Sales: $80 million
Description: Plant Locations
Gumi, Kyungsang-Bukdo, South Korea
Y.K. Lee/President and CEO, Y.K. Kim, senior vice president; Shigeto Fukuda, senior vice president
Spunbond PP, PET
Jesbon (PP), Techbon (PET), Airbon (protective apparel)
Hygiene, medical and protective markets, industrial specialties, agricultural, upholstery, filter, PP/PE bicomponent, geotextiles
A joint venture between Japan’s Toray Industries and Korea’s Saehan Industries, Toray Saehan produces spunbond nonwoven fabrics as well as polyester films, polyester chips, filaments and information/technology-related products. In 2004, TSI enjoyed a significant increase in sales volume of approximately 30% compared to the previous year. While half of the company’s sales target the Korean market, approximately one quarter (27%) is generated from sales to Japan and 23% come from other markets.
“Sales increased dramatically in 2004,” stated company spokesperson H.B. Lee, “but earnings fell due to the sharp rise of raw material prices, particularly polypropylene resins.” The company’s new polypropylene spunbond production line, which came onstream at the end of 2003, reportedly contributed to much of the increase in nonwovens sales turnover in 2004. Looking forward, TSI is optimistic that sales will grow in 2005, with a planned increase in the 20% range. TSI will target earnings improvements in 2005 through its high-end product portfolio as well as sales turnover.
Representing 14% of the company’s total turnover, the nonwovens sector represents a small but important market for TSI. A steady capacity level of 54,000 tons was maintained in 2004 on the company’s six spunbond lines in Korea. Five of these are polypropylene-based while one is polyester. Its technology includes SMS, SSMMS, bicomponent layers and multilayered material for lighter weight nonwovens.
In discussing current market conditions, Mr. Lee said that most nonwoven roll goods producers suffered from consistent raw material price hikes in 2004. “However,” he noted, “China experienced such a sharp increase in demand in nonwovens sectors that additional capacity increases at this moment and in the future are possible.” Mr. Lee also forecast that market competition will be much more severe among roll goods producers.
For TSI, the key to success in this highly competitive environment has been to make the most of its status as an Asian-based operation. “This advantage allows us to provide better services and products to major Asian hygiene conglomerates,” opined Mr. Lee. “We offer Asia’s largest nonwovens capacity at a single manufacturing site.” He added that the company provides customized quality control with QRS (quick response system) for the benefit of its customers.
In China, a market where TSI’s sales have doubled in the last year, economic growth is leading to rapid expansion in the hygiene sector. TSI plans to focus on the Chinese market as a new investment target and is underway with a feasibility study examining upcoming investments in this region. The company plans to make a decision on Chinese expansion by the end of the year. “Economic growth within the Asian region will boost hygiene demand and will be a positive factor in our capacity expansion plans,” Mr. Lee predicted. Specifically, TSI plans to build a new manufacturing facility in Nantong, China near Shanghai with a new line that was expected to be operational in 2006 but has been postponed to 2007.
In the hygiene sector, which remains TSI’s primary focus, the company has launched hydrophilic bicomponent spunbonded nonwovens for hygiene applications. The new offerings are a result of efforts to expand these products into new markets. Hygiene is the application area where most of TSI’s nonwovens volume is directed, specifically for use as coverstock for disposable baby diapers, adult incontinence products and sanitary protection products.
TSI is currently supplying a limited volume of SMMS grades to the high-end medical/protective markets. With limited production capacity, TSI now only works with select customers but expansion in these markets is expected in the near future. “As China is the hub market for medical converters, we are monitoring Chinese medical nonwovens market growth. New investments will be focused on hygiene and medical applications,” said Mr. Lee. Meanwhile, TSI has a leading marketshare in domestic agricultural applications and, in geotextiles, TSI supplies its polyester spunbonded nonwovens to its domestic market.
In the short-term future, TSI intends to maintain the strength of its domestic marketshare in hygiene, agriculture and industrial applications. “With exports accounting for 50% of sales, we plan to support most of Asia’s hygiene manufacturers,” said Mr. Lee. TSI also plans to strengthen its position through consistent quality control, new quality development and customer satisfaction initiatives. “With our advanced technical background and stabilized financial status, we will be able to better provide for Asia’s nonwovens customers.”