Location: WEINHEIM, GERMANY
Sales: $1.45 billion
Management board: Bruce Olson, president and CEO; Rene Wollerg, CFO; Thomas Reibelt, CTO. Worldwide Divisions: Heino Freudenberg, managing director interlinings; Jörg Sievert and Andreas Kreuter, managing directors of filter (as of Jan 1, 2009: Managing Directors Freudenberg Filtration Technologies); Thomas Reibelt, managing director Spunlaid; Juan Charlos Borchardt, managing director Southern Hemisphere; Helmut Beck, managing director industrial nonwovens
Weinheim, Germany; Neuenburg, Germany; Kaiserslautern, Germany; Greetland, U.K.; Swindon U.K.; Littleborough/UK; Colmar, France; Barcelona, Spain; St. Omero, Italy; Cape Town, South Africa; San Martin/Buenos Aires, Argentina; Jacarei, Brazil; Suzhou, China; Changchun, China; Nantong, China; Yang Mei Tao-Yuan, Taiwan; Tayuan, Taiwan; Durham, NC; Hopkinsville, KY; Pyungtaek, South Korea; Chennai, India
Drylaid staple fiber, wetlaid, spunbonded, meltblown, electrostatic spun microfiber, needlepunched, thermal bonded, chemical bonded, water entanglement
All locations are ISO 9001 and ISO 14001 certified; locations serving the automotive industry are QS 9000 certified; 21 out of 23 plants are OSHAS 18001 certified
Vilene, Viledon, Vilmed, micronAir, Vlieseline, Vildona, Fliselina, Lutradur, Lutrasil, Evolon, Comfortemp, Vitech, Celestia, Soundtex
Apparel interlinings, filtration, medical, protective clothing, automotive interior, electrical insulation, electrical specialties, home furnishings, industrial wipes, hygiene, shoe components, coating substrates, carpet backings, landscape fabrics, geotextiles, agriculture, furniture and bedding and industrial nonwoven specialties
The global economic crisis is in reality just the latest, albeit very serious, challenge confronting the Nonwovens Industry, according to Freudenberg Nonwovens. Many segments of the industry had been experiencing significant pressure on operating margins since the 2006-2007 timeframe brought on by rising raw material and energy costs which, despite generally strong volume growth, were difficult to pass on in the form of higher pricing due to excess production capacity.
The collapse in the demand for nonwovens, which began during the second half of 2008 and greatly accelerated during the first quarter of 2009, created an even more urgent need for restructuring, portfolio management and cost control measures.
Fortunately, Freudenberg Nonwovens had defined and begun implementing many of these measures during 2008 following the completion of its strategic planning process earlier in the year. This, to some extent, has helped Freudenberg get ahead of the curve in responding to the 20-25% decline in sales which it has experienced during the first half of 2009. This sharp decline in sales, which has been more or less experienced across the diverse portfolio of segments in which Freudenberg is active, does appear to have reached a “stable” bottom during the last few months.
“It is much too early to predict when we will actually begin to see a sustainable recovery in demand,” said Bruce Olson, CEO and president of Freudenberg Nonwovens. “Nevertheless, I am confident that Freudenberg Nonwovens will emerge from the current economic crisis as a stronger and more focused producer, given the adjustments we are making to both our business portfolio and cost structure.”
Reacting to the lower demand for nonwovens in the U.S., Freudenberg has moth-balled a polyester production line in Durham, NC in response to a significant decline in demand from its automotive customers. In Europe, FV has taken the decision to consolidate polyester capacity onto a newer and larger production line by shutting down an older and less efficient line. A commoditized segment of the polypropylene hygiene market is under review and potential adjustments to production capacity and cost structures at Freudenberg’s facility in Kaiserslautern, Germany are being analyzed. With regard to FV’s global spunlaid production capacity footprint, it is worth mentioning the significant investment Freudenberg made to increase polyester capacity at its Taiwan Spunlaid joint venture. This new line, PT 2, came onstream during the second half of 2007 and is helping Freudenberg to drive the profitable growth of its Asian-Pacific business that is taking place despite the current global economic crisis.
“With regard to spunlaid technology, we will continue to invest to lower production costs and improve both the uniformity and performance our polyester product line,” Mr. Olson explained. “As an example, we have developed a new spinning process in Asia for bicomponent polyester fibers, which allows us to change the surface appearance of our products in a way that will open up a number of new applications for our spunlaid polyester products.”
In addition, Freudenberg is working hard to incorporate higher and higher quantities of PCR (post-consumer recycled) polyester flakes into its products to meet the growing demand for “green,” sustainable Nonwovens. A good example of this is Lutradur Eco product line that has been recently launched in the U.S. and has qualified for LEEDS points. Last but not least, FV will continue to invest in the development of new fine-fiber and microfilament technologies that can significantly increase the market for our spunlaid products.
“We have made a significant investment to convert one of our polypropylene spunlaid lines in Kaiserslautern into a line capable of producing a wide range of fine-fibre products that we currently have under development” said Mr. Olson. The interest in the Evolon microfilament technology continues to grow to the point where the company will likely need to consider an investment to expand its production capacity during the next 12-18 months.
As noted above, consequent portfolio management has played an important role in making certain that Freudenberg Nonwovens will emerge from the current economic crisis as a stronger and more-focused supplier to the Nonwovens industry. The first part of this process was to identify those businesses within the portfolio which could not be restructured quickly or were cost-effective enough to meet the profitability targets we have set for ourselves in order to divest or close these businesses as quickly as possible. A good example of this was the company’s decision to close at the end of the first quarter of 2009, the staple-fiber production facility in Durham, NC, which had been stagnating and declining in profitability for several years.
However, portfolio management involves much more than just the divestment and/or closure of non-performing businesses. It also entails identifying those businesses within the portfolio that offer good chances for future profitable growth and making certain that adequate resources are being invested in a focused way to help nurture and scale up these businesses. Fine-fiber and microfilament spunlaid products are good examples of such businesses. In addition, Freudenberg sees good chances to expand the supply of staple fiber products to meet the growing demand in the automotive interiors, personal hygiene, medical, battery separator and electro-cable market segments.
“We also expect to continue investing to move downstream by adding more and more value to our base products through finishing and converting” Mr. Olson concluded. “This already plays an important role in our supply of products to the battery industry. A more recent example is the investment we made in a new facility in Littleborough, U.K. to support production of our adsorptives line which are products finished with activated-carbon technology that find use in medical and a variety of technical applications.”
At the beginning of 2009, Freudenberg spun off its filter division into a separate business group within the Freudenberg Group of companies, called Freudenberg Filtration Technologies. This decision evolved from Freudenberg’s business model, which favors small entrepreneurial companies.