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Did The Boom For Nonwovens Go Bust?

By Sandra Levy | September 2, 2010

Now That the Gulf Crisis is Resolved, Boom Makers Have To Deal With Increased Inventory and Lessened Demand

In April, the nonwovens community responded almost instantaneously to a catastrophic oil leak in the Gulf of Mexico, providing BP with absorbent nonwovens booms, which were being deployed by the thousands to keep oil offshore. At the same time, BP was also using millions of feet of containment boom to protect the Gulf Coast. But, as BP's efforts to stop the flow of oil progressed by mid-July, the company reportedly cancelled some orders.

Recently, The Industrial Fabric Association International (IFAI), which represents companies including boom makers and their suppliers, began to receive calls from dozens of members who said they have been left with huge amounts of inventory and bills, following cancelled orders, according to JoAnne Ferris, IFAI's director of marketing. "Those affected included end-product manufacturers, but also suppliers throughout the value chain—fabric, foam, cord, chain, pigment—as well as many suppliers were waiting for end-product manufacturers and disaster recovery companies to be paid so they could in turn be paid," said Ms. Ferris.

A spokesman from BP's press office in London sent this response to Nonwovens Industry's query regarding the current state of affairs: "We are reaching out to our suppliers to understand their individual situations and explore possible solutions. BP's procurement department has not rejected purchase orders for boom that met our quality standards. We have cancelled purchase orders for boom that did not meet our quality standards. In these cases we have tried to work with suppliers to resolve the matter."

Value Vinyls, a Texas-based supplier of raw vinyl material that was used on the outer parts of the containment booms that were deployed in the Gulf has been left with a huge inventory. Randy Busch, Value Vinyls' president told Nonwovens Industry, "We ramped up and almost solely dedicated production for a six week periodto making this 22 ounce yellow and orange vinyl for the boom manufacturers. We did receive from these manufacturers our own firm purchase orders and deposits. These weren't speculative orders. We were meeting the demands for those and calling in for production, shipping and logistics to get these in as quickly as we could—not for business greed but for the urgency that was needed for environmental protection. We have a whole lot of inventory. People are trying to cancel purchase orders for it. They are telling us they don't have the space to take receipt of the goods and even if they take receipt of the goods, 'we can't pay for it because we have so much invested into existing raw materials, existing machinery or ready made boom that doesn't have a home' and they are strongly looking in the eye of bankruptcy."

Despite his company now having an excess three- to four-year supply of materials Mr. Busch is optimistic about the future. "We are trying to substitute it for other products where we can. We are considering sales and specials on them but at the same time we have firm orders from customers and are expecting them to live up to them and hoping they remain financially stable to accept them. We're a supplier of PVC coated and laminated products."

Some of 26-year-old Value Vinyls' main markets include truck tarpaulins, tents, billboards, banners and signs, athletic mats, sports pads and shade structures. "We did shift our focus for a period of time,"Mr. Busch said. "Thankfully we can shift back and not miss too much of a beat other than sitting on excess inventory. We had to rent additional warehouse space to put the excess goods. It hasn't been fun but we'll come out of this still okay."

Supertex, a company which was producing absorbent boom netting during the crisis has also been impacted. Edward Cumins, Supertex president said, "We geared up for this oil spill cleanup and bought equipment and a tremendous amount of (polyester) yarn to produce high strength absorbent boom netting. We sold the netting to the boom makers and the boom makers sold it to BP. We had millions and millions of feet of orders from four or five different customers and within a week everything was cancelled. I'm stuck with machinery and yarn that I don't need. Three weeks ago they canceled the orders."

Like Mr. Busch, Mr. Cumins sees the glass as half full. "Hopefully we'll come though it. I didn't get stuck with netting. I'm stuck with all this equipment and yarn and I even brought one of my retired technicians back from Europe to help us get going quickly. Day and night the people were calling me for more deliveries saying, 'We'll fly it in, get it to us as quickly as possible.' It's a polyester yarn. I will use it eventually. I just didn't need it now. It could be resold as yarn but I'm not inclined to do that. We're going to work our way through our problems."

Ducts Unlimited, which makes containment booms of PVC coated material reported that the company had a very positive experience with BP. Thomas Slaughter, project manager at the Wallington, NJ firm, said, "We didn't have any problems with BP. We went through a research and development phase internally. We pitched the product to them. They issued a purchase order and we delivered on it. It wasn't as difficult as a lot of people are saying. It was pretty simple for us. Basically we do ventilation ducting for the defense and mining industries. We had the machinery to make the containment booms.We just had to buy a couple of extra parts and one extra machine to make booms. We did research and development to find out how to make booms properly and we did some marketing and BP found us.They actually called us. We went through a quality audit with them, which took three to four weeks. We had drawings back and forth. They sent inspectors to inspect our facility and product. They released a purchase order and we bought the rest of our materials, made the items on the order and that's how simple it was for us. BP never promised us we were going to get something we never got from them. They told us from the beginning they were going to look at what we could do in a month capacity and give us an order for that."

First Line Technology, which distributed its cotton carbon nonwoven Fibertect for booms that were utilized in the Gulf was not negatively affected.

Amit Kapoor, First Line Technology's president said, "We learned lessons from the disaster management side from Hurricane Katrina. A lot of companies ramp up and people are spending a lot of money because they are hoping for business. We learned lessons not to do that. Events come and go. Everybody has to make their own business decisions. If you buy too much inventory--with a disaster they are trying to throw everything they have at it-- when a disaster is over or it's been contained, then what do you do? You really have no way to pull back. I would ramp up with firm financial commitments, not just relying on written PO's. We learned lessons from our attorney too. You have to have financial backing behind it. If you are a small business don't over commit yourself looking to make money. We did not. We had the option. A lot of people came over to us and told us that we should produce a lot of Fibertect, a lot of carbon and boom and we said 'no.' We had significant business there, but at the rate they were using boom, I didn't think it was sustainable for a long period of time."

With excess boom material sitting in store rooms and warehouses throughout North America, many are wondering if recycling or reuse is an option. One fiber industry executive said the questions needs more examiniation."The sorbent boom possibly could be used but we would have to get samples to see if we could take the polypropylene on the inside out and figure what to do with the casing because it's made of a different material,"said George Martin, vice president of Leigh Fibers. "With the vinyl we would see whether it's filled with air or something on the inside. The sorbent boom might be able to be reused and recycled but the vinyl is a woven material with a coating on top. When you grind it up it doesn't always necessarily have a value."

Whatever the output, one thing is certain, the boom that the boom business gave to many nonwovens producers seems to be over and producers in this field are returning to normal, pre-oil spill conditions.
"The boom business is bust. Being two to three steps removed from the Gulf, we hear second hand the stories regarding the boom business. The word was that three weeks ago boom manufacturers who had confirmed orders for hundreds of trucks of polypropylene and booms had them summarily cancelled by BP and its partners as they wanted to take inventory of what was in the system. They thought they had plenty of booms and could not deploy them or handle any more. The pipeline meanwhile was full of resin, nonwoven media, metal pins, socks and all the bits to make many more."

Monadnock completed its last order—a truckload of 30-inch diameter roll gods—last month. This was a truckload of 30 inch diameter rolled goods to a converter. Like other surges related to emergencies—take the run up in demand in face masks brought on by the Swine and Avian flus—executives expect the depletion of current supply to take at least a year now that the situation has been resolved.

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