September 6, 2006

Freudenberg Nonwovens
Weinheim, Germany
$1.4 billion

Key Personnel

Management Board: Stephan Tanda, president and CEO, Dr. René Wollert, CFO; Walter Schwarz, managing director, North America; Georg Brasch, managing director, supply chain and restructuring; Worldwide Divisions: Andreas Kreuter and Gerhard Schaut general managers of interlinings; Bill Casey, general manager of tuft and Jörg Sievert, general manager of filter


Weinheim, Germany; Neuenburg, Germany; Kaiser—slautern, Germany; Greetland, U.K.; 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 and Pyungtaek, South Korea (Korea Vilene Company)


Drylaid staple fiber, wetlaid, spunbonded, meltblown, electrostatic spun microfiber, needlepunched, thermal bonded, chemical bonded, water entanglement

ISO Status

All locations are ISO 9001 and ISO 14001 certified; locations serving the automotive industry are QS 9000 certified; 25% of the plants are OSHAS 18001 certified

Brand Names

Vilene, Viledon, Vilmed, Pellon, MicronAir, Vlieseline, Vildona, Fliselina, Lutradur, Lutrasil, Evolon, Comfortemp, Novolon, Vitech, Celestia, Soundtex

Major Markets

Apparel interlinings, filtration, medical, protective clothing, automotive interior trim, 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

Sales grew slightly for the world’s largest roll goods producer in 2005. Sales declines in Europe and the U.S., caused largely by the continued shifting of garment production into Asia, were offset by gains in Asia and Latin America, according to company spokesman Christof Schroeder.

In order to stave off increased raw material costs and competitive pressure in the automotive and textile markets, in October Freudenberg initiated a restructuring of its German nonwovens facilities. The plan will save Freudenberg €30 million from a combination of wage concessions, increases in weekly work hours, shift of labor intensive operations to Eastern Europe and staff cutbacks. The moves are designed to safeguard the German sites in the long term. “We have to operate more efficiently at our German sites and concentrate primarily on high technology production divisions there,” said Stephan Tanda, president and CEO of Freudenberg Nonwovens. “If we want to keep our German sites—and that is our firm resolve—then there is no alternative to the measures we have announced.”

The cutbacks in Germany involve 250 jobs in Weinheim,, 50 positions in Kaiserslautern and a further 20 in Bochum, Germany, so the total number of jobs to be cut is 320. Kaiserslautern, in particular, will benefit from the restructuring; a technology center at the site will be devoted to high technology automotive cabin air filter and spunbond production, which will create 58 news jobs at the site.

The difficulties that led up to this restructuring effort were largely caused by external factors including raw material cost increases of some €15 million per year. At the same time, considerable competitive pressure in the market has resulted in lower sales revenues, particularly in key European markets such as automotive and textiles, according to the company.

The impact of these factors have been cushioned to some degree by Freudenberg’s $40 million corporate restructuring program, announced in 2002 and completed last year, which was designed to meet customer demands more quickly by streamlining the company’s five divisions—tufts, hygiene/medical, filter, interlinings and technical nonwovens—to operate with increased customer focus. The plan called for a reconfiguration of the divisions to make them self-sufficient in product development, marketing, sales and services as well as responsible for the production and the plants and the lines. Now each Freudenberg facility is responsible for specific market segments rather than offering a range of products at each site. In Europe, the Kaiserslautern, Germany site is responsible for the tuft, filtration and hygiene/medical divisions, Weinheim, Germany houses the interlinings and filtration businesses and the Parets, Spain and Neuenberg, Germany sites house technical nonwovens. The Greetland, U.K. facility is responsible for hygiene and medical products and Colmar, France holds Freudenberg’s Evolon business. The reconfiguration also called for the addition and replacement of lines throughout Europe.

In the U.S., lines have been transferred from the Lowell, MA facility, which was closed in late 2004, to Durham, NC and Hopkinsville, KY.

While the restructuring has not impacted Freudenberg’s operations beyond North America and Europe, the company has been focusing on these areas, which present strong growth prospects. In Latin America, Freudenberg has started a new line in Jacarei, Brazil, the facility’s fourth, to grow its hygiene business there. Freudenberg also has a plant in San Martin/Buenos Aires, Argentina.

In Asia, a new 12,000-ton-per-year spunbond line is set to come onstream in Taiwan in the first quarter of next year. Based on polyester technology, the new line will enable Freudenberg to increase its production capacity for tuft backing substrates and enhance its global supply flexibility to its customers. The added capacity is expected to meet demand for the polyester-based products for the next eight to 10 years.

In addition to capital investment, Freudenberg has been boosting its Asian business through acquisition. In May 2005, Freudenberg strengthened its position in China’s apparel interlinings business through the purchase of Nantong Hymo Co., in Nonton, Jiangsu Province. Nantong Hymo was the market leader in shirt interlinings in China as well as one of the leading finishing companies for woven and weft interlinings in China. It was established in 1985 and has become renowned in China for its high quality finishing technologies as well as for its exceptional service level and delivery reliability. In 2004, Nantong Hymo generated $22 million in sales and produced more than 30 million square meters of interlining materials.

The acquisition of Nantong Hymo has grown Freudenberg’s Asian interlinings business to now include more than 1000 employees throughout Asia where it operates five factories—in Suzhou, China, Nantong, China, Seoul, Korea, Yang-Mei, Taiwan and Chennai, India. It now generates sales of approximately $150 million in Asia.

Also in Asia, Freudenberg formed a joint venture in 2004 in the filtration segment. Freudenberg, Japan Vilene and Chinese partners formed a company called Freudenberg & Vilene Filter (Changchun) Co. Ltd., which acquired the filtration business of Changchun Autofilter Company. This venture is supplying motor and cabin air filter housings as well as filter elements to leading automotive manufacturers in Northern and Eastern China and is helping fuel Freudenberg’s position in the Chinese automotives market, particularly with its micronAir cabin air filters.

By division, Freudenberg’s tuft business, which is centered around polyester spunbond technology, has witnessed strong sales in Asia but has been challenged by rising raw material prices, which have been hard to pass along to customers, as well as by the chapter 11 status of one of its key customers. On the plus side, however, the division is set to benefit  from new fine fiber polyester spunbond technology being installed in Kaiserslautern, Germany. This new line will start up during the first quarter of next year and will target a broad range of fine fiber durable polyester spunbond markets.

Increasing its importance to Freudenberg is the filtration market, where it continues to roll out products and announce investment strategies to grow its business globally. While sales growth continues in Latin America and North America, this division has seen heavy pricing pressures in Europe, particularly in Germany, amidst higher raw material costs.

Freudenberg continues to see movement of its interlinings business into Asia, a situation being remedied to some degree by its investment in Nantong Hymo, which has resulted in lower European and U.S. sales and a boosted Asian business. Freudenberg’s new product Vilene X!treme, which is being billed as the world’s first super elastic interlining with softness, resiliency, multifunctionality and good care properties, has received positive feedback from the market.

In hygiene and medical, Freudenberg continues to avoid mass production in commodity segments and instead has targeted niche applications such as topsheets, barrier leg cuffs, acquisition layers and textile backsheets as well as products for incontinence and feminine hygiene and nonwovens for wound care applications. These segments allow Freudenberg to offer, and be rewarded for, innovation and value.

Freudenberg’s fifth segment, technical nonwovens, includes a wide range of smaller niche and specialty applications. In North America, major areas of interest include fire blockers for the mattress industry— driven by state and federal regulations—window shades, automotive interior applications and hoodliners, while in Europe, cable wraps, battery separators, automotive interiors, fiber-reinforced plastics and acoustics are showing promising activity.

Beyond its five key divisions, Freudenberg continues to focus on two key specialty products—Evolon and Novolon. Evolon, made from continuous filament spunlaced nonwovens, features good drapabilty, soft feel and high tensile strength, making it ideal for many applications such as specialty wipes, antimite bedding, technical packaging and artificial leather. According to Mr. Schroeder, sales of this material are still below expectation, but the company is making good progress in a number of products. Meanwhile, Novolon, a technology that can transform a two-dimensional product into a three-dimensional object, is still in its development stage, being made on a start-up line in Durham, NC.