PGI Nonwovens

September 7, 2006

Polymer Group, Inc.
Charlotte, NC
$948 million

Key Personnel

William Hewitt, acting chief executive officer; Willis (Billy) Moore, III, chief financial officer; Mike Hale, vice president and general manager—U.S. Nonwovens; Fernando Espinosa, vice president and general manager—Latin America; Jay Cheng, vice president and general manager—China; Bill Spencer, vice president general manager—Canada;  Rick Ferencz, vice president, engineering and development; Bob Dale, vice president, sales and marketing—U.S. nonwovens and Dennis Norman, vice president—strategic planning and communication


Landisville, NJ; Rogers, AR; Benson, NC; Gainesville, GA; North Little Rock, AR; Mooresville, NC; Waynesboro, VA; Clackamas, Oregan; Clearfield, Utah; Guntown, Mississippi; Kingman, Kansas; Magog, Quebec; North Bay, Ontario; Neunkirchen, Germany; Cuijk, The Netherlands; San Luis Potosi, Mexico; Buenos Aires, Argentina; Bailleul, France; Nanhai, China; Suzhou, China; Cali, Colombia; Molnlycke, Sweden

ISO Status

Landisville, NC; Rogers, AR; Vineland, NJ; Benson, NC; Gainesville, GA; North Little Rock, AR; Mooresville, NC; Waynesboro, VA, Nanhai, China, Buenos Aires, Argentina; San Luis Potosi, Mexico, Molnlycke, Sweden 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, other proprietary fabric forming, surfacing and binding systems.

Brand Names

Apex, Agriban, Agribon, Amira, Aquapex, Bonlinn, Bonsec, Chicopee Cares, Chix, Chux, Comfortlace, Comfortsilk, Duralace, Durapex, Dura-Tex, Freeswell, Isolite, Keybak, Kiara, Masslin, Matline, Medisoft, Multi-Strike, Poly-Breathe, Poly-Safe, Quat-Safe, Provira, Reticulon, Reforel, Softlin, Soft-Touch, SuperSoft, TopSwell, Thermoform, Thermospost Ultra Dryloft, Titan, Ultra-Ply, Xiora

Major Markets

Agriculture, apparel, automotive, battery separator, flame retardant materials, cable wrap, filtration, home furnishings, hygiene, industrial, industrial and marine sorbents, medical, packaging, thermal barriers, wipes for cleanroom, food service and specialty end uses, consumer wipes, household wipes

Continuing its streak of success has been PGI Nonwovens. Among the highlights of this diversified roll goods producer during the past 12 months are the start up of a new line in Mooresville, NC, the relocation of its corporate headquarters from Charleston, SC to Charlotte, NC and continued investment in its Latin American and Chinese businesses.

In 2005, PGI achieved sales of $948 million, continuing an upward trend begun three years ago when sales clocked in between $750-$780 million, and the company is on track to top $1 billion as new machines in North Carolina, Latin America and Asia come onstream and start contributing to the bottom line. “Our growth last year does not even reflect upcoming investments,” explained CEO James Schaeffer. “The new line in Mexico is included into this but most of it was attributable to increased sales off of existing lines from new programs and new products. We grew our sales the old fashioned way. We earned it.”

Among the company’s recent initiatives was the establishment of a new corporate headquarters in Charlotte. Located in Charlotte’s Harris Corners Business Park, the headquarters brings together about 100 employees in senior leadership, finance, purchasing, human resources, sales, customer service, information technology and other administrative positions. PGI relocated employees from the former headquarters in North Charleston and offices in Mooresville and Raleigh, NC and Dayton, NJ to establish the centralized location. The Charlotte office puts the company closer to its customers and manufacturing operations and aims to increase operational efficiencies and foster greater collaboration across the company.

With a new headquarters in place, PGI is poised to continue the steady growth stream started three years ago. Growth will largely be achieved through a string of new lines that came onstream in early 2006. In the U.S., PGI held a ribbon-cutting ceremony commemorating the completion of a fourth spunmelt line in Mooresville, NC to meet demand for products in this region. The line, a Reifenhauser Reico IV spunmelt line, is specifically designed for enhanced flexibility. It can make high quality, fine denier materials that are softer and lighter than products available from conventional technology and have improved barrier properties.

Also new to PGI’s spunmelt business is a line in a new plant in Suzhou, China, which is currently ramping up to make PGI China’s largest spunmelt maker as well as the country’s only vertically integrated producer of finished medical fabrics. Located near Shanghai, the new plant contains a multi-beam Reifenhauser spunmelt line, targeting medical and hygiene applications, as well as a finishing line capable of making treated medical fabrics that meet the highest quality standards. Creating this operation, according to PGI executives, was the result of its medical converter customers’ movement into Asia.

PGI has also expanded its technology base at its current facility in Nanhai, China, where it operates one sold-out spunbond and one sold-out spunmelt line, with an advanced chemical bonding line serving hygiene and medical markets. This allows PGI China to make sublayer products for the hygiene market previously available only in its U.S. and European operations.

“The Asian market is getting more sophisticated,” Mr. Schaeffer said. “We like the fact that a good percentage of our products that we make there are staying there. Some come back as finished medical products but the lion’s share is intended to be consumed in Asia.”

And to give its Asian business a cohesive structure, PGI this year established an Asian headquarters near the Suzhou site, bringing its manufacturing plant together with administrative functions under one roof. “The new Asian headquarters will facilitate greater collaboration and cooperation among our teams, and also puts the leadership for the Asian business in the same location as our newest manufacturing site,” said Jay Cheng, vice president and general manager, PGI Asia.

Finance operations, headed by PGI Asia’s new financial director Z.Q. Zhan, as well as information technology, sales and marketing and administrative support, will also be based at this office in the growing Shanghai region.

Meanwhile, Latin America, which has been a strong growth area for PGI for some time, is home to the company’s most recently announced investment—a new spunmelt line at the Dominion Nonwovens Sudamerica (DNS) joint venture facility in Buenos Aires, Argentina.  The new wide-width, multi-beam spunmelt line will more than double the capacity of the joint venture facility to meet growing demand for its products in South America and to better serve its customers in the region. It will produce more than 15,000 metric tons of nonwovens when it comes onstream in late 2007.

The new line is intended to be fully dedicated to the hygiene market, providing high-quality fine denier topsheet material and other substrates for use in diapers. The addition of this line gives the company’s DNS operation the ability to produce material that will satisfy the highest hygiene standards in the industry. The expanded capacity will also be used with DNS’s coating capabilities to provide even more value-added products, such as cloth-like backsheet.        This investment follows similar growth strategies across PGI’s Latin American business. News lines have come onstream in Cali, Colombia in early 2005, which doubled capacity at the site, and in San Luis Potosi, Mexico in 2004. In Cali, the new Reifenhauser line is fully dedicated to the hygiene market, providing high quality, fine denier topsheet material for diapers, while in Mexico, a new three-beam spunbond line produces lightweight materials for hygiene markets throughout the Americas.

“Latin America is a very important piece of our total business,” Mr. Schaeffer said. “It is consistent with our mission of having the right products at the right price anywhere in the world. Our customer base continues to grow at a very good rate throughout Latin America, and we have a really good manufacturing footprint. We are continuing to expand that.”

And, while spunmelt technology been the focus of much investment for PGI of late, the company maintains its commitment to be a total solution provider to the nonwovens industry.

“A lot of people think we only do spunmelt in these areas, but we have a carded operation in Cali and chemical bond products in China,” Mr. Schaeffer said. “Our drive is to be a full service provider of nonwovens and engineered products.”

Also contributing to PGI’s full range of services is its patented Apex spunlace technology, which has allowed the company to target a number of interesting markets. With more than 40,000 tons of the material earmarked for wipes, certainly this has become an interesting market for PGI but the company has shied away from commodity areas and instead has focused on areas where Apex’s imaging technology is valued. “There is a real array of different materials in the wipes market,” Mr. Schaeffer said. “We are seeing a number of different shapes and feels.”

One good example is the development of cotton-containing baby wipes by PGI and wipes converter NicePak for retail giant Costco, which have not only proven successful at retail but has opened a new category in the baby wipes market. “Just as we anticipated, we are leading the way with some new applications and new products with Apex,” Mr. Schaeffer continued.  

Beyond wipes, Apex has allowed PGI entry into markets including automotives, carpet backing and filtration. In filtration, PGI’s Durapex line of media now contains oleophobic aramid and conductive variations, thanks to a strategic relationship with Donaldson Co. These new products are suited for dust removal in humid conditions, high temperatures and manufacturing environments where dust may be explosive.

“One of the things about Apex is that we are really incorporating it into a number of different applications,” said Dennis Norman, vice president, strategic planning and communication. “There are a number of different ways we have been able to leverage Apex to create a real value-added, differentiating product.

And, while hygiene and medical and wipes continue to be an important part of PGI’s growth strategy, so do industrial areas like flame retardant fabrics for mattress applications and automotive products, filtration and construction.”

PGI’s growth in these areas has helped offset market maturity in certain regions of the hygiene market. “Hygiene in emerging regions is growing very quickly but hygiene in general in the U.S. is not growing as fast as industrial. By playing in industrial, we have great diversity,” Mr. Norman said.  

“The great potential for industrial is in organic growth,” he added. “We are growing just by entering new markets because we are starting at zero.”

 With plants throughout the world, PGI’s expansion strategy has largely centered around new lines but major investment in Europe has clearly been missing as PGI’s capital expansion has taken place in the Americas and Asia. PGI executives would not specify their plans for Europe, but alluded to future growth plans to be implemented at the right time and stressed that the European leg of its business continues to be important to its position as a global supplier of nonwovens.

“I think you will see with PGI a consistent theme for growth yet it will be growing strong, growing smart,” Mr. Schaeffer said. “We are not just going to grow for the sake of growing. This industry offers great growth potential. We believe we have the capability to be the industry leader instead of an industry leader.”

In October, PGI named William Hewitt interim CEO replacing Mr. Schaeffer. PGI’s board asked Mr. Schaeffer to submit his resignation from the nonwovens producer following an investigation of how information was reported internally during the preparation of financial statements related to certain transactions that included a €4 million agreement with an equipment supplier.

Mr. Hewitt has been chairman of the board of directors of the company since April 2003 and a director since March 2003. PGI will launch a search for a permanent replacement, and while no timeframe has been specified, Mr. Hewitt said similar processes often last three to four months.

Mr. Hewitt has been involved with many segments of PGI’s business, according to Dennis Norman, director of strategic planning and communication. “He has also spent a period of time as a paid consultant for the company related to our global approach to our business,” he said. “Bill knows the ins and outs of PGI very well and we have the utmost confidence in his ability.”

Mr. Schaeffer’s resignation stems from a previously announced internal investigation into certain transactions between the company and an equipment supplier. In particular, the investigation, for which PGI enlisted the help of special counsel, focused on uncertainties surrounding the events that led to a €4 million agreement between PGI and the equipment supplier and a potential relationship with other transactions with that equipment supplier. Pursuant to the investigation, PGI’s board—citing lack of confidence in Mr. Schaeffer’s abilities to remain CEO of PGI—asked for the resignation of Mr. Schaeffer as well as that of James Snyder, vice president of global purchasing, whose activities were also within the scope of the investigation.

Mr. Hewitt said he doesn’t expect PGI’s ongoing day-to-day activities to be disrupted by Mr. Schaeffer’s exit. “We have been in discussions with people around the globe starting last night and all the reports are that people are sad (about Jim) but they understand that we will move forward,” he said. “Nothing really has changed apart from the people. The strategy we had eight weeks ago is the same strategy we have today. We have a very strong management team. We have a strategy of delivering the right product at the right location at the right price. Our vision is to be the industry leader and we will get everyone refocused fairly quickly.”