Sales: $93.5 Million
Description: Key Personnel
Suominen Corporation: Heikki Bergholm, president and CEO, Esa Palttala, executive vice president, Wipes and Nonwovens; Juha Henttonen, vice president, Flexible Packaging; Pekka Rautala, vice president, Wet Wipes Business Unit, Arto Kiiskinen, vice president, CFO
Suominen Nonwovens: Sakari Santa-Paavola, commercial director, Teppo Lainio, production director, Margareta Huldén, product and process development director
ISO 9001, 14001 environmental certification
Hydroentangled, thermal bonded
Wipes, hygiene, medical
Net sales decreased 3.2% to €75 million last year despite increased volumes for Suominen Nonwovens, Nakkila, Finland. The decrease was blamed largely on cost competitiveness among wipes producers in the European market as well as an upturn in the private label market. This decrease follows a more substantial 13% drop in nonwovens sales reported in 2003, which was blamed on the entry of new players into the company’s core markets.
“Private label markets have been a major part of market growth, but at the same time they have driven prices down,” explained Esa Palttala, executive vice president, Wipes and Nonwovens.
Nearly 80% of Suominen’s nonwovens output centers on spunlaced technology for the wipes market, which has been plagued by increased capacity in Europe particularly in recent months. Despite this, the company was able to grow sales in this segment thanks largely to gains in the U.S. market, which has not yet seen the capacity surge reported in Europe. However, with several new production lines scheduled to come onstream in the short term in the U.S., executives are concerned that overcapacity could become an issue. Furthermore, Suominen, which produces 100% of its nonwovens in Finland, could have trouble competing with U.S.-made goods. Still, the company has nothing to announce concerning U.S. operations at this point, according to Mr. Palttala.
“You have to be sure that you can really make profitable business before this kind of strategic decision,” he said. “We are very pleased with our business in North America and we can serve our customers from overseas for the time being.”
Instead of adding new lines, in fact, Suominen has been relying on a line modernization program to increase its nonwovens output. Just by improving and debottlenecking its four existing spunlaced lines, the company could increase its capacity by up to 20%, according to Mr. Palttala.
Earlier this year, Suominen combined its nonwovens business with its wet wipes unit, which it purchased from Codi International in October 2003. The integration is reportedly intended to allow the company to more effectively use the operational synergies formed by the two units, Wipes and Nonwovens, as well as Flexible Packaging. The wet wipes business will supply wet wipes to international brands and private label customers while the nonwovens business unit will manufacture nonwovens for wipes, hygiene and health care companies. Integration will be furthered by using Suominen’s own nonwoven material and product applications.
This is another step forward in Suominen’s strategy of forward integrating into wipes manufacturing. Last year, the business was hit by reductions in sales volumes and prices, causing sales to drop 15.7% to €81.3 million. According to Mr. Palttala, this loss will be recouped as the company continues to work toward forming more partnerships with retail chains to compensate for some of its branded customers’ loss in marketshare.
“We are trying to improve cost efficiency by concentrating on the number of products we offer,"" Mr. Palttala said. “Wipes are the majority of our business and they have been plagued by slower growth but now we are trying to regain marketshare and achieve future growth in baby, personal and household markets.”