Karen McIntyre, Editor10.08.10
A major acquisition, a bankruptcy and a Finnish start-up are just a few of the headlines that have rocked the airlaid market during the past 12 months as this quiet nonwovens technology continues to do what it does best—achieve steady growth in its existing markets while branching out into new areas.
While this technology does not boast the screamingly large volumes and process speeds of spunmelt or spunlace, it has made a name for itself in a number of markets like feminine hygiene, tabletop and wipes, and industry observers expect that the stability of pulp prices—airlaid’s key raw material—will make it a more attractive option in many markets moving forward.
“Airlaid is a fairly young technology and there is a lot of interest in it,” said Andreas Normen, vice president of sales and marketing for Swedish airlaid outfit Rexcell. “Fluff pulp is one of the least expensive raw materials and when you compare it to other raw materials, people are more and more aware that oil doesn’t grow like trees do and prices will remain stable.”
During the past decade, North American airlaid producers have struggled to move excess capacity after a global investment surge badly skewed supply-and-demand ratios throughout the industry. Today, it seems industry demand has caught up with supply as few investments have been made in recent years.
“The market will do well because there is limited expansion,” said airlaid industry consultant Phil Mango. “Even with small demand increases, there’s going to be a tightening of supply over time.”
Mr. Mango added that even though there appears to be a large amount of capacity available on the market, much of this output is born from outdated technology, made on lines not able to process the more sophisticated multibond technology.
“I wouldn’t be surprised to see some line shutdowns in the next couple of years because it just doesn’t make sense for the companies to run them,” he continued.
Airlaid Looks Good
Airlaid technology proved attractive enough for paper industry giant Glatfelter. At the start of 2010, the York, PA-based company, which already had experience with wetlaid nonwovens technology, purchased Concert Industries, and its airlaid operations in Canada and Germany, in a deal reported at $235 million.
At the time of the acquisition, Glatfelter executives said that airlaid was a natural fit for the company because of its expertise in paper making and its knowledge of the nonwovens industry. Concert, in particular, made sense because a significant percentage of its output is contracted through 2013 and some 80% of its current revenue is attached to raw material price pass-throughs, which allow the company to raise and lower prices depending on its supplier costs.
With operations in Gatineau, Quebec, Canada and Falkenhagen, Germany, Concert’s estimated annual sales are $203 million and its earnings are approximately $25 million. In the fourth quarter of 2009, Concert began ramping up a third European airlaid line, representing a $70 million investment, in Falkenhagen, which will add 18,000 tons of capacity per year and bring Concert’s global output to 84,000 tons. Approximately 80% of Concert’s output currently serves the global feminine hygiene market, which is growing at 5% per year. Other key markets include adult incontinence, food pads, cosmetic pads, tabletop applications and specialty wipes.
“We believe that Concert Industries is a natural fit with the Glatfelter family of companies as well as an excellent example of the kind of growth catalyst we want to add to our portfolio,” said chairman and CEO George Glatfelter. “This acquisition combines the strengths of two highly specialized companies that operate in adjacent markets.”
Interestingly, Concert is one of the few airlaid makers that has invested in recent years. Most of its competitors in the market have instead focused on using what equipment they already have to the fullest extent.
Concert’s key competitor in North America, Buckeye Technologies, continues to fill up its Gaston, NC line—a 50,000-ton machine that was added in 2001. The company also operates a smaller, more specialty-oriented machine in North Carolina as well as a line in Delta, British Columbia, Canada, which Buckeye freely admits is only operating at 50% capacity. In Europe, Buckeye has a facility in Steinfurt, Germany.
Last year, Buckeye’s sales reportedly reached $247 million, slightly higher than the $240 million reached the year before. At the same time, operating income continues to grow.
While Buckeye won’t comment on customer activity, industry sources say that Buckeye’s business, which is largely centered on wipes, has recently been boosted by Procter & Gamble’s conversion of its Thick Care baby wipes from spunlace to airlaid, in North America. According to reports, about half of Buckeye’s airlaid output is tied to the disposable wipes market, making it one of that industry’s largest suppliers.
In addition to Concert and Buckeye, the North American airlaid market contains EAM, a one-line operation once owned by Rayonier, that produces NovaThin patented hydrogen bonded airlaid nonwovens, and a converting operation for McAirlaids, a German company that has been talking about building an airlaid line in Virginia for the last couple of years but so far has not finalized plans.
Enough in Europe
Moving west, the European airlaid market has not seen the same pitfalls as North America during the past decade and instead has seen steady growth that has largely matched supply levels. This is not to say that the region has not been without its ups and downs. In the past two years, the European market has seen the opening and then quick closing of an airlaid line (Fiberweb in Italy), the bankruptcy of a young player (Danish Airlaid in Denmark) and the start up of a new company (Lacell Oy in Finland).
Opened in February, Lacell’s new factory, situated between Lahti and Kouvola in Iitti, can produce thermo-, binder- and combi-bonded products. Lacell is going to compete with its rivals with its ability to produce exactly what the customer needs, down to limited production runs and the ability to change product types very quickly, executives said. With the latest technology it is possible to produce more products using less raw material.
“We have an active dialogue with our customers so that we know what type of expectations they have, and what kind of products they want to promote. When we develop our products, we involve our customers, the suppliers of raw materials, and ourselves,” said managing director Risto Tamminen.
With the goal of becoming a market leader, Lacell will focus on the creation of green, biodegradable, wood-based products and a completely closed production process and ecological energy solutions that support this image.
The growing market in Europe, new products and the disappearance of old production methods has affected new production in a positive way. A further possibility will be the attractive Russian market, which could be a major factor for exports in the near future, Mr. Tamminen said.
While the new Concert line did tighten up the market, to some degree, earlier this year, industry observers said that much of this output was contracted before the line was even operational so its addition hasn’t had a whole lot of effect on the market.
Now the situation is very stable,” said Rexcell’s Mr. Normen. “From a capacity standpoint, the market is quite balanced right now. There is not too much leftover,” he said. “We saw a reduction in orders last year which was tied to the recession but it had more to do with warehouse reductions. Many of the businesses airlaid is tied to are very defensive.”
From Lacell’s perspective, the timing is right for a medium-sized producer to enter a market to cater to customer needs that larger producers, like Buckeye or Glatfelter, cannot.
“The big producers in Europe have further streamlined the processing of raw materials leaving a position in the market for a medium-sized independent flexible producer,” Mr. Tamminen said.
However, entry will not be without its challenges. The market proved to be too difficult for Danish Airlaid, a Denmark-based start-up that filed bankruptcy protection last year despite boasting a number of experienced engineers in its employee ranks. While executives from the company were not available for comment, industry observers blamed poor timing on the failure. Danish Airlaid came up at a time where many customers were reducing their warehouse inventories, lessening purchases even though customer demand did not necessarily drop.
China Ramps Up
Fiberweb has remained focused solely in Asia since starting its first airlaid operation in Tianjin, China in 2002. According to Derek Chan, Fiberweb’s Asian president, growth in this region remains attractive at 5-6% or higher, which led to the company’s decision to add a second line to the operation two years ago. “As the largest airlaid producer in Asia, we don’t see any obstacles to introduce our second line products in the market,” he said.
The second line, supplied by China’s own Shangahi EPS, has allowed Fiberweb to broaden its scope into the mid-tier segment which includes regional players and good quality local converters. “A few years ago, local fem care products were only appearing on the low end of the market but they have been improving,” Mr. Chan explained, noting that the local producers include Hengan and ABC, which are offering a wider range of products to satisfy all segments of the market.
Beyond fem care, Fiberweb also supplies the wipes, medical and food pad industries and most recently has been working toward developing new business in diapers and adult incontinence, which provide good volume and growth. Industrial applications, like filtration, are also an interest.
“The biggest challenge is to satisfy the year-on-year product cost reduction expectation from global customers,” Mr. Chen said. “This implies we have to excel on product and process development to meet such a demand.”
China’s other big airlaid producer Nanning Qiahong New Materials operates a Dan-Webforming line able to make 10,000 tons of superabsorbent compound fiber per year, according to the company. Target markets for the material, which range in weights from 40-500 gsm and slitting widths of 45-700 mm include wet and dry wipes and tissues, napkins, cleaning coths, table cloths, makeup removers, household wipes, diapers, panty shield and sanitary napkins.
More Investment On the Horizon?
Probably no one has suffered more during the past decade in airlaid than the suppliers of machinery. Despite consistent technological upgrades that have led to machines with more bells and whistles capable of targeting new applications, these manufacturers have had trouble selling new lines in a market that is leery of overcapacity.
Ten years ago, the world’s two largest airlaid producers were Dan-Webforming and M&J Fibretech. Both based in Denmark, these two companies boasted great success in the late 1990s and early 2000s as Fiberweb, Concert and Buckeye all placed orders for extremely large lines. This, of course, led to unprecedented overcapacity that the market continues to recover from and since then investment has been scarce.
MJ Fibretech, now a part of Oerlikon Neumag, was able to secure a large order with the new Glatfelter line in Germany and Dan-Webforming, which has been in and out of bankruptcy protection and seen several changes in ownership during the past 10 years, has reported some sales, most recently a smaller line to industrial goods specialist New Pig, according to reports.
However, for the most part, it’s been a struggle, a situation that will hopefully end in the near term as airlaid producers start realizing that updated technology is needed to move forward.
Mr. Mango noted that little of the world’s airlaid capacity is based on more sophisticated multibonded technology and as such is incapable of creating competitive products.
“Despite that fact that it looks like there is a lot of airlaid technology around, in the next couple of years, you will see a shortage of high quality airlaid for certain applications,” he explained.
“The problem with airlaid investment is, unlike other technologies, there is a pretty significant learning curve when its comes to starting up a new line, and there are not many companies with the engineering backbone needed to successfully launch state-of-the-art production lines.”
“Airlaid has a very good chance of doing much better in the future,” said Rexcell’s Mr. Normen. “It’s still a young technology and there are not that many players out there. If you look at other nonwovens technologies out there, like spunbond, they have had tremendous growth, airlaid has been left behind, the process has not evolved enough.”
One machinery supplier said he feels airlaid has remained a smaller technology because it never made it into the diaper market. Many of the other larger technologies for nonwovens grew quickly when they found their spot in hygiene. While it has long been rumored that airlaid could find its way into the core of the diaper, such a switch would mean a major machinery conversion—and investment—something no major diaper maker has seen worthwhile. “For the airlaid core to be competitive with a normal diaper core, you have to undergo a huge, huge investment,” he said. “This big shift is not going to happen today or tomorrow.”
While this technology does not boast the screamingly large volumes and process speeds of spunmelt or spunlace, it has made a name for itself in a number of markets like feminine hygiene, tabletop and wipes, and industry observers expect that the stability of pulp prices—airlaid’s key raw material—will make it a more attractive option in many markets moving forward.
“Airlaid is a fairly young technology and there is a lot of interest in it,” said Andreas Normen, vice president of sales and marketing for Swedish airlaid outfit Rexcell. “Fluff pulp is one of the least expensive raw materials and when you compare it to other raw materials, people are more and more aware that oil doesn’t grow like trees do and prices will remain stable.”
During the past decade, North American airlaid producers have struggled to move excess capacity after a global investment surge badly skewed supply-and-demand ratios throughout the industry. Today, it seems industry demand has caught up with supply as few investments have been made in recent years.
“The market will do well because there is limited expansion,” said airlaid industry consultant Phil Mango. “Even with small demand increases, there’s going to be a tightening of supply over time.”
Mr. Mango added that even though there appears to be a large amount of capacity available on the market, much of this output is born from outdated technology, made on lines not able to process the more sophisticated multibond technology.
“I wouldn’t be surprised to see some line shutdowns in the next couple of years because it just doesn’t make sense for the companies to run them,” he continued.
Airlaid Looks Good
Airlaid technology proved attractive enough for paper industry giant Glatfelter. At the start of 2010, the York, PA-based company, which already had experience with wetlaid nonwovens technology, purchased Concert Industries, and its airlaid operations in Canada and Germany, in a deal reported at $235 million.
At the time of the acquisition, Glatfelter executives said that airlaid was a natural fit for the company because of its expertise in paper making and its knowledge of the nonwovens industry. Concert, in particular, made sense because a significant percentage of its output is contracted through 2013 and some 80% of its current revenue is attached to raw material price pass-throughs, which allow the company to raise and lower prices depending on its supplier costs.
With operations in Gatineau, Quebec, Canada and Falkenhagen, Germany, Concert’s estimated annual sales are $203 million and its earnings are approximately $25 million. In the fourth quarter of 2009, Concert began ramping up a third European airlaid line, representing a $70 million investment, in Falkenhagen, which will add 18,000 tons of capacity per year and bring Concert’s global output to 84,000 tons. Approximately 80% of Concert’s output currently serves the global feminine hygiene market, which is growing at 5% per year. Other key markets include adult incontinence, food pads, cosmetic pads, tabletop applications and specialty wipes.
“We believe that Concert Industries is a natural fit with the Glatfelter family of companies as well as an excellent example of the kind of growth catalyst we want to add to our portfolio,” said chairman and CEO George Glatfelter. “This acquisition combines the strengths of two highly specialized companies that operate in adjacent markets.”
Interestingly, Concert is one of the few airlaid makers that has invested in recent years. Most of its competitors in the market have instead focused on using what equipment they already have to the fullest extent.
Concert’s key competitor in North America, Buckeye Technologies, continues to fill up its Gaston, NC line—a 50,000-ton machine that was added in 2001. The company also operates a smaller, more specialty-oriented machine in North Carolina as well as a line in Delta, British Columbia, Canada, which Buckeye freely admits is only operating at 50% capacity. In Europe, Buckeye has a facility in Steinfurt, Germany.
Last year, Buckeye’s sales reportedly reached $247 million, slightly higher than the $240 million reached the year before. At the same time, operating income continues to grow.
While Buckeye won’t comment on customer activity, industry sources say that Buckeye’s business, which is largely centered on wipes, has recently been boosted by Procter & Gamble’s conversion of its Thick Care baby wipes from spunlace to airlaid, in North America. According to reports, about half of Buckeye’s airlaid output is tied to the disposable wipes market, making it one of that industry’s largest suppliers.
In addition to Concert and Buckeye, the North American airlaid market contains EAM, a one-line operation once owned by Rayonier, that produces NovaThin patented hydrogen bonded airlaid nonwovens, and a converting operation for McAirlaids, a German company that has been talking about building an airlaid line in Virginia for the last couple of years but so far has not finalized plans.
Enough in Europe
Moving west, the European airlaid market has not seen the same pitfalls as North America during the past decade and instead has seen steady growth that has largely matched supply levels. This is not to say that the region has not been without its ups and downs. In the past two years, the European market has seen the opening and then quick closing of an airlaid line (Fiberweb in Italy), the bankruptcy of a young player (Danish Airlaid in Denmark) and the start up of a new company (Lacell Oy in Finland).
Opened in February, Lacell’s new factory, situated between Lahti and Kouvola in Iitti, can produce thermo-, binder- and combi-bonded products. Lacell is going to compete with its rivals with its ability to produce exactly what the customer needs, down to limited production runs and the ability to change product types very quickly, executives said. With the latest technology it is possible to produce more products using less raw material.
“We have an active dialogue with our customers so that we know what type of expectations they have, and what kind of products they want to promote. When we develop our products, we involve our customers, the suppliers of raw materials, and ourselves,” said managing director Risto Tamminen.
With the goal of becoming a market leader, Lacell will focus on the creation of green, biodegradable, wood-based products and a completely closed production process and ecological energy solutions that support this image.
The growing market in Europe, new products and the disappearance of old production methods has affected new production in a positive way. A further possibility will be the attractive Russian market, which could be a major factor for exports in the near future, Mr. Tamminen said.
While the new Concert line did tighten up the market, to some degree, earlier this year, industry observers said that much of this output was contracted before the line was even operational so its addition hasn’t had a whole lot of effect on the market.
Now the situation is very stable,” said Rexcell’s Mr. Normen. “From a capacity standpoint, the market is quite balanced right now. There is not too much leftover,” he said. “We saw a reduction in orders last year which was tied to the recession but it had more to do with warehouse reductions. Many of the businesses airlaid is tied to are very defensive.”
From Lacell’s perspective, the timing is right for a medium-sized producer to enter a market to cater to customer needs that larger producers, like Buckeye or Glatfelter, cannot.
“The big producers in Europe have further streamlined the processing of raw materials leaving a position in the market for a medium-sized independent flexible producer,” Mr. Tamminen said.
However, entry will not be without its challenges. The market proved to be too difficult for Danish Airlaid, a Denmark-based start-up that filed bankruptcy protection last year despite boasting a number of experienced engineers in its employee ranks. While executives from the company were not available for comment, industry observers blamed poor timing on the failure. Danish Airlaid came up at a time where many customers were reducing their warehouse inventories, lessening purchases even though customer demand did not necessarily drop.
China Ramps Up
Fiberweb has remained focused solely in Asia since starting its first airlaid operation in Tianjin, China in 2002. According to Derek Chan, Fiberweb’s Asian president, growth in this region remains attractive at 5-6% or higher, which led to the company’s decision to add a second line to the operation two years ago. “As the largest airlaid producer in Asia, we don’t see any obstacles to introduce our second line products in the market,” he said.
The second line, supplied by China’s own Shangahi EPS, has allowed Fiberweb to broaden its scope into the mid-tier segment which includes regional players and good quality local converters. “A few years ago, local fem care products were only appearing on the low end of the market but they have been improving,” Mr. Chan explained, noting that the local producers include Hengan and ABC, which are offering a wider range of products to satisfy all segments of the market.
Beyond fem care, Fiberweb also supplies the wipes, medical and food pad industries and most recently has been working toward developing new business in diapers and adult incontinence, which provide good volume and growth. Industrial applications, like filtration, are also an interest.
“The biggest challenge is to satisfy the year-on-year product cost reduction expectation from global customers,” Mr. Chen said. “This implies we have to excel on product and process development to meet such a demand.”
China’s other big airlaid producer Nanning Qiahong New Materials operates a Dan-Webforming line able to make 10,000 tons of superabsorbent compound fiber per year, according to the company. Target markets for the material, which range in weights from 40-500 gsm and slitting widths of 45-700 mm include wet and dry wipes and tissues, napkins, cleaning coths, table cloths, makeup removers, household wipes, diapers, panty shield and sanitary napkins.
More Investment On the Horizon?
Probably no one has suffered more during the past decade in airlaid than the suppliers of machinery. Despite consistent technological upgrades that have led to machines with more bells and whistles capable of targeting new applications, these manufacturers have had trouble selling new lines in a market that is leery of overcapacity.
Ten years ago, the world’s two largest airlaid producers were Dan-Webforming and M&J Fibretech. Both based in Denmark, these two companies boasted great success in the late 1990s and early 2000s as Fiberweb, Concert and Buckeye all placed orders for extremely large lines. This, of course, led to unprecedented overcapacity that the market continues to recover from and since then investment has been scarce.
MJ Fibretech, now a part of Oerlikon Neumag, was able to secure a large order with the new Glatfelter line in Germany and Dan-Webforming, which has been in and out of bankruptcy protection and seen several changes in ownership during the past 10 years, has reported some sales, most recently a smaller line to industrial goods specialist New Pig, according to reports.
However, for the most part, it’s been a struggle, a situation that will hopefully end in the near term as airlaid producers start realizing that updated technology is needed to move forward.
Mr. Mango noted that little of the world’s airlaid capacity is based on more sophisticated multibonded technology and as such is incapable of creating competitive products.
“Despite that fact that it looks like there is a lot of airlaid technology around, in the next couple of years, you will see a shortage of high quality airlaid for certain applications,” he explained.
“The problem with airlaid investment is, unlike other technologies, there is a pretty significant learning curve when its comes to starting up a new line, and there are not many companies with the engineering backbone needed to successfully launch state-of-the-art production lines.”
“Airlaid has a very good chance of doing much better in the future,” said Rexcell’s Mr. Normen. “It’s still a young technology and there are not that many players out there. If you look at other nonwovens technologies out there, like spunbond, they have had tremendous growth, airlaid has been left behind, the process has not evolved enough.”
One machinery supplier said he feels airlaid has remained a smaller technology because it never made it into the diaper market. Many of the other larger technologies for nonwovens grew quickly when they found their spot in hygiene. While it has long been rumored that airlaid could find its way into the core of the diaper, such a switch would mean a major machinery conversion—and investment—something no major diaper maker has seen worthwhile. “For the airlaid core to be competitive with a normal diaper core, you have to undergo a huge, huge investment,” he said. “This big shift is not going to happen today or tomorrow.”