Almost all nonwovens producers are looking for new markets for expansion. One of the key factors they are looking at is the growth of any target market. If a market is growing, it makes it attractive to penetrate with new products. The filtration market is definitely growing and continues to draw strong interest from nonwovens producers and raw material suppliers. The filtration business is viewed as offering many opportunities for companies to penetrate into new applications or geographies with both existing and new products.
“The filtration business is growing in part because of the demand for cleaner air and cleaner water. Meeting these demands makes our environment a better place for us all to live, and filtration is a major reason for it,” said Gary Blevins, vice president of sales and marketing for Ahlstrom Filtration North America. In fact, many segments of the filtration business are growing at multiples of inflation that far exceed the businesses they serve. Water filtration, power generation and diesel exhaust are all filtration market segments that are growing at rates significantly greater than the rate of inflation.
When nonwovens companies look at the filtration business, they must first consider what its characteristics are and how they fit them before they decide to enter the business. Some of these characteristics are:
• filtration is a technical business
• filtration is highly fragmented
• razor/razor blade business model
• outside influences have a large impact on its direction.
“In the old days…” is a statement not heard much anymore in filtration. There have been many new technical developments during the past few decades that have changed the character of this business and those who have chosen to compete in it. Filtration applications have become much more demanding and customers have become significantly more knowledgeable about the products they produce and sell. Gone are the days when a customer would specify a filter medium by basis weight and permeability alone. Today, roll goods filter media are purchased to very exacting performance standards defined under specialized test conditions. Nonwovens companies that enter this business must be able to speak the language of filtration and have a high level of sophistication that gives their customers a great degree of comfort.
There is no such thing as one filter medium that works in all filter applications. Some filter media are designed for single use and others must perform under repeated cleaning conditions. Filter media are challenged with many types of fluids (both air and liquid), must remove a broad range of contaminant types from fluid streams (including solid and liquid contaminants) and must work across a great many processes and conditions (including variations in temperature, operating pressures and chemical resistances). The applications are usually so different from one another that, while many companies participate in the filtration business, they may not compete directly against each other. In fact, two of the largest filtration companies in North America, one focused on air and one on liquid, have very little overlap in their product portfolios and do not compete against each other in most of their markets. As we all know, a filter medium suited for a building ventilation filter (HVAC) will not work in coal-fired power plant bag houses and will not work in a polymer filter. Yet, these are all filters and all use nonwoven media.
Razor/Razor Blade Model
One of the most attractive characteristics of the filtration business to nonwoven roll goods producers is that a very high percentage of filters are produced for single-use applications and have finite useful lives. In many cases, the purpose of a filter in a process or a piece of capital equipment is to protect the machinery or purify a product by removing an unwanted component from a fluid stream. When one of these filters gets dirty, the filter can no longer clean, protect and purify like it was designed to for that specific application, requiring a filter change.
Many maintenance programs have been developed to systematically and regularly replace filters based on either time in use, pressure drop rise or quantity of product produced. This is a good thing for filter makers and their suppliers as it drives replacement filter sales and increases consumption of filter media roll goods. Just like a dull razor blade, filters must be changed when they stop performing their function, making this a good business model from the viewpoint of the filter maker and their raw material suppliers.
In the filtration world today, a large proportion of growth is being driven by factors outside of the market such as government regulations. For example, regulations that have been issued in the U.S., Europe and Japan have created a filtration revolution in the diesel engine business. Extremely tight rules worldwide for allowable emissions from diesel engines have generated new truck filtration design changes throughout the engine, starting with exhaust filters but also changing the types of engine oils required to work in the new exhaust gas recirculation systems. These oils become much more chemically aggressive during use and attack today’s commodity filter media types and have created the need for more chemical resistance in many of the filter applications that are being deployed in the engine. Many industry experts project that this business will grow to a $10-15 billion business for filter products during the next five to 10 years. Other businesses seeing the same regulatory effects include power generation, storm water and drinking water.
In addition to regulatory influences, there are a number of trends and factors impacting the direction of the filtration business. At the macro level, finer filtration continues to be a major driver across the board in all segments of the business. Liquid applications as different as fuel filtration and drinking water markets are demanding more efficient filters. The same is true in air filtration, where applications such as HVAC and power generation are continuing to demand from more efficient filters and, therefore, more efficient filter media roll goods from filter producers. For example, the EPA and PM 2.5 has forced the development of better performing felt media for use in bag houses for power plants.
Danny Grover, president of Southern Felt, an Andrew Group company, said that Southern Felt is introducing several new felts in its Microfelt line for low and high temperature applications. “These felts offer much better efficiency ratings than standard felts,” he remarked. “In fact, filter bags and cartridges produced from these felt media have significantly lower emissions and less particle penetration, leading to bags that require almost 50% fewer pulse cleaning cycles to control operating pressure build and operating cost savings of 30% compared to the life of standard felt bags in use today.”
Another trend that has accelerated over the past few years is the demand for filter media with multiple functions. The filter media, in addition to removing particulate, must also remove odor, taste or have specialized chemistries that are used to neutralize chemical changes in fluids. Mr. Blevins of Ahlstrom said, “Customers are asking for filtration media that do more than they used to. The media may act as a carrier for materials such as baking soda to remove odor in a room air filter or chemicals that neutralize the acidity of oils and coolants during their use. This leads to the need for multiple layer and composite nonwoven products such as our Trinitex brand that can form multifunctional sheets to meet customer demands.”
Ahlstrom’s proprietary Trinitex technology is used to form three-layer wetlaid nonwovens with the ability to vary the composition of the inner and outer layers. This technology finds its way into many applications. Most notably, filtration products take advantage of it because of its ability to customize pore size in each layer.
While the outlook for growth continues to be strong, there are a number of clouds on the horizon in the filtration business that all companies must be aware of. During the past year, energy prices have skyrocketed. This has changed the way some nonwovens companies think about making their products. Many of our industry’s products are treated or finished to meet very demanding performance standards. Finishing processes typically use high levels of energy to dry, cure, singe or otherwise finish a nonwoven filter medium for shipment to the customer. Some companies are now experimenting with accomplishing the finish step earlier in the process by adding components during the nonwovens manufacturing process and capturing more value by cutting out finishing steps.
Another cloud on the horizon has been shortage of supply for certain fiber and polymer types. Demand has outpaced supply in a number of performance markets. Mr. Grover stated that “due to shortages of name brand high temperature fibers over the past year, Southern Felt Company has had to source generic fibers either from domestic sources or other countries such as China. We are now offering a line of high temperature felts that we call generic blends. By offering these felts, we have been able to keep our customers supplied and at competitive pricing.” And, as we all know, the supply situation has been exacerbated by the production disruption and force majeure of a number of chemical feed stock producers in the U.S. due to the hurricanes that damaged the Southeastern U.S. earlier this summer.
Another issue that has warranted much more attention lately is the emergence of off-shore filter suppliers bringing low cost filters into the U.S. This has already started in Asia in two ways. First, Western companies have built plants there to take advantage of the low labor cost base available and have started to produce product for domestic consumption as well as for export to developed countries to combat margin compaction. Secondly, Asian companies have started to build filters for both domestic and export consumption. Shipping nonwoven filter media to Asia for conversion into filters tends not to be cost competitive for many media types. This puts pressure on prices of Western filter media as the available market size shrinks at home as the customer moves overseas.
Finally, technological changes have and will continue to impact the filter media business and determine who the winners and losers supplying nonwoven filter media will be in the long run. Older technologies such as drylaid nonwovens have become either relegated to low-end performance applications or made obsolete altogether by newer technologies like nanofibers and composites. In the HVAC business, producers of synthetic nonwoven filter media have taken share from drylaid/latex bonded products. Will nanofiber web composites do the same tomorrow to today’s synthetics? Nanofibers are one of the most talked-about technologies impacting filtration today as can be seen by the actions of two of the biggest filter media players in the market, Ahlstrom and Hollingsworth & Vose. They both offer nanofiber nonwoven filter media solutions for a number of filtration applications today, and some of us believe that this is only the tip of the iceberg as to where these products will be tomorrow.
Where Do We Go from Here?
One of the beauties of our business is that filtration is always needed. This means that filtration markets, while they may change and look different in the future, will in most cases still be there and most likely will still be growing, again good news for nonwovens filter media suppliers. Governments continue to regulate emissions of air and liquid pollutants, manufacturers continue to demand cleaner and purer products and people expect better lifestyles for themselves and their children both in developed and emerging economies around the world. Companies that meet these demands in the filtration business will prosper for the long term. Many major nonwoven filter media producers have invested in other geographies to capture the growth in many of these economies. One example is Southern Felt, which has completed its expansion in China. The new state-of-the-art plant will also make filtration its main focus. “The new plant will be able to produce all synthetic fiber types including microdenier fibers,” commented Mr. Grover.
In five years, the pace of change in the filtration business will increase again. Customers will enjoy the application of new technologies to the filtration business to make better filter media products cost effectively. Many companies are investing today in these technologies so that they have more technology “tools” in their “toolboxes.” These nonwoven roll goods producers have expanded their technology base to be able to supply nonwoven filter media with increased value in many of the markets they participate in today and want to be part of tomorrow.
According to Ahlstrom’s Mr. Blevins, “Customers will continue to demand better solutions to tighter product requirements. This trend will require a broad spectrum of new products and technologies needed to meet these needs. In fact, we believe that this trend may stretch the definition of “fiber solutions” as we look at our business over the next five years.” So with the filtration business continuing to prepare itself for growth with new products and in new geographic regions, it is easy to see why new companies will be testing the waters for entry. It is a robust and dynamic business today and all things point to this continuing into the foreseeable future.