward to taking this journey with you and I am convinced that our team will continue to exceed expectations in 2022.

Nobuya “Nobu” Ando

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EHS Update: Mexico

TOKUAN in Zoltek México

April 27, – Dec. 27, 2021

In May 2021 Zoltek de México was designated as a Tokuan company by Toray. This was a great opportunity to review our safety system and develop new ideas. We focused on 7 main items: TPC program, small groups activity, leadership training, SOP revision, safety champions, safety suggestion and safety patrols.

We have learned to listen to each employee, as their contributions have provided methods of communication between management and workers about any concern or situation that could affect their state of ALERTA (TPC program) during the execution of their activities. As well as individual safety awareness in the first place by always following basic safety principles.

The on-site verification of the execution of tasks and the development of improvements in each SOP to eliminate risks or difficulties is also a fundamental aspect to continue and keep our objective of zero accidents, persuading employees not to take unnecessary risks, in addition to feeling the support, direction and leadership of their work teams in the event of any doubts.

We will continue with all the safety activities implemented in the Tokuan designation to improve our daily efforts to protect the safety of each of our employees.

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Financial Update

Zoltek – Fiscal 2022 3^rd Quarter Report

As a reminder, our fiscal year is April 1, 2021, to March 31, 2022 (Fiscal 2021). The name of the fiscal year always relates to the year in which it started.

I would like to provide you with a performance update through the 3^rd quarter of Fiscal 2021 (i.e. April 1 to December 31) so that you can know how we are performing versus our budget.

Goal #1: Our revenue budget for fiscal 2021 is $326M through the 3^rd quarter and $457 million for the full fiscal year (all numbers in USD). Actual revenues through December 31, 2021, were $373M. This means we exceeded our budget for revenues by $47M or 15%.

So please let me explain where we are performing ahead of budget.

Our carbon fiber business is in high demand. We are not just seeing sales demand increase, but we are also experiencing a shift in demand to more customers as they learn to use and adopt carbon fiber. This expansion in the number of customers means that we are better positioning our business for our long-term success and diversification of risk from any single customer. The challenge remains for us; however, that most of these customers are in the wind industry. We must all continue to work hard to expand the use of carbon fiber into other industries.

Our chop business also continues to grow into areas outside of wind turbines. We have seen demand for this product into areas such as laptops, cell phones and automotive which is good for diversifying our business. We have expanded our output with a new chop line in Mexico that is now in production. We are also working at using contract manufacturers to expand this business. This will allow us to expand our sales even further into these market segments.

Our oxidized fiber and aircraft brake business is now back in full production. This part of our business had been significantly affected by the pandemic as air travel was reduced. However, as air travel returns, we are seeing this part of our business rebound. This is allowing us to bring our sales in this area of the business back to normal levels.

Overall, I think everyone can feel good that by working together we have been able to navigate our business through the pandemic.

Goal #2: Manage our costs.

Our costs continue to be a significant challenge for us due to issues such as inflation and logistics. Some areas to note are as follows:

Acrylonitrile (ACN) and other raw material cost: we have finally seen some reduction in AN costs in Mexico. However, in Hungary these costs have remained high. This has a lot to do with the higher utility costs in Europe, difficulties in transportation/logistics as well as the aggressive moves by the Russian military. We will continue to monitor this situation but are hopeful we will see these costs go lower over the remainder of the fiscal year.
Equipment Utilization and Management: We are now at full production across all of our plants. It is exciting to see all of our operations at full production. Of course, our goal is always to push to achieve full production. I want to let you know I greatly appreciate everyone’s efforts to produce, sell and deliver our products!
Carbon Fiber Expansion: We have received approval and are moving forward with expanding our carbon fiber capacity in Mexico. We are adding additional lines. This capacity increase will allow us to continue to increase our sales in FY2022 and FY2023. So please work to support the engineering teams as they help to prepare for our future!

I believe we can feel good about the first three quarters of the year. We have overcome a lot with the challenges of the pandemic. We continue to grow no matter the obstacles we face. None of this is possible unless we work together. So, thank you for your perseverance during these challenging times!

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Sales and Marketing Update

The carbon fiber market is now facing a shortage of supply, and we are doing everything we can to increase output while maintaining our quality standards. This shortage is driven by Zoltek’s new wind customer demand, which we have spent the last 6-8 years developing. This is a great success for Zoltek, as these new customers are finally starting to understand and adopt our PX35 carbon fiber into their new blade designs.

We have almost finalized our budget for FY22, and the expectation is that we continue our growth trajectory. The primary drivers of our growth will be new wind demand, new Industrial OX fiber business, and the recovery of our aircraft brake business. Our total revenue is growing from $232M in 2017 to more than $600M in 2020. This growth is a result of both higher volumes and higher pricing. More importantly, we have diversified our customer base during this time to create a more solid foundation for future growth.

Total Revenue (USD)

As noted in the chart above, our wind business has more than tripled in revenue in the last 5 years, but more importantly, this business is also more diversified. In 2017, our wind revenue was 90% dependent on Vestas volume but in 2022 Vestas will only represent 20% of our revenue. The rest of our wind revenue is supported by new contracts with GE, Siemens Gamesa, Nordex, and others. Unfortunately, we did not have enough capacity to support these new wind OEMs together with Vestas’ existing demand, so we were forced to make some difficult decisions. Overall, our business diversification efforts, along with supply contracts to support this new business, is very positive for our longer-term growth. We hope to build back our supply to Vestas as our capacity continues to expand.

Our Industrial OX fiber business also remains strong, and has surpassed our aircraft brake business now in both sales volume and revenue. We have seen the most significant growth in energy storage applications, most notably in runaway thermal barriers for electric vehicle batteries. As the aircraft brake market recovers, we expect that our OX fiber business will be much stronger as a result of these new applications and business diversification. It is critical that we keep our costs as low as possible to support these new applications and new volumes.

The challenges we faced in 2021 remain in 2022: increasing raw material costs, lack of material availability, and global logistics and supply chain delays. However, we face a new risk in 2022 with Russia’s activities in Europe, which is that our energy costs (natural gas & electricity) in Hungary have spiked to all-time highs. This has a huge negative impact on our profitability, and we are trying to share these costs wherever possible with our customers. But, we are getting significant pushback from the market on higher prices, and we risk killing market demand if we cannot keep these costs under control. The current environment is very challenging, but Zoltek needs to do everything we can to maintain our reputation as the lowest-cost supplier with stable supply.

With increasing cost inputs and limited capacity, our ability to increase sales volume is restricted. So price increases and cost reduction efforts will be critical for FY22. Our past success has been tied to how quickly we can respond expand capacity to support rapid demand growth and maintain our low cost. We need to stay aggressive in our cost controls and capacity expansions so we are in a strong position to withstand the oncoming competition from China in the next few years.

New Application Update

What is Possible with ZOLTEK PX35 KS Tow and SMC

One emerging carbon fiber application is made possible by utilizing large tow carbon fiber in sheet molding compounds (SMC). SMC is a process where carbon fiber is cut and “slivers” of carbon fiber are combined with a thermoset resin matrix and molded into parts using a double sided tool and press. Until recently, large tow carbon fiber like our PX35 would not from the “slivers” or “fingers” necessary for proper wetout and the subsequent property translation.

Thanks to Zoltek’s effort to create a split tow process called Kassen and through our expertise in how to distribute and cut the split tow, the SMC process is now viable to make parts high performing automotive parts and accessories.

The following material referenced from the February edition of Composites World magazine highlight applications made possible through process developments using large tow carbon fiber.

Envisioning high-volume, 100% composite wheels

By: HANNAH MASON, Associate Editor, CompositesWorld

Lightweight, high-performance carbon fiber composite and metal-composite hybrid wheels have graced many a racecar or other high-performance vehicle in recent years, but high material costs and low-volume manufacturing methods have generally limited their market demand to the most premium cars. However, as more OEMs develop electric vehicles (EVs), demand may increase for lightweight wheels on production vehicles — if they can be built with lower cost materials at high volumes while still meeting stringent requirements.

One company seeking to change this paradigm is Vision Wheel (Decatur, Ala., U.S.), which has been manufacturing custom forged and cast aluminum wheels for more than 40 years in the passenger automotive, performance and specialty vehicle and utility terrain vehicle (UTV) markets. Under the name Vision Composite Products, the company debuted its first carbon fiber composite wheel at the CAMX exhibition in Dallas, Texas in October 2021, where the wheel was a finalist for a CAMX Award.

This new wheel is about nine years in the making, according to John Paul Mathew, COO of Vision Wheel. In 2010, several attempts were being made in the market to develop lighter, carbon fiber-based wheels, he says, and Vision Wheel CEO Roger Minor had the idea to develop a carbon fiber wheel that was not only lighter, but that could be manufactured in high volumes for the passenger vehicle market. “We have this vision that at some point the aluminum [wheel] market will be overtaken by carbon fiber,” Mathew explains.

Inventing the wheel: Original designs and hand layup

“We didn’t want to reinvent the wheel,” Mathew says. Vision Wheel looked at other carbon fiber wheel designs that were being developed — “they’re usually formed over a mandrel or some kind of foam core, making them look bigger than normal, or less contoured, or more plain than typical aluminum wheels” — and decided they wanted to mimic the complexity of a forged aluminum wheel as much as possible. For the first wheel, the company took the aluminum wheel used on the Shelby GT Mustang and mimicked the style using composites.

It was a difficult process, Mathew admits, and required many iterations, and a lot of back and forth between the finite element analysis (FEA) models and physical prototypes, tweaking the models according to how the prototypes were performing in reality.

The result is a two-piece wheel concept — a choice made for ease of manufacture, Mathew says — with the barrel or rim manufactured as a separate piece that is then assembled to the combined hub and spokes. Vision Wheel has various barrel tooling sizes that can be reused for many different wheel designs, while designs and tools for the spokes and hub are likely to be modified to meet the aesthetic requirements for each vehicle type and OEM.

For the first wheel iterations, the Vision Wheel team began by laying up continuous fabric by hand over mandrels. “The process was successful,” Mathew says, “but we realized that with that process, you can’t make millions of wheels a year. It’s tedious with long process cycles. We wanted to migrate and move to something that’s more focused on volume and mass production.” In addition, Vision Wheel needed to find composite materials that would pass stringent automotive test requirements.

Meeting requirements: Materials development, new partners

Alan Dudley, engineering manager at Vision Wheel, explains that the U.S. Department of Transportation (DOT) requirements for wheels — tests for measuring minimum fatigue, impact, radial impact, etc. — were developed with the breaking points of aluminum and steel wheels in mind. “Plastic wheels do not fail in the same manner as aluminum wheels. When an aluminum wheel fails on impact, you see a crack in the spoke or other places, and it’s easily determined. With composites, it’s difficult to tell the severity of the crack — it can be surfacing, or delamination, or one of several things. But does it constitute a failure? That’s harder to determine.”

A particular challenge for composites, he adds, is passing temperature requirements — specifically in the supercar and powersports markets, where larger brakes and faster speeds can cause increased temperature on the wheels. “The tests are very robust, and it’s very difficult to get a composite material across the finish line,” he says. However, as more composite wheels are developed, new testing requirements are being developed by standards organization SAE International for composite wheels specifically, he notes.

In an effort to learn about new process techniques and materials that may be used to meet these requirements and Vision Wheel’s plans for high-volume production, the company got in touch with the Institute for Advanced Materials and Process Innovation (IACMI, Knoxville, Tenn., U.S.) and Purdue University’s Composite Manufacturing and Simulation Center (CMSC, West Lafayette, Ind., U.S.), and from there were introduced to material supplier IDI Composites International (Noblesville, Ind., U.S.).

“The two major goals were to reduce the material cost and the cycle times,” explains Kevin Cahill, director of technology and application engineering at IDI Composites. “These are two things IDI was very familiar with, given our background in SMC [sheet molding compound] and other compression molded materials.”

To keep material costs low, IDI and Vision Wheel first began looking at using an SMC comprising low-cost, fast-cure vinyl ester and a combination of chopped glass and carbon fibers. “We wanted to find the lowest cost solution that gave us the required strength,” Mathew says. About three years of development and iterations followed, leading to the use of all carbon fiber SMC to meet stiffness requirements in the wheels.

The carbon fiber SMC, Cahill says, almost met part requirements on its own. However, the discontinuous fiber composite was not strong enough to carry the highest stresses on the outside of the wheel on the spokes. About three years ago, it was decided that some amount of continuous fiber needed to be added into the mix, and so Cahill and IDI turned to braided material specialist A&P Technology (Cincinnati, Ohio, U.S.). Previously, IDI and A&P had worked together on a one-step process to co-mold A&P braided fabric into IDI SMC parts — specifically, they’d worked on a powered composite surfboard using A&P’s QISO fabric.

To read the rest of the article, visit CompositesWorld.com

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Plant Update: Hungary

Bosch Boiler Project:

The expansion of Zoltek Zrt.’s production was accompanied by an increase in steam consumption, therefore it was necessary to install a new 50t/h boiler due to the safety of production. Boiler Mechanic Gábor FÜLÖP had the responsibility to manage the project. The ZFR-X 55 product from Bosch Gmbh was the most suitable for the required parameters. The project included several different fields of work such as construction, engineering, electrical design, and IT. Further information about the boiler: from 2.5t/h to 50t/h it can produce 210 C ° steam at a pressure of 13 bars (which means a consumption of 250Nm³/h to 4000Nm³/h in gas). The boiler is housed in a completely new building, has its own transformer, and fully meets the latest safety requirements. Unfortunately, the pandemic effected the project, so the deadlines were extended (due to the late delivery of electric components), but since last October, the boiler has been producing the amount of steam needed for the technology.

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Plant Update: Mexico

ZMx2B

As you will see in the Engineering section of this newsletter, work is in progress on the ZMx2B Expansion Project. Click here for more details.

Implementation of NOM-035 (Mexican Official Norm 035 -Government Requirement)

The Nom-035 is a Federal Mexican Government requirement issued by the labor authority, which is focused to mitigate any psychosocial factor among the staff. This NOM asks us to identify risks factors in the workplace (stress, sexual harassment, violence and abuse of authority, to mention a few). A survey must be applied to identify the risks and for us the first survey was implemented last 2019.

Due to be a bi-annual obligation for the employers a new survey was applied to 664 Zoltek employees on December 17, in 5 sessions this was done with the support of all HR team and legal department.

The survey was carried out by an external consultant now throughout an electronic application, with their support an action plan Zoltek HR will be building a training plan for all leaders in Zoltek Mexico (from GM to Supervisors) with the aim of complying with this Government requirement but also to improve organizational environment, avoid accidents, reinforce our leaders and promote the BEAR (CIRAR in Mexico) Culture among all employees and workers in Mexico.

The Compliance & Ethics Department has been providing a close tracking and the team is completed with EHS (Medical Department) to track all those cases reported with an issue.

We are sure we will be creating the appropriate atmosphere for our employees in Mexico for the coming challenges.

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Plant Update: St. Peters

Holiday Food Drive

Food for the St. Louis Area Foodbank at St. Peters

The employees at our St. Peters facility competed to collect the most food items for a charity fundraiser this past December. They broke up into teams based on their shift and collected an amazing amount of food.

A Shift – 484 pounds of food

B Shift – 1,130 pounds of food

C Shift – 523 pounds of food

D Shift – 921 pounds of food

Support – 551 pounds of food

Total Food Collected: 3,609 pounds of food!

Attendance Prize Winners

Below are the attendance prize winners for our St. Peters location for July – December 2021. Congratulations to all the winners!

St. Peters Raffle

Our St. Peter location hosted a raffle this past December raffling off a variety of items ranging from a BBQ Grill to Folding Chairs. Employees purchased chances with all money raised being split between Shelter Friends and Five Acres Animal Shelter. In total, they collected $295 for charity!

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Plant Update: Missouri Research Park

Safety

MRP employees achieved 1 year with 0 recordable incidents during Q3! This is a well-deserved accomplishment for the team. In the last year, all departments have consistently worked hard to enhance our safety program in many aspects. This includes adding more safety-related information to onboarding with operators, adding more training resources with new hires, ensuring there are multiple methods for employee-to-management communication, reviewing and updating operator instruction materials, prioritizing machine upgrades and improvements, and so much more. Employees were rewarded with black, Zoltek branded safety flashlights that seemed to be well received by everyone.

CSR

In November, MRP held their first canned food drive, supporting St. Louis Area Foodbank. Teams competed to bring in the most canned goods and the winning team was rewarded with a pizza party! Collectively, employees raised and donated 617 pounds of food, which helped supply over 500 meals to those in need.

In December, MRP held an Ugly Sweater & Cookie Fundraiser, where employees wore their Holiday fashion and donated money in exchange for cookies. All proceeds were donated to Fire Truck O’ Toys. This is the second year in a row MRP has supported the St. Louis-based non-profit.

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Plant Update: Engineering Technology Corporation

Engineering Technology Corporation: Toray Industries America, Inc and Zoltek Corporation Visit

As part of Toray’s annual safety audit, Engineering Technology Corporation (ETC) hosted a team from Toray Industries America, Inc and Zoltek Corporation at its facility in Salt Lake City on February 8th and 9th. ETC is celebrating its second full year of zero accidents and continues its commitment with Toray’s safety slogan for 2022: “Top Priority is Safety. Pursue zero accidents, heighten safety awareness, and back to basics at all times.”

Mr. Kei Shimaji (President of Toray Industries America, Inc) and Mr. Masao Okuda (Human Resource Manager of Toray Industries America, inc) joined Mr. Nobuya Ando (CEO/COO/President of Zoltek) and Mr. Yasuo Ueda (EVP Engineering & Board Member) to tour ETC’s facility, conduct the safety audit, and discuss ETC’s business plans for fiscal year 2022 and beyond.

This was the first visit to Engineering Technology Corporation for Mr. Kei Shimaji and Mr. Masao Okuda. They were able to see the full line of ETC’s filament winder line on the manufacturing floor, from the Standard Small (SS) machine used for material testing to large custom 5 spindle filament winding machines supporting the CHG market.

The staff at Engineering Technology Corporation appreciates the continued support from Toray and Zoltek, and plan to build on existing relationships with companies under the Toray umbrella for collaboration efforts.

About Engineering Technology Corporation
A Member of Zoltek® & Toray Group
Engineering Technology Corporation is a global expert in filament winding, composite solutions and a complete service provider for the filament winding industry. The company was established in 1962 in Salt Lake City, Utah (USA), and has more than 50 years of trusted service. In addition to filament winding machinery and production lines, they provide retrofits, automation, design & analysis services, prototyping, and robust software for filament winding – FiberGrafiX®.
Commitment to customer satisfaction, long-term partnerships, and the best outcome for each filament winding project are goals the company strives to achieve.
To learn more about Engineering Technology Corporation, please visit www.etcwinders.com or follow the company’s profile on LinkedIn.

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US Human Resources Update

Benefits
For easy access, forms regarding your benefits coverage can be found at www.zoltek.com/hr Password: carbon. Employee Assistance Program (EAP) resources are available at www.zoltek.com/hr under OTHER EMPLOYEE BENEFITS.

Wellness
2022’s Wellness program is now underway. Some of what you can look forward to is healthy snacks, hydration, and step challenges, as well as drawings for prizes when receiving a flu shot and getting an annual wellness screening (information below). Keep an eye on www.zoltek.com/wellness to view upcoming wellness events.

2022 Annual Wellness Assessment and Wellness Exam

Complete a simple confidential online health assessment; It takes less than 10 minutes to complete. Your health answers will remain confidential with Cigna/your health plan, Zoltek will only be advised that you participated. To complete the assessment, visit mycigna.com and log in to your “my Cigna” account. On the home page, select “Wellness” then “My Health Assessment”. Employees who do not participate in Zoltek’s health plan can also take the online health assessment by going to this link. https://my.cigna.com/?token=00615324 . Once you complete the assessment you will be entered into a drawing for (1) of (16) *$50 gift cards. Final date of entry 11/30/22. Drawing to be held in December 2022.
Complete a wellness exam; One of the best decisions you can make for your health, and the health of your family, is to make sure to visit your doctor annually for routine physical exams, immunizations, and recommended screenings. Wellness exams and preventive care can help ensure that you and your family stay well and identify potential health issues early. With 100% coverage for in-network well-child, well-woman, and well-man care, Zoltek Corporation’s medical plan makes it easy and affordable for you and your family to get the preventive care you need.
- These include:
  - Well Woman Exam
  - Annual Physical
  - Mammogram
  - Colonoscopy/Sigmoidoscopy
  - Prostate Cancer/Screening

*Employees must be an active employee at the time the gift cards are distributed

Payroll
W2s have all been mailed out to each employee’s home address on file. We encourage employees to visit www.workforcenow.adp.com to review their address, email, and personal information and make updates when necessary. Remember you can retrieve W2’s and check stubs from this site as well.

Learning and Development
ISO audit training is scheduled at the St. Peters facility, taking place on March first and second. Seven new auditors will train for certification. St. Charles Community College Workforce Education division will utilize certified trainer Randy Thomas to conduct the training.

Awareness Training focusing on Section 11(c) of the Federal Occupational Safety and Health Act is to be conducted before the end of April 2022. Training will center around OSHA’s Office of the Whistleblower Protection Program (OWPP). Whistleblower protects workers from retaliation and discrimination when filing complaints to their employer, union, OSHA, or other agencies.

eLearning
The Zoltek Learning Academy (hosted by Go1) boasts 75,307 learning items in our content library. Numerous learners have taken advantage of Go1’s large library with thousands of self-enrollments by Zoltek personnel during the first subscription year. Users are encouraged to explore this unique learning portal to find subjects related to Zoltek, career interests or just for fun (many subject focus on health, happiness, personal interests, and hobbies).

The ZLA historical records project has successfully reformatted Cornerstone historical records to match Go1 formatting. The reformatted records have been uploaded into all ZLA User transcripts, completing the record retention project.

Compliance training “BEAR + Mr. Nikkaku’s message” was issued on February 4, 2022, with a due date of March 4, 2022.

Recruitment
Recruitment & retention at our US manufacturing locations remains a priority. In light of COVID-19, we are continuing our modified recruitment process to follow the recommended CDC guidelines for social distancing. We continue to sponsor ads for open positions, participate in virtual job fairs at career centers, and encourage current employees to utilize the employee referral bonus system. If you know of anyone searching for a great position with advancement opportunities, contact HR to start the referral process today.

HR and Operations are continuously working to improve and enhance the candidate experience from initial interviews, recruitment, and selection to onboarding, training, and long-term employee engagement. We are utilizing a multi-faceted approach to increase employee retention including “stay” interviews with current employees, market-pay analysis, facility upgrades, and supervisor training.

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Engineering Update

Hungary

AN tank

Parallel to production capacity increase of Zoltek Hungary, there is higher material consumption as well. Looking at it from a purchasing viewpoint, the acrylonitrile market price is fluctuating quite a lot. Spot price is very often better than pre-contracted raw material price. This gives the indication and need of a strategical AN storage, that can be filled up, when AN price is low. This has immediate positive effect on financial results.

We had intensive welding and building activity during autumn and wintertime.

As a result of this challenging period, we had:

Tank body completed and painted, including stairs, lighting and lightning protection installed, rainwater collecting system and chemical sewage system connected.
Fire system piping, technology piping completed, instrumentation installed and high voltage and instrumentation cabinet switched-on for testing.

We have still few small issues ahead of us: Yokogawa programming, new Siemens and current ESSER fire system synchronization, site ground organization, tank cleaning, thus service hole not yet closed.

Hungary Dormitory Program
The project turned into final phase as the year counter turned 22 from 21. The internal construction and furniture works have been finished, the necessary safety systems like fire alarm and heat- and exhaust system have been set up. Our cleaning staff did their job and the construction site transformed into a welcoming, nice dormitory. Meanwhile the dormitory’s operating staff have hired, trained and the 24/7 reception and cleaning service has started. Local Firesafety Officer and Local Health and Medical Officer have made their audit and gave us permit for starting the dormitory usage.

We, as Zoltek, wanted to rename the dormitory, after some brainstorming, we decided the new name: “Sakura”. It is a Japanese word which means cherry blossom, and in this context, it symbolizes spring, a new life, and of course our Japanese mother company; Toray. We hope this renovated building will give new chance and new home for Zoltek operators who travelled here in hope of a better life from far regions of Hungary.

AN and DMF monitoring system project for Polymer I and Mavilon I
A new Gas Chromatograph monitoring system was implemented recently. This system is online in most of the production areas. The project is continuous and two new areas are waiting for this development, where AN and DMF might be present in workspace. Based on the previous projects Zoltek and contractor made a detailed plan for these areas, where the installation work begun at the end of last year. The instrument has been ordered and it is at the manufacturing site in Madrid, where the FAT test was completed a couple of weeks ago. Zoltek and the Contractors are working together now to prepare the layout and create the conditions for the installation and commissioning of the instrument arriving soon. A fully reliable operation is expected to be reached at the end of May 2022.

Energy Saving Projects
Keeping competitiveness of Zoltek with continuously increasing energy prices is crucial for the long term. While the future is unpredictable for other factors (prices of raw material, structural material, etc) as well, and it is difficult to count therefore on compensation factors from market, reducing raw material and energy consumption can be always a good way to improve competitiveness. Such development work is running already by redirecting heat energy from carbonization stack into oxidation ovens. The difficulty here is the heat transport between the stack and the ovens as well as placement of heat recovery devices since area is very limited on the floor level and the roof is not suitable for heavy equipment. During the design phase, Zoltek Corporate Engineering made several thermal simulations on their own in Ansys, a flow calculation software, used worldwide for a wide range of applications. Optimization of the model resulted in a theoretical saving of 300 kW which can cover 60-70% of the electrical consumption of the oxidation ovens thus reducing CF production cost. Now we moved to realization step and started to ask quotes for heat exchangers, fans ducts and all necessary equipment.

Mexico

ZMx2B

The ZMx2B expansion is still in progress, designing works are completed including improvements proposed by all involved areas like Production, Maintenance and Technology, manufacturing of main equipment has been successfully completed in Hungary and has been already receive in ZMx.

Execution works for installation are on going in a close coordination with Production, Maintenance and EHS as the area is shared with the lines that are already producing.

ZMx 3

ZMx 3 expansion is already approved and started. This expansion requires the capacity increase of utilities, raw materials, polymerization, precursor fiber and carbon fiber areas. Currently the design stage is almost completed.

For the Utilities, the purchase of main equipment is ongoing, mostly for electrical distribution and refrigeration. Regarding raw materials and polymerization equipment, the design is completed and manufacturing has already started. In precursor fiber, the definition of design and requirements are under development. For carbon fiber, the design of the buildings are completed and the manufacturing of main equipment is ongoing.

USA – St. Peters

ZUS-1

The ZUS-1 project is under way. Designs for equipment are complete, and major work will begin in Spring of 2022. The project will expand the pultrusion production capacity of St. Peters substantially.

Corporate engineering is working closely with Ops, and EH&S to safely execute this expansion.

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Quality Update

Quality Alerts

STP Quality Alert!!

Are you aware of the intent of a Quality Alert? The use of a Quality Alert is to inform and to alert other team members that there is problem. The problem may be initiated by another Zoltek team member or be the result of a customer comment, alert or complaint. Regardless, it is one of our tools to immediately increase operator attentiveness of the issues, and address / solve the problem regardless of origin. If you see a Quality Alert, please take the time to read and follow any instructions.

If you see a problem which needs an immediate action, please contact your Quality Department to issue a Quality Alert. It just may prevent the next complaint!

Data Integrity Program appears to be effective 0.4%, (basically 1 incident reported by multiple persons) but we continue to strive for zero incidents.

Data integrity Update – what were the results?

We recently completed our annual Data Integrity Training and a Data Integrity questionnaire. The results of the questionnaire given to all employee involved in preparing, collecting, and providing data to our customers was very positive. With exception to one minor incident which was identified and controlled immediately by our Quality Team preventing any escape, our team’s responses were very positive.

It is critical that all employees know where the Data Integrity Reporting forms are located to report any concern or potential issue immediately. This allows our team to address the concern immediately and preserve the integrity of Zoltek/Toray’s reputation and meet our customer expectations!! Thank you all for your daily involvement! See something say something!

Meet the Quality Team!!!

The quality organization is made up of many hard-working individuals whom try to ensure success in many areas of our company. A lot of what they do is performed in the shadows of our production departments, but their efforts contribute immensely to the success of our company. Please meet a few of those team members and learn a little about what they do.

St. Peter’s – Rebecca Bartges working on document control

St. Peter’s – Andrea Prentice testing ILSS

Atomic Absorption Project at Zoltek México

Started in 2021 an atomic absorption unit has been installed at Zoltek México. The main purpose of the equipment is to verify heavy metals in water discharge and make sure every discharge is within limits. Previously this service was contracted with an external laboratory, so the intent is to have faster feedback of results.

Equipment, and all its auxiliary and safety devices have been validated and released. Still, it is a Project in progress in which metal by metal must be certified.

David Ortiz, our Mexico site metrology, and validation engineer

(Don’t forget: “see something – say something”)

Please make sure Reporting forms are readily available for all Employees.

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Global Compliance

Compliance Awareness month underway: For the second year in a row Zoltek is participating in Toray’s Mission B.E.A.R+ campaign and we have designated February 2022 as our Compliance Awareness Month. The campaign is now underway, and the Global Compliance team has introduced a number of compliance initiatives including our annual Compliance e-learning program (see below for details), Toray BEAR+ awareness videos and BEAR+ survey. Full employee participation is requested and as always, your feedback is encouraged.

Annual Compliance e-Learning Program: Compliance training is a cornerstone of any effective compliance program and Zoltek is no exception. Our annual e-Learning program – mandatory for all employees – has been updated to provide the latest knowledge and awareness across several legal and regulatory areas relevant to Zoltek global operations. A major improvement for this year’s program is the addition of two new courses aimed at sharpening our focus on the importance of ethical conduct. These courses – Business Ethics and Respect in the Workplace – will be assigned to all enrolled employees. Employees have 45 days to complete the assigned training before the March 31^st deadline. Automatic reminders will be sent as the due date approaches and keep in mind year-end performance reviews will consider training completion status.

Compliance Policy update: Zoltek’s Third-party Due Diligence policy has recently been updated to clarify screening requirements applicable to ALL Zoltek business parties, both direct and indirect. Under U.S. sanctions regulations, Zoltek is prohibited from engaging with any listed or blocked entity regardless of where they are situated in our supply / sales chain. So, in situations where our customer or supplier is in an intermediary role, i.e., when our customer is a direct re-seller of Zoltek products or our supplier is not the source / producer of goods purchased, we are still responsible to screen and clear the “indirect” parties as well, i.e., ultimate end-users on the sales side and source producers on the purchasing side. Global Compliance is partnering closely with our Sales and Global Operations teams to implement the changes. New customer and new vendor forms have been updated. The revised Policy, GCP-002, has been posted to our intranet here (link).

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Global Operations

The Global Operations Team has responsibilities of global production planning, managing the Sales & Operations Planning Process, and balancing of global inventory. In the past year new processes have been implemented for AX order entry. Orders now fall into two groups, referred to as Unconfirmed and Confirmed. Customer Service enters the orders as Unconfirmed and then add a confirmed shipping date once that date is provided by Global Operations. This has allowed for us to better manage orders of items that are in short supply and allows us to easily identify when new orders are entered. Planning tools have been prepared by GO to review these orders on a regular basic. It also allows us to keep notes to help us with future planning and provide updates to Customer Service when shipping information changes (due to a change in customer priority, production related changes, etc.). Below is an example of the notes maintained in our Chop Planning tool.

The process has been implemented across Chop, Pultrusion, Mill and most recently OX Tow & Staple. It will soon also be rolled out to Carbon Fiber tow orders and the remaining product classes (fabrics / yarns). This allows us to quickly identify which orders still need to be reviewed and to have a better idea of which orders are actually planning to ship during a specific period (which is helpful in estimating sales numbers). The intention is to remove the Sales Team from the production planning process other than in areas of inventory shortages. To confirm orders the GO Team reviews our currently inventory, existing confirmed orders, and future production plans. We calculate when inventory will be available and share those dates with Customer Service, who then add the confirmed dates to AX. If there are questions regarding which orders (or customers) to prioritize the GO Team will reach out to the Sales Team for direction on how to proceed.

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Procurement Update

What Makes a Truly Agile and Resilient Supply Chain?

Supply Chain Visibility from logisticsviewpoints.com | By Jerome Roberts • 02/15/2022

Last year, many in the supply chain technology industry were warning companies all over the globe to prepare for the unknown. We didn’t know how long COVID-19-related shutdowns, and the ensuing port congestion and crunch on carrier capacity, would last. It now seems that port congestion and capacity issues will persist throughout the year. There is optimism around the corner, but a sunny outlook isn’t enough; it’s past time for supply chain leaders to transform their supply chains to become more agile. The unknown can be frightening and risky unless supply chain processes are properly digitized and resilient.

Some supply chain leaders believe that the key to a resilient supply chain is developing a value chain that is averse to risk. However, this thinking could lead to a potentially higher costs and low customer service. If there is enough preparation for the unknown, there’s no need to be averse to risk. You can embrace challenges and changes knowing that supply chain digitization has made your processes pliant, adaptable to disruptions and, yes, resilient. What does that mean? Your supply chain should benefit from end-to-end supply chain visibility and execution solutions that work together in a coherent supply chain orchestration strategy. True resiliency is achieved when supply chain leaders can predict issues and dynamically respond – from sourcing and manufacturing to final delivery – with agile solutions. With these capabilities, you can predict and react to constant manufacturing and logistics changes with control-tower precision, confronting challenges before they become disruptions.

To cultivate true supply chain resiliency, the concept of end-to-end supply chain visibility should not be limited to freight shipment transparency. Supply chain leaders need to look beyond visibility to freight in motion and partner with technology companies that can provide upstream transparency to sourcing manufacturing. Organizations leveraging a neutral, single source of truth that enables real-time tracking of orders and items throughout the entire manufacturing and shipment process, including solutions that truly orchestrate the end-to-end supply chain process, create their own success. It is possible, today, to find technology providers that offer true supply chain orchestration that emboldens companies instead of leaving them at the mercy of data. These solutions allow them to plan, using variable lead times, cost implications, sustainability implications and intelligent historical data; track, using end-to-end visibility and continuously updated ETAs to ensure orders are traveling on time; and adjust, viewing recommended alternate modes, carriers, service levels and routes to bring shipments back on track. Adding sourcing, quality and supplier management enables supply chain technology providers to create an agile and resilient supply chain for their customers through the entire lifecycle of a product.

With a keen handle on manufacturing processes, companies can complement transportation visibility with manufacturing lead time, yields, quality, ready-to-ship, advanced shipment notice and even the manufacturing CO2 footprint. This enables complete supply chain resiliency because companies can act earlier in the process to prevent disruption and increase customer satisfaction. It’s simply not enough to know that a component is not going to be available or it’s running late. Resiliency is realized when these insights are combines with analytics to create opportunities for near real-time mitigation and recovery. This is where visibility to suppliers and new souring options becomes critical. Companies need visibility not only to the suppliers they are sourcing from today but all of the backup suppliers and all of the places they can possibly source each component in order to keep the flow of goods predicable and efficient.

If resiliency is already in your company’s DNA, stress test your processes. Can your supply chain technology let you know if a supplier will deliver on time given the impacts of a seismic supply chain disruption like COVID-19? If not, how will you find alternate suppliers and pivot to different logistics solutions on the fly? Do you know, briefly, how many component parts were shipped and if they will arrive in time? Finally, are you able to quantify the impact on finished goods if component parts are delayed?

A digitized supply chain can help anticipate disruptions and ultimately optimize operations. Real-time analysis of integrated data spanning customers, partners and suppliers will lead to outcomes that better match supply and demand while containing costs. AI and machine learning can also power optimization to minimize costs, maximize capacity, increase agility and anticipate potential impacts while recommending solutions.

Uniting manufacturing and logistics processes bridges the visibility gap and optimizes what has, up until now, been viewed as separate processes. End-to-end supply chain orchestration like this is what winning organizations will achieve. Those that do not will fall behind. True supply chain orchestration is only achieved when a supply chain technology provider can offer real-time visibility from the start of the manufacturing process to the final delivery in combination with control tower-level logistics execution.

There’s no need to fret over uncertainty if you have the solutions that can help identify supply chain issues before they start and resolve issues that crop up during the manufacturing and freight transportation process. Armed with the right technology tools, companies can face disruption and be prepared to emerge more successful than their competition.

Jerome Roberts is vice president of product marketing at Blume Global. He has more than 25 years of experience in the supply chain industry, driving innovative solutions for both SMB and global enterprise companies across all major industry verticals. He was formerly vice president of marketing at UPS, where he led product innovation, customer technology and supply chain marketing.

As we continue on our journey at Zoltek to build quality supply chain dashboards, and provide as close to real time visibility as possible, we can reach, implement, and maintain, an agile and resilient supply chain.

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Proactive Management Program (PMP) Update

Please continue to ask about our PMP program. PMP is a management program aimed at involving all employees in achieving the success of the company. We want to learn to share more information and keep the transparency of the information with employees and provide for improved feedback systems. You can make a difference in this program so please be curious and ask questions about it!

So how is PMP progressing?

In this issue I thought I would share the ideas associated with more “Dashboards”. A dashboard is a tool meant to bring you information just like you have when you are driving your car. Information that is important to know on a regular and timely basis.

At this time, I would like to share with you a “usage” dashboard which allows me to see who is using the company’s dashboards. As you can see, we have a LOT of users!! This is very exciting for me to see!

I can also look deeper and see which dashboards are being used. Below is a “Top 10” listing of the company’s dashboards.

The good news is that dashboards are becoming a normal part of our business. Hopefully, with the goal improving your ability to perform your job with the best information available.

Please continue to inquire about the tools the company have to assist you in doing your job. It is important so please ask!! We have tools for you but unless you ask you may not learn about them and how to use them.

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Voices of Zoltek

Caylen Johnson – Maintenance Mechanic, MRP

Tell us a little about yourself.
I’m a tech guy that loves cars and I like working with electrical stuff, that’s my thing. I’ve been with Zoltek for 2 years now.

What do you enjoy doing in your free time?
Working on cars, hanging out with friends, I like food a lot. Sushi is my favorite, Blue Ocean in Delmar Loop is the best!

If you could meet any famous person from history, who would it be and why?
King Tut so I can find out if aliens are real!

Why did you choose to work at Zoltek?
This day in age, anyone interested in cars is also interested in carbon fiber. Carbon fiber is the future. It is an all-around interactive position too.

When you began working at Zoltek, what did you find most surprising?
How many different processes of carbon fiber you can have in one area. We do a lot of stuff here.

What advice would you give to new employees?
Start with hot water first and then cold if you’re itchy!

How has working at Zoltek impacted you?
It’s given me a sense of confidence. I can handle anything that’s thrown at me.

What has been your biggest professional achievement to date?
Leading the plant shut down with Wayne Agne. We tightened and checked every single electrical connection in the plant. We also cleaned the entire electrical system which was strenuous. This was an interesting process, shutting off power to a place like MRP.

If you could switch jobs with anyone at Zoltek, who would it be and why?
Ando-san – then I could afford a brand-new BMW M5 – Ando-san has the same car but just newer. Same color and everything!

What have you learned since you began working at Zoltek?
Maintenance is a step at a time – you can’t really plan your week.

What are your goals for your future with Zoltek?
Keep building my experience level.

What is the most exciting change you have seen in the company recently?
A push to update the factory from several different people including Paul Townsend and Tim Faenger.

How do you think Zoltek will change over the next five years?
It will get easier and easier for the next generation in line coming in to do their day to day jobs. There’s been an improvement in communication and information available about what we do here.

István MOLNÁR – Process Engineer, Hungary

Tell us a little about yourself.
My name is István MOLNÁR, and I am 36 years old. I live in Tát with my wife and my two daughters. I started working at Zoltek 5 months ago as a process engineer, however, I used to work here between 2005 and 2013 as an operator in CF2. I finished university last year and received my mechatronics engineer degree.

What do you enjoy doing in your free time?
I spend most of my free time with my family, but I go to the gym every morning before work and I play table tennis once a week, as well.

Why did you choose to work at Zoltek?
For the stability, and because it is near to my home and of course due to the good memories.

When you began working at Zoltek, what did you find most surprising?
The changes that have taken place since I was an operator. The mentality and workplace culture have changed a lot.

What advice would you give to new employees?
If they overcome the initial concerns (i.e., fire hazard, smoke, and the discomfort of wearing protective clothing) they can work at a stable, reliable workplace.

How has working at Zoltek impacted you?
Thanks to my work at Zoltek, I wanted to achieve more in life and I started to learn again.

If you could switch jobs with anyone at Zoltek, who would it be and why?
I do not want to switch with anyone because I cannot exactly see into everyone’s work except my own and my team’s.

What have you learned since you began working at Zoltek?
I took up an English course.

What are your goals for your future with Zoltek?
I want to automate what I can in the CF plant to make production more stable, easier and more transparent.

How do you think Zoltek will change over the next five years?
I hope the carbon fiber plants will be expanded with a new plant to meet all customer needs.

Interview with Robert Stalliviere – Electrical System Designer

Over 40 years of professional expertise and outstanding performance at Engineering Technology Corporation

I came to work at ETC after Graduating from SLCC with an Associate Degree in Electronics. I actually had job offers from several companies; ETC offered me a little more money than the others. I started here on September 24, 1979. I have been at the company over 40 years and my job has paid for my house, raised my children, and supported my wife and me. Shortly after I started here I told Kirk Samowitz, the man that hired me, that I plan to be here until I retire. It looks like that will be the case someday I don’t know when. I have had opportunities go to a lot of the places where our machines are located, like China, Spain, Italy, Japan, Canada and most of the lower 48 states.

In the years that I have worked at ETC, I have done many different jobs and had many different titles. I started assembling printed circuit boards and the next week I was drawing Schematics with pencil and paper on a drafting table. We now do all our drawing with CAD packages on the computer. We moved to this new building in 1994 which was interesting. I was able to help layout the building and make sure we had power to run all of our equipment. At that time I was also the building maintenance man, just another title. Another interesting move I supervised was moving equipment and machines from S.L.C., UT to St Peters, MO and then again when we later moved more machines to the same place. In the beginning before the move I went down and had to check out the building for the proper power with Wayne Agne and some other Zoltek Officials before Zoltek would lease the building. I also helped with what I think is the world’s biggest filament winding machine, it winds wind blades to generate power, the blades ½ was 180’ Lg X 10’ dia. when assembled was 360’ Lg X and 10’ at the widest point.

Some of the things that I have done is run the Electrical Department for maybe 30 years, with as few employees as 1 me, and as many employees as 7. With running the Electrical Department, Designing Controls systems, drawing schematics, and Specifying parts for machines, I didn’t have a lot of time to make improvements in the Electrical Department which I would like to have done. I had the job title of Control System Manger for over 10 years. I now have a new job title of Electrical System Designer.

I like the people that I work with, some I have known for a very long time and they are like family. Some of the people that I worked with have already moved on. If you like change this is a great place to work.

My goal at Engineering Technology Corporation is to keep designing Control Systems for equipment and also to help the company digitize the entire paper machine folders and files to make it easier to access information about past machines.

In my spare time I like collecting coins, playing pool, and spending time with my Grand Children.

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