Location: CHARLOTTE, NC
Sales: $1.15 billion
Description: Key Personnel
Veronica Hagen, chief executive officer; Robert Kocourek, chief financial officer; Mike Hale, chief operating officer; Bob Dale, vice president of research and development; Jonathan Bourget, senior vice president and general manager, Europe; Rolando Dominguez, vice president, general manager, Latin America; Daniel Guerrero, vice president and general manager, U.S.; Richard Gillespie, vice president and general manager, Canada; Wuling Zhang, vice president and general manager, Asia; Charlie Saine, vice president, global procurement; John Heironimus, vice president and chief marketing officer and chief sustainability officer; Dennis Norman, vice president, strategy and corporate development
Benson, NC; Mooresville, NC; Waynesboro, VA; Clackamas, OR; Clearfield, UT; Guntown, MS; Kingman, KS; Magog, Quebec; North Bay, Ontario; Cuijk, The Netherlands; San Luis Potosi, Mexico; Buenos Aires, Argentina; Bailleul, France; Nanhai, China; Suzhou, China; Cali, Colombia
Benson, NC; North Little Rock, AR; Mooresville, NC; Waynesboro, VA; Nanhai, China; Buenos Aires, Argentina; San Luis Potosi, Mexico; and Cuijk, The Netherlands are ISO 9002 certified
Spunbonded, meltblown, SMS, composites, through air bonded, adhesive bonded, resin bonded, thermal bonded, spunlaced, airlaid, apertured film, film
laminates, sonic laminated, extruded polyolefins, thermal laminated, Apex, Spinlace, other proprietary fabric forming, surfacing and binding systems
Apex, Agriban, Agribon, Amira, Aquapex, Bonlinn, Bonsec, Chicopee, Chix, Chux, Comfortlace, Comfortsilk, Duralace, Durapex, Dura-Tex, Freeswell, Isolite, Keybak, Kiara, Masslin, Matline, Medisoft, Medisoft Ultra, Multi-Strike, Poly-Breathe, Poly-Safe, Quat-Safe, Provia, Reticulon, Reforel, Softlin, Soft-Touch, Spinlace, SuperSoft, TopSwell, Thermoform, Thermospost Ultra Dryloft, Titan, Ultra-Ply, Xiora
Despite the tough global economic climate, nonwovens producer PGI ended 2008 a much stronger company than it was a year-anda- half ago with sales at a record high, according to Veronica (Ronee) Hagen, chief executive officer.
“These are the toughest economic conditions I’ve ever seen,” said Ms. Hagen. “The challenges have us doing business in a cognitive fog. We don’t have a lot of the information we used to rely on when we wanted to make decisions— there is so much volatility in terms of raw materials, global demand and currency fluctuations.”
Against this difficult backdrop, Ms. Hagen is proud to say that PGI is stronger than it was 18 months ago and well positioned for what will likely be an extended tough economic situation. This is partly credited to PGI’s good business sense but the defensive nature of the hygiene market has also played a role.
Currently, PGI’s nonwovens business is split between twothirds single-use sales—hygiene, wipes and medical applications —and one-third industrial markets.
“We are pleased we are in a non-cyclical business,” Ms. Hagen said. “Two-thirds of our business is single-use and that’s been a positive thing for us. We have a diversified market portfolio in our businesses and this extends globally. We don’t have too much exposure to any one region or market.”
Sales were up 8.1% for PGI in 2008, a trend not expected to continue this year primarily due to lower selling prices resulting from lower raw material costs. Additionally, the company expects declines in its industrial business volumes, namely U.S. automotive products and construction, to not be offset by gains in its disposables business.
“We don’t expect the same level of growth in 2009 because it would require higher raw material prices in our disposables businesses, which is not expected,” said Dennis Norman, vice president of strategy and corporate development. “Industrial is also going to be off considerably.”
In addition to higher raw material prices, PGI’s nonwovens sales were boosted last year by the continued ramp-up of a new line in Buenos Aires, Argentina, the continued roll out of its Spinlace continuous filament technology and some new industrial applications. More recently PGI’s sales have been benefitting from the completion of a state-of-the-art spunbond line in San Luis Potosi, Mexico, which came onstream in May ahead of schedule.
The $50 million plant expansion increased PGI’s capacity by approximately 15,000 metric tons to meet ongoing demand for the company’s nonwoven materials used in hygiene and disposable medical applications. PGI’s new Reifenhauser Reicofil 4 line features the latest technology and produces high quality, lightweight, strong fabrics for use in fine denier barrier materials used in diapers and medical garments. In addition to serving customers in Mexico and the U.S., the new line is also a gateway for PGI to supply its products to Central America and the Caribbean.
These new lines have secured PGI’s role as the world’s largest manufacturer of spunmelt nonwovens in the Americas. With capacity spread out between North Carolina, Virginia, Mexico, Argentina and Colombia, PGI has a sizable hygiene business, serving multinational and private label diaper and hygiene manufacturers. Mr. Norman said he characterizes the North American hygiene market as healthy, for now. “If all of the new lines previously announced come in, the industry could start seeing some problems with overcapacity,” he said.
Outside of North America, PGI has a large spunmelt line as well as a medical gown converting operation in China, which has contributed to the company’s leadership position in the Chinese medical gown market.
“In 2008, we were able to leapfrog into a number one position in all of the (medical) markets we participate in,” said Mr. Norman. “These include gowns and drapes, head covers and shoe covers. The medical market has an existing supply chain and the fact that we are in China and that we are vertically integrated gives us the ability to deliver.”
According to Ms. Hagen, cost effectiveness and flexibility has allowed spunmelt to dominate many markets and this is why the company has invested so heavily in the technology during the past couple of years. “Markets tend to migrate to the best technology. Spunmelt is a very cost-effective technology and it would be great if it could satisfy all of the market needs. Right now it can’t, but Spinlace is a good example of how this technology is expanding to meet new market needs,” she said.
By Spinlace, Ms. Hagen is referring to the company’s continuous filament technology, which was launched in April 2007 and is already being used by multinational wipes manufacturers including a major consumer goods manufacturer that chose the material for its disinfectant wipes relaunch last year. The Spinlace process provides added strength, absorbency, texturizing and other performance characteristics that enhance the cleaning in the wipes.
PGI created Spinlace to bridge the gap between value and performance in wipes. By eliminating the carded manufacturing steps, PGI is combining continuous filament, pulp and its proprietary Apex imaging technology to achieve the performance attributes customers want at competitive prices.
“Wipes is a good example of a market where value has eroded,” said Cliff Bridges, global marketing and HR communications director. “The cost everyone was willing to pay came down creating a gap between performance and price. Spinlace helped bridge this gap by offering superior performance in a more efficient manner.”
In addition to these expansions, PGI has focused on streamlining its business, exiting businesses that strategically don’t make sense, and consolidating plants and machinery to improve its cost performance. The latest of these efforts came in June when the company announced a plan to close its North Little Rock, AR facility by early next year — making the site the fourth PGI site to close in three years. Under the plan, PGI will consolidate certain manufacturing operations into its Benson, NC plant and phase out operations of its North Little Rock facility by the end of March 2010 and relocate portions of its hydroentanglement and fusible fiber businesses to increase efficiency, reduce costs and maintain its high quality levels. These activities will involve upgrading the capabilities of both the hydroentanglement and fusible fiber manufacturing bases at PGI in order to meet developing market needs through capitalization of inhouse intellectual properties.
According to Mr. Bridges, this facility was very industrial-oriented and as such was hit quite hard by the economic crisis. “It is well aligned with our Benson operation so it made sense to shut it down when we were looking at streamlining,” he said.
PGI closed sites in Rogers, AR and Gainesville, GA in 2007 and in Landisville, NJ in mid-2008.
PGI is also reexamining its business portfolio to consider what businesses continue to make sense for it in this new economy. Despite the fact it had invested in its automotives business in the U.S. as recently as 2008, earlier this year, PGI made the decision to exit the automotives market—except for its business in the automotive wipes category. “Volume in the industry was cut in half and our business model just didn’t make sense any more,” Mr. Bridges explained. “There would have to be a really compelling argument for us to re-enter that market. We are now selling the assets we used to make those products.”
Also hurting has been the construction market, particularly the housewrap segment, but bedding, particularly in the FR arena, continues to perform well as does filtration, where PGI’s presence is small but competitive in certain niche markets.
Moving forward, PGI sees great opportunity to partner more closely with its customers and create greater value through its sustainability initiatives.
“We are committed to achieving leadership in sustainability in our industry,” Ms. Hagen said. “We see this as not only an essential matter of corporate responsibility, but also an important area of collaboration with our key customers and suppliers. Our commitment to sustainability is a reflection of our values and integral part of the PGI brand. The world’s leading companies have embraced the sustainability challenge as a core operating principle and PGI will be no exception as a leading global nonwovens company.”