Don't be alarmed, but nanotechnology is in your pants.
The "old-economy" industry of basic clothing is making the acquaintance of the new promise of nanotechnology, improving the performance of textiles. Nano is making our jackets water-repellent, our shirts stain-resistant and our pants wrinkle-free. With nano, our clothes will last longer and need to be washed less often.
As Foolish investors, it makes sense to determine what companies are providing these nano particles to enhance our clothing. One of the leaders is Nano-Tex LLC, a subsidiary of bankrupt Burlington Industries, which was almost purchased by Berkshire Hathaway (NYSE: BRK.A ) in 2003. Instead, Wilbur Ross created the new firm, International Textile Group, the result of the combination of Burlington Industries and Cone Mills, both of which were acquired out of bankruptcy. Nano-Tex remained within this group.
Nano-Tex customers range from Levi's, to GAP (NYSE: GPS ) , to Eddie Bauer, and to about 40 other retail brands. The company has formidable competition such as DuPont (NYSE: DD ) , but none have the momentum that Nano-Tex has built.
The technology is fairly straightforward for textile mills to adopt. The chemical formulation changes the fabric on a molecular level with nano-enhanced fibers. These "nano hairs" prevent stains in your clothing by not allowing grape juice or mud or French fry grease to soak into the fabric.
Nano-Tex reports growing sales and looks forward to further enhancements that will make its technologies more coveted by clothiers. Unfortunately, because it's a private company, we don't have any SEC reports to verify sales claims. But Nano-Tex is looking to create greater mindshare -- to get people thinking about these nano-hairs -- by introducing a new hangtag to increase brand recognition. Think of it as the "Intel Inside" of the garment industry. Additionally, agreements with mills in the United States, Europe, and Asia indicate a robust marketing and licensing effort.
But at best, this area features the evolution of a product using nano particles to enhance the clothing's properties. Nano-Tex's presentation at the NanoCommerce 2004 conference doesn't change our view of the company. It's using a small sideline of nanotechnology, which may provide a reasonable return if and when the company goes public. But will the market be large enough to justify extraordinary long-term returns?
Right now, our view is that this is just another promising company with nano in its name.
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