Whoa, Baby!

August 17, 2005

competition in the baby diaper machinery market is as strong as ever

competition within the baby diaper machinery market is as strong as ever

s usual, “competitive” was the adjective used most when describing recent trends and issues in the baby diaper machinery market. Customer demands are evolving as disposable baby diaper products change and equipment manufacturers, meanwhile, have had to compete with each other in order to keep customers satisfied. Competition within the market has also grown due to certain emerging areas such as Asia and South America, which are now prize locations since European and North American markets are for the most part saturated. All of these indicators suggest that competition is as fierce as ever and has no signs of letting up in the future.

Customer requirements are one of the main driving forces behind this high level of competition. In order for a company to keep a customer it worked hard to get, that customer must be kept satisified through product updates and improvements. According to Giuseppe Baldassarre, industrial director for Cellulose Converting Equipment, Sambuceto, Italy, many customers are requesting high quality machinery products that are able to handle new baby diaper features—such as leg gathers and “hook-and-loop” fastening systems—at the lowest price possible. “There are two leaders in the baby diaper market—P&G and K-C—and all the other producers want to make a product that looks very similar to their top products,” he explained. Stefano Romanelli, general manager of Diatec Srl, Collecorvino, Italy, agreed, “Customers are asking for flexible machines that are able to include, as options, all of the new product features from the multinational companies.”

According to Yukio Yoshioka, general manager of Zuiko, Osaka, Japan, the basic structure of the baby diaper has not changed, but there have been a variety of changes in the componenets used, such as tapes, biodegradability of materials, aquisition layers, anti-bacterial treatments and breathability.

Thinning Out The Market
One of the features customers are requiring their machinery to handle continues to be found at the very “core” of the baby diaper industry. According to equipment supplier GDM SpA, Offanengo, Italy, one important trend is the increasing use of a thin core structure, which decreases the need for pulp and allows the use of alternative materials such as air laid nonwovens and SAP. At RML Raynworth Marketing Ltd., Lugano, Switzerland, the trend has influenced sales, “Almost every client, including newcomers, have asked that machines be equipped for the production of diapers with SAP and frontal tapes,” assistant manager Birgit Biancardi said.

Nathan Toney, president of core forming system manufacturer FT&D International, Helen, GA, concurred. “The trend for core pads has gone from thicker to thinner with lower basis weights and higher SAP and weight tolerancing,” he said. “Customers want a lower pad weight variability off of the machinery, which means we have to build our equipment to a high precision so that core pad requirements are within a certain tolerancy window.” Mr. Toney attributed the trend toward thinner core pads to the use of SAP, which allows manufacturers to use less fluff. “Where SAP used to represent about 10-15% of a diaper’s content five to 10 years ago, it’s now up to 40%, resulting in less pad volume being needed,” he said.

According to Lother Geiger, sales manager for Bicma Hygiene Technologie, Basaltweg, Germany, the move toward a thinner, more compact diaper will result in machinery that is easier to operate. “The speed of the equipment and the utilization of servo drivers will increase, while the modularity of the machines will allow for easy adaption to different product designs,” he explained. Mr. Romanelli of Diatec agreed, “The manufacturing process is easier and safer, avoids dust and reduces power consumption, making the equipment environmentally-oriented.”

In addition to ease of operation, customers want machinery that turns out a high quality product at the lowest possible cost. “In the last few years, baby diaper manufacturers have added various features to the standard diaper, which has increased the cost of the finished product,” said Dino Caldiroli, principal of Caldiroli Srl, Castellanza, Italy. “The purchasing power in many world markets is not high and therefore it’s a must to offer a low-cost machinery product.” Commercial and marketing director Giampiero De Angelis of Fameccanica .Data, Sambuceto, Italy, agreed, “The biggest customer requirement is to have a high quality product with a reasonable cost. Customers require cost reductions without impacting quality. Machine efficiency, waste level and use of alternative materials are major issues that customers are stressing.”

The World On A Cloth-like Backsheet
Demand for low-cost machinery is especially prevalent in new emerging diaper markets such as Asia and South America, which are experiencing business growth as their economies begin to revive. “In South and Latin America and China, the real movement is very cost-based,” stated Jane Bachhuber, marketing strategist for Paper Converting Machine Company (PCMC), Green Bay, WI. “Those customers are looking for inexpensive machinery and start-up operations, which require a lower level machine with more basic functions and performance so that it is compatible with the facility and requirements of the market.”

Some machinery suppliers have organized their product lines to fit various market scenarios—emerging markets, medium markets with some established production and highly demanding mature markets. One such company is Technipro, Petit Foret, France, which has three complete diaper line models each of which are designed for a certain market area.

Although there is definitely untapped potential for baby diapers in Asia and South America, some machinery manufacturers question just how substantial these markets will be. According to Fameccanica’s Mr. De Angelis, in South America, although there is market movement, there is also the possibility of economic problems in the future. “We are not certain about whether or not the Asian market will resume a very rapid growth rate,” Mr. De Angelis added. “We are expecting it and have been expecting it, but we still haven’t see it.” In Asia, Mr. De Angelis commented that the recovering economy is not strong enough to offset the cost of machinery sold by Western companies, which has created a growth of local machinery suppliers within Asia.

As has been the case in recent years, many machinery manufacturers continue to concentrate on emerging markets as existing European and North American markets have become saturated with less demand for new machinery. According to GDM, Europe and North America are looking to reduce operational costs through sophisticated machines with high performance technology platforms that will guarantee strong volumes at lower costs.

Technipro’s Mr. Blohorn described a similar situation. “In Europe, we have seen almost no increase in production capacity, yet there are demands for cost-effective equipment. In North America, there is very high potential for adult incontinence products, but I think the baby diaper market there is saturated.” Ms. Bachhuber of PCMC also characterized Europe, Japan and the U.S. as flat. “There are some instances where older equipment is being replaced with higher speed lines, but generally those are multinationals that are moving their old equipment into emerging markets,” she said.

A Fluffless Future?
One technology trend keeping machinery manufacturers on their toes is the ever-increasing presence of air laid material as a core for baby diapers. “There is interest in the use of sophisticated new materials on baby diaper systems such as an air laid base instead of pulp,” said Raynworth’s Ms. Biancardi. At Diatec, this trend has led to the development of a festooning system for air laid materials as well as new automatic systems for roll handling and splicing. At FT&D, air laid cores may have an effect on the core forming area in general, but according to Mr. Toney, this will not happen for another eight to 10 years.

Air laid material is not the only innovation driving baby diaper machinery into the future. According to GDM, an increasing number of global players will be a factor in the future of the market as medium-sized companies acquire smaller companies in order to gain an expanded base of operations in their country, in bordering areas or within entire continents.

According to Mr. Geiger of Bicma, baby diaper machinery will maintain its solid position as new products are developed for highly developed countries while demand in less developed countries increases. Other companies, such as Cellulose Converting, suggested that penetration into emerging markets may not be as easy as manufacturers think. “Baby diapers are a must for European countries and the U.S., but they are a luxurious item for other countries and penetration of those countries will depend on their economies,” Mr. Baldassarre stated. PCMC’s Ms. Bachhuber agreed, “In countries that value disposable products, such as Japan, Europe and the U.S., the market for baby diaper machinery is mature. For markets where there is some growth, like China or Latin America, disposable products are valued differently so it’s difficult to predict whether baby diapers will really take off and make the same growth leaps that have occurred in Japan, Europe and the U.S.”

Regardless of whether baby diaper machinery finds its place in all areas of the world, one thing is certain, according to FT&D’s Mr. Toney: “As long as there are babies, there will need to be diapers, so baby diaper machinery will play a very important role in the future.”

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