Nonwovens Industry
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PGI



Published January 1, 2003
Related Searches: wetlaid converting Wipes battery separator
Location: North Charleston, SC

Sales: $750 million

Description: "Key Personnel
James Schaeffer, chairman and CEO; Jim Boyd, executive vice president, treasurer and CFO; Rick Rerencz, group vice president—engineering and Asia; Rick Pierce, vice president, Industrial products; Fernando Espinosa, vice president-Latin America; Rolf Altdorf, vice president-Europe; William Spence, vice president-Fabrene; Mike Hale, senior vice president of U.S. operations; Robert Dale, vice president of medical and wipes

Plants
Landisville, NJ; Rogers, AR; Vineland, NJ; Benson, NC; Gainesvile, GA; North Little Rock, AR; Mooresville, NC; Waynesboro, VA; Neunkirchen, Germany; Cuijk, The Nether­lands; Tilburg, The Netherlands; San Luis Potosi, Mexico; Buenos Aires, Argentina; Bailleul, France; Nanhai, China; Cali, Colombia; Istanbul, Turkey; Molnlycke, Sweden

ISO Status
Landisville, NC; Rogers, AR; Vineland, NJ; Benson, NC; Gainesville, GA; North Little Rock, AR; Mooresville, NC; Waynesboro, VA; Nanhai, China; Buenos Aires, Argentina; San Luis Potosi, Mexico; Molnlycke, Sweden; Istanbul, Turkey and Cuijk, The Netherlands are ISO 9002 certified

Processes
Spunbonded, meltblown, SMS, composites, air through bonded, adhesive bonded, resin bonded, thermal bonded, spunlaced, airlaid, wetlaid, apertured film, film laminates, sonic laminated, thermal laminated, apex, other proprietary fabric forming, surfacing and binding systems

Brand Names
Apex, Agribon, Amira, Bonclin, Bonlinn, Bonsec, Dry-Fit, Duralace, Dura-Tex, Empact, Ensorb, Freeswell, Isolite, Keybak, Kiara, Masslin, Matline, Miratec, Multi-Strike, Poly-Breathe, Poly-Safe, Reticulon, Reforel, Softlin, Soft-Touch, TopSwell, Thermoform, Thermospost Ultra Dryloft, Ultra-Ply, Vignec, Waste-Set, Xiora

Major Markets
Agriculture, apparel, automotive, battery separator, cable wrap, filtration, home furnishings, hygiene, industrial, industrial and marine sorbents, medical, packaging, thermal barriers, wipes for cleanroom, food service and specialty end uses


A renewed focus and commitment to its core businesses characterize much of the efforts being made by PGI Nonwovens, N. Charleston, SC. The company, which emerged from Chapter 11 in March, after only nine months of reorganization, has elected a new CEO and developed a six-pronged strategy to bring its business forward.
 
“We are now in a period of stabilization, and we are feeling good,” explained CEO James Schaeffer. “After a short period of bankruptcy, we have emerged with a significantly lessened debt load. Basically, all of our goals have been accomplished.”
 
A 27-year veteran of PGI and PGI-owned companies, Mr. Schaeffer replaced former CEO Jerry Zucker, who stepped down from the top spot in early March, one week after PGI emerged from bankruptcy.   
 
Mr. Schaeffer, who had formerly led PGI’s nonwovens business, said he and the company have learned from past mistakes—which contributed to the bankruptcy—and are well positioned for the future as an industry innovator. “We are more customer-focused than we were in the past and we have decided that we are better served by focusing on our core markets of hygiene, medical, consumer and industrial,” he said. “We won’t take our focus off of these areas again.”
 
PGI’s U.S. business entered into “pre-negotiated” reorganization under Chapter 11 in May 2002 after a proposed restructuring plan failed to win the requisite approval from PGI’s senior note holders. The filing was the culmination of several factors including an aggressive capital investment program centered around apparel-replacement technology, rising raw material costs, unfavorable exchange rates and overcapacity in the spunmelt segment.
 
As a result of the bankruptcy reorganization, PGI is now majority owned by Matlin Patterson, a private investment fund, which is able to provide PGI with secure financial backing. The bankruptcy process allowed PGI to reduce its debt  from $1.2 billion to less than $500 million.
 
Despite its past problems, PGI has a lot to look forward to. The company maintained its day-to-day operations during bankruptcy, was able to pay all of its vendors, dollar for dollar, during the reorganization period and did not lose any major suppliers or customers during the crisis. While executives are keen on demonstrating how these facts clearly prove the strength of PGI’s position in the nonwovens industry, they are not resting on their laurels just yet. Instead, the company is focusing on gaining new customers and creating innovation to move it forward into the next phase of its business cycle. “We didn’t lose that much but we didn’t gain much either in the bankruptcy process,” Mr. Schaeffer explained.  “Now, we are being invited back into the fray in terms of new business. In the next 6-12 months, we will definitely enter a growth period.”
 
To expedite this growth, PGI in September, announced a six-part plan to move its nonwovens business into the future. The first step in this strategy is a decision to focus on its core businesses—hygiene, medical, wipes and specialty, instead of trying to supply to a wide range of markets. In hygiene, which has faced troubles including pricing pressures and competition associated with most commodity-oriented markets, PGI hopes the streamlining practices—including a more than 20% reduction in workforce—it adopted prior to entering bankruptcy will help it remain successful.  Additionally, the company hopes to benefit from being innovative, particularly in production practices.
 
Meanwhile, the medical segment for nonwovens has softened  in recent years due to shifts in technology. In the future, the company expects spunlaced and spunmelt products to gain acceptance in medical markets in many of the world’s key regions, and as one of its major suppliers, PGI will benefit from this growth. Still, executives are mindful that they have to do more than simply exist in a market to be successful. “We have worked really hard at meeting price targets,” Mr. Schaeffer explained. “For instance, we have already patented technology to help us increase our line speeds.”
 
The second part of this plan calls for a streamlining of manufacturing processes across all of its markets. This philosophy has, so far, led to the discontinuation of operations at PGI’s wetlaid plant in North Little Rock, AR and a consolidation of its Guntown, MS facility. The wetlaid plant has served its customers and markets for more than 30 years, however it is a pulp-based process outside of the scope of the company’s core business. Meanwhile, Guntown will continue to operate as a converting and full-service distribution center for PGI’s FabPro division as other areas of its operations are consolidated into other locations.
 
Thirdly, PGI will rely on customer-driven innovation. Future research and development efforts will center around the needs and wants of its customers rather than being conducted in a vacuum. Executives are confident that its customers will reward this type of innovation.
 
Fourth on PGI’s list of strategies is the formation of long-term partnerships both on the customer and supplier side of the business. Having recognized the loyalty of both its customers and suppliers during its bankruptcy proceedings, PGI is aware of how important these relationships are to stabilizing business.
 
The fifth part of the growth plan is expansion into key markets. While approximately 79% of the company’s sales are conducted in the U.S., Canada and Europe, PGI operates a sophisticated manufacturing network with facilities located strategically throughout the world. One area of key interest is Latin America, where PGI is currently in the process of expanding a manufacturing site in San Luis Potosi, Mexico. The new spunbond line at the facility, which currently houses multiple nonwovens production technologies, is set to come onstream later this year. It will target the industrial and hygiene markets in the Americas. In addition to the Bonlam site, PGI has plants in Buenos Aires, Argentina and Cali, Colombia. In total, Latin America represents about 13% of PGI’s overall business.
 
Meanwhile, Asia is also an important growth area for PGI; the company added a second spunbond line to its Nanhai, China site last year and continues to explore growth options for this region.
 
Finally, PGI will pay more attention to its balance sheets to avoid repeating its past mistakes. One of the major factors that led PGI to bankruptcy was an aggressive investment strategy surrounding its Apex technology during a time when the industry was not ready. Recognizing that bad timing in the textile replacement category contributed heavily to its past financial problems, PGI has lessened its focus on Miratec, the company’s spunlaced fabric made through Apex technology. The company constructed two Apex lines, aimed at the apparel market, at its North Little Rock facility in 1999, an investment that weighed heavily on the company’s bottom line.
 
Now that the focus has shifted from Miratec, the company is adapting the Apex technology to other areas including filtration, automotive, specialty wipes and industrial applications, where growth is more likely. In filtration, PGI’s Durapex product continues to perform well, while automotives has experienced substantial growth during the past three years. Apex technology is also being appreciated by wipes companies. The advanced fabric formation technology, which is a part of the Apex process, is capable of 30-40% better lint particle pick-up than standard spunlaced materials, meaning a smaller substrate is needed to do the same job.
 
PGI’s past financial problems have left it leaner than ever. In November 2001, before entering bankruptcy, PGI launched a restructuring plan designed to save it $55-60 million annually and reduce its global workforce by 14%. In addition to the personnel cuts, PGI has focused on other cost-cutting efforts to improve margins during the past two years. These practices have also made PGI more adept at making quick decisions to move with the industry.
 
This six-part plan will be critical to PGI’s success in the future, and executives conceded they would be unveiling several new plans and initiatives, centered around these strategies, in coming months. “We are trying to grow and develop the company with the customer in mind,” Mr. Schaeffer said. “If you don’t do this, you’ll end up going down different paths.”
 
Achieving these goals will be critical for success in the nonwovens industry, which has been characterized lately by depressed margins and pricing pressures, according to Mr. Schaeffer, however, these factors are merely cyclical. He envisions a future of steady growth for nonwovens which will reward companies that are well poised in three areas—cost effectiveness, innovation and the ability to be in the right place, at the right time.
 
While global penetration is part of PGI’s strategy for future growth, paramount is its ability to respond quickly to market demands by focusing on its core businesses. With that in mind, the rest of 2003 will be spent laying the groundwork for return to profitability in the nonwovens industry, while 2004 will be the year for the company to return to growth. While the past couple of years have been tough, the company considers them a learning experience and is confident that success will once again be gained. “The past two or three years, we have been in transition mode,” Mr. Schaeffer explained. “Now we are focusing in improving our core business while growing in emerging markets.”