Cotton is King... in Cleveland!

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In a manufacturing plant just north of Cleveland Hopkins International Airport, four foot tall piles of cotton fluff sit waiting to be sucked up and transported through metal ducts running across the ceiling. From here, huge machines and nearly 400 workers will turn this fluff into the humblest and most ubiquitous of beauty products: cotton swabs, cotton pads and cotton balls.

Greg Tilton: The largest cotton ball manufacturing facility in the world is in Cleveland, Ohio. This is it.

Who knew!

Greg Tilton is senior vice president of operations here at US Cotton's Cleveland factory. Since he started here in 2000, he's seen this plant go through multiple buyouts, most recently by North Carolina's thread making giant Parkdale Mills. The cotton left over from thread making goes to US Cotton plants to be turned into balls, pads and swabs. Cotton balls seem an unlikely way to make money, but US Cotton is the dominant supplier of generic or store brand cotton beauty products to most major retailers including WalMart.

Greg Tilton: It's common that during a market slowdown that the consumer will switch away from a brand and go to the generic. So if the consumer is at retail and they are buying a cotton ball, by and large, it's us. If they buy a cotton swab, if they move away from the brand, it is us.

And because customers are turning to generic labels and discounters like WalMart, US Cotton has been on target for sales for the past year. But US Cotton won these big name clients, besting Chinese companies and other domestic manufacturers that have since gone out of business. That's because, Tilton says, his company was willing to bet millions on the plant's dreams to overhaul outdated equipment on the factory floor.

Greg Tilton: There were machines on the market that you could buy to perform certain functions but they weren't designed for making cotton balls. So we designed equipment to make cotton balls. And that's really what gave us the edge.

Since that new equipment started up in 2005, US Cotton has nearly halved the cost of making a cotton ball. That savings allowed the company to grow while competitors went under. Manufacturers like US Cotton that are willing to take risks when slashing costs are the companies that are succeeding in this downturn. Just ask Bill Forsythe, an analyst for the giant consulting firm Deloitte Consulting.

Bill Forsythe : Too many of the companies we talk to are thinking about addressing their business needs right now like they are changing the oil or spark plugs on their car and not enough of them are thinking about the need to change the engine. They need to do bigger things that will deliver double digit kind of cost savings.

Greg Tilton: These two machines have been built by John's staff right here in Cleveland...new panels..new control systems...new electronics...

Greg Tilton and plant manager John Sotak admire a 6 foot tall machine making cotton swabs. The company is now investing millions to figure out how to make cotton swabs better. The swabs spin through the machine and into little plastic packs. As we watch, some swabs spill out of the machine and onto the floor.

Greg Tilton: We're not perfect yet (laughs)...

But when the machine is ready, Tilton believes he'll be making swabs better than many of his competitors. It helps that it's surprisingly expensive to ship cotton products. The company still pays to fill up the truck, even if cotton balls weigh virtually nothing. The company finds that helps them compete even against cheap labor in Asia.

Greg Tilton: With what we're doing now, we know we can continue to make [these products] for many years.

Though Tilton is not hiring his company continues to post strong sales numbers through this year. He's even readied space in his factory to expand, when the economy finally turns around.

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