Airlaid: What’s Next?

August 17, 2005

after an unprecedented surge in global capacity, the airlaid market is now left with an important question to answer

The term rocky does not begin to describe the past several years in the airlaid market. Since the late 1990s, the segment has been characterized by tremendous highs and lows, which have made airlaid one of the most watched and talked about technologies in the nonwovens industry.

For a while, it seemed that everyone wanted a piece of the airlaid market. Concert Industries, Vancouver, British Columbia, Canada, established in 1993, began an aggressive capital expansion program in 1998 that included new lines in Germany and Canada as well as the acquisition of a smaller scale South Carolina airlaid producer. Around this time, Buckeye Technologies, Memphis, TN, also began to grow aggressively with the acquisition of Steinfurt, Germany-based producer Walkisoft in 1999 as well as subsequent capital expansion plans that nearly doubled its airlaid capacity. While these two companies were the most aggressive and are considered the ring leaders in the explosion of airlaid capacity that came onto the market in 2001, they were not the only companies that participated in this massive growth.

BBA Nonwovens, Nashville, TN, entered the airlaid market in 2001 with the construction of a new facility in Tianjin, China, a plan first announced in 1999. Additionally, pulp supplier Rayonier, Jessup, GA, constructed a new line to manufacture its Novathin airlaid core material. While Rayonier had begun marketing NovaThin in 1998, it was using an outside source to produce the material until late last year when its new line was completed. Other newcomers to the airlaid playing field are Main SpA, Pisticci Scalo, Italy, and Softbond, Pilar, Argentina. Meanwhile, absorbent product manufacturers Kimberly-Clark, Dallas, TX, and Procter & Gamble, Cincinnati, OH, reportedly were upping their airlaid capacity levels to help fuel their consumer businesses.

The reasons behind this unprecedented increase in airlaid capacity across the globe are vague. Some experts say the new capacity responded to new product introductions planned by major consumer product companies that were later revoked due to negative economic factors. Others say the surge in capacity was a coincidence, caused by a general need for additional airlaid capacity in the world—it was simply bad luck that so many companies increased their capacity at once.

No matter what the reasons behind the excessive increase in capacity are, the results are clear. The airlaid industry is currently facing serious overcapacity issues that have left many of its largest players looking for creative solutions to getting all of their material out onto the market before the situation causes permanent damage to their corporate structures.

While conditions might be tough now in the airlaid market, experts do not expect this situation to last forever and most agree that the timeframe for airlaid’s recovery is about 18-24 months. Until recovery occurs, manufacturers should focus on increasing airlaid’s role in existing markets as well as creating new areas for the material. While no airlaid producer is in any hurry to add to its current capacity, many continue to be optimistic about the future.

“There is definitely overcapacity right now in the market,” explained Hank Hall, North American sales manager at Buckeye Technologies. “Right now, we have a lot of things going on to remedy this situation but nothing that’s going to solve the structural imbalance short term.”

Especially because this is not the first time airlaid technology has been in an overcapacity situation, executives are confident that recovery is ahead. In fact, this situation is actually viewed by some as healthy because it encourages new markets and applications, thus broadening airlaid’s scope.

“We have had the same scenario in earlier times in the airlaid market, and what we have seen in the past is that the idle capacity forces companies to come up with new ideas for products and markets to absorb the idle capacity,” explained Jesper Dobel, general manager of airlaid machinery supplier Dan-Webforming, Risskov, Denmark. “It takes time for a market to recover—we saw the same thing in the early 1990s. Even in the best economic conditions, there would be overcapacity.”

Markets Wanted
During the past decade, airlaid has seen a great deal of interest from the feminine hygiene market, which has been able to produce much thinner sanitary napkins using airlaid absorbent cores. While growth caused by the feminine hygiene segment’s conversion has leveled off somewhat in more developed world regions, manufacturers still expect to see some growth in the segment. Meanwhile, feminine hygiene’s not-so-distant relatives, the adult incontinence and disposable baby diaper markets are still open markets for airlaid. The attractiveness of these markets is further enhanced by their size. The baby diaper market in particular would generate massive airlaid consumption if manufacturers adopted such a change. However, problems still exist for airlaid in these markets as manufacturers are reluctant to front the capital investment such a change would require. Therefore, many of the new applications being eyed for the airlaid market do not relate to the absorbent core.

Given the current state of the airlaid market, manufacturers are investing a great deal of time in developing new end use categories for airlaid materials in an effort to use up the new capacity. These new end use areas are either replacing other nonwovens technologies such as spunlaced or creating new nonwovens categories all together.

For instance, Buckeye has found success in the household cleaning segments as well as the premoistened wipes and food packaging markets for airlaid. These two areas, while showing nice growth, are not sufficient to fill all of its capacity right now, according to Howard Cannon, vice president of nonwovens sales for Buckeye. “We have seen some fairly nice growth but it’s still not where it has to be to keep pace with all of the new capacity,” he said. “It will work itself out. It’s just a matter of time.”

Many say that the recovery will depend on how quickly new markets for airlaid materials are developed and accepted. While manufacturers were reluctant to elaborate on the potential new markets, they did speculate that they could dramatically change the nonwovens industry as a whole. “There are a lot more applications for our airlaid materials, especially because our new machine can reduce the cost structure,” Mr. Cannon explained. “We are currently assessing several new markets that we have not had previous involvement in and we expect to get to commercialization in some of these markets within the next 18-24 months.”

Because most of the new capacity brought onstream recently is in North America, the European market for airlaid has not felt quite the same devastating effects of the situation. However, some fallout has certainly affected the market there, which includes such producers as McAirlaid’s Vliesstoffe, Steinfurt, Germany, and Main SpA. Additionally, North American-based companies Buckeye and Concert both operate European airlaid plants.

For McAirlaid’s this situation has made the company hesitant to add any new capacity or make any other aggressive expansion plans, but overall business is good, according to company CEO Alexander Maksimow. “We’ve been in the airlaid business since the early 1980s,” he explained. “Since then we have been looking after new applications and we’ve made some good progress. For us, it’s been a strong year and we’re doing well.”

Still, the company has delayed previously announced plans to bring a second airlaid line onstream until the global capacity situation is resolved. In the meantime, McAirlaid’s, like its competitors, is focusing on new markets for airlaid nonwovens including food packaging and tabletop products. However, Mr. Maksimow agreed that a strong position in the hygiene market is vital for success because of the huge sales volumes this business creates. While McAirlaid’s has seen strength in the feminine hygiene market, further penetration into other hygiene markets will be necessary in the future, Mr. Maksimow explained.

The main focus of Rayonier’s airlaid business is absorbent core technology. The company’s absorbent material, Novathin, is already found in feminine hygiene applications and shows great potential for baby and adult diaper products, according to executives.
A Word About Wipes
The recent boom in disposable wipes made of nonwoven substrates has meant big exposure for the nonwovens industry and, by association, airlaid materials. Particularly in the U.S., manufacturers are choosing airlaid over spunlaced materials for their wiping products due to their softer, spongier feel and lower price points. These wiping products have moved a good deal of capacity onto the market, however, the price structure in this industry is not attractive for airlaid makers.

Because many consumer wipes are commodity-oriented products, their manufacturers are not looking for much differentiation in their products and subsequently creating a market driven primarily by cost. Still, they are a nice way for airlaid producers to move their volumes.

“There are still a lot of opportunities in wipes,” explained Paul Farren, vice president and general manager of nonwovens for Georgia-Pacific, Atlanta, GA. “While there is a lot of maturity there, there is also still a lot of room for displacement.”

Mr. Farren predicted that the market for both wet and dry airlaid wipes would grow 4-5% a year during the next several years, driven partly by the food service business. Additionally, this segment will receive a boost from airlace technology, a practice of combining the properties of airlaid and spunlaced nonwovens to reap the benefits of each technology. G-P is among a handful of companies examining the possibility of retrofitting airlaid production machinery with hydroentangled bonding capabilities.

“I do believe one area we are looking at is the airlace situation, which combines airlaid and spunlaced materials,” Mr. Farren said. “It combines the economies and performance benefits of pulp, found in typical airlaid materials, with the strength and softness of synthetic materials that are characteristics of spunlaced nonwovens.”

In addition to the wipes market, the products made from this airlaced technology can find application in such areas as the medical market. Additionally, the technology offsets the competition that has traditionally existed between the two materials. “There is still competition between airlaid and spunlaced,” Mr. Farren added. “The opportunity lies in being able to provide a technology that performs using both technologies.”

At The Core
While the main focus at many airlaid producers is filling excess capacity no matter what the final application, the sole mission for Rayonier, Jesup, GA, is the airlaid absorbent core. In fact, Rayonier’s strategy is two-fold. The company, which started its first airlaid production line at the end of 2001, is supporting its existing absorbent core business while keeping machine time available to develop the next generation of materials for absorbent products. In essence, 100% of the company’s focus is to leverage its cellulose chemistry, fiber expertise and absorbent material knowledge to optimize the performance of airlaid nonwovens for absorbent core applications.

After using an outside toll producer to manufacture its proprietary NovaThin absorbent core material for two years, Rayonier, which is traditionally a specialty pulp producer, began producing it on its own line last year in an effort to streamline its operations and emphasize the importance of the material to its overall business. While initial applications for NovaThin primarily centered around the feminine hygiene segment, in 2002 Rayonier has seen a great deal of interest for the material from adult incontinence manufacturers. While the baby diaper market’s conversion to an airlaid core may still be down the road, Rayonier is reportedly seeing the first signs of commercial acceptance for the material. In fact, Rayonier has already developed an airlaid core for a disposable diaper that is currently available in test markets where it is reportedly performing well, according to Kent Kvaal, general manager of Engineered Absorbent Materials at Rayonier.

Still, the chief obstacle between the baby diaper market and an airlaid absorbent core relates to economics. While this hurdle has been passed, more or less, in the feminine hygiene and adult incontinence segments, the baby diaper market has been a tougher sell, and the reason for this scenario lies in the very nature of the market itself. Among the key values of the airlaid core are thinness, discretion and, most importantly, comfort. In the feminine hygiene and adult incontinence segments, the wearer is oftentimes the purchaser and more apt to pay a higher premium for these attributes. In the baby diaper market, the purchaser is not the wearer, and these values become more secondary.

Buckeye Technologies offers customers the option of receiving their airlaid materials in festooned stacks instead of rolls.
Additionally, the advent of superabsorbent polymers and other diaper manufacturing technologies has made today’s diapers substantially thinner than they were several years ago. Therefore, the consumer does not necessarily feel a need for a thinner baby diaper because the padding in diapers is so often associated with a baby’s bottom.

Because of this, industry observers expect the diaper industry’s conversion to the airlaid core to come in stages. So far, airlaid cores have been used in the disposable swim diapers produced by many of the leading diaper manufacturers and experts predict that the next step will be the inclusion of airlaid materials into disposable training pants. Already, the importance of a thin product in this market has been evidenced by two major manufacturers’ launches of an updated pant that is 30% thinner earlier this year. While these redesigned products reportedly do not contain airlaid materials, they do reflect a trend in the industry from which airlaid can benefit.

“For airlaid to penetrate the baby diaper market, it has to start small,” Mr. Maksimow of McAirlaid’s explained. “This is why I think it would be great for the pull-up pants. This is a product that should seem more like underwear, and airlaid is a way this can be done.”

While no one has an answer as to when an airlaid core will be found in a disposable baby diaper marketed under a major national brand, executives agree that the baby diaper is an extremely important application for airlaid materials because it allows manufacturers to fetch a premium price for their materials. In fact, while many of the airlaid producers interviewed by Nonwovens Industry are examining new markets, for all of them the baby diaper continues to be a strong interest.

Roots And Wings
Airlaid technology finds its roots in Denmark where it was developed by machinery and equipment suppliers Dan-Webforming International, Risskov, Denmark, and M&J Fibretech, Horsens, Denmark. These two companies created the technology and continue to hone their offerings to fuel the overall advancement of airlaid’s role in the market. Particularly during the leaner times for airlaid materials, such as we are experiencing right now, these machinery manufacturers are constantly improving the flexibility, speed and quality of their machines.

For instance, Dan-Web has been focusing its efforts on two major areas, according to Mr. Dobel. For one, the company has doubled its line speed but is already gearing up to double it again within the next three or four years. Additionally, the company is working out ways to help its customers achieve better profits by developing new products and adding greater flexibility to its machines.

Also with its customers’ best interests at heart is M&J Fibretech, which recently developed a new process of plies of 100% airlaid wood pulp to be bonded through spunlacing as well as a process for creating highloft synthetic materials with high resiliency, according to managing director Henning Skov Jensen. Looking beyond machinery technology, the equipment supplier is also working on the development of new acquisition/distribution/absorbent substrates to help better position airlaid materials in the baby diaper and adult incontinence markets.

With approximately 49 airlaid production lines, made by either M&J or Dan-Web or through the operating company’s proprietary technology, operating around the world, the airlaid market has expanded significantly during the past decade in both size and scope. Even though this tremendous growth has led to a significant overcapacity situation in the market, already three more large-scale lines are reportedly scheduled to be built. According to Dan-Web, two Chinese companies and one Kuwaiti firm have placed orders for large-scale airlaid production lines, each capable of producing approximately 50,000 tons of material per year. These lines are expected to come onstream during the next 18-24 months, according to reports.

Mr. Dobel, whose company is building the machinery, said the new lines will benefit world regions that face limited airlaid supply and will not acerbate the worldwide overcapacity situation in the airlaid market. Particularly in China, where only one airlaid machine currently exists, the new lines will help support growing consumer markets, created by the 10% of the Chinese population, or 150 million consumers, who have the buying power for such products as feminine hygiene items, hot towels and tabletop items. “Just like the rest of the world, China will become a dominant player in its own right before long,” Mr. Dobel predicted.

But, some industry observers are skeptical about the need for these new lines and question whether or not these new companies will be able to generate the large amount of capital needed for such an initiative. With existing manufacturers either scrambling to fill their new capacity or postponing plans to add more capacity, it certainly does not seem like a good time for anybody to enter the airlaid market. Still, the market has survived tougher times than these and there is no question that the good times will soon return to the airlaid market.