Twelve months ago, the nonwovens industry was reeling from a global economic meltdown that impacted credit markets, consumer spending and raw material prices. As the dust settled, many of the industry’s top companies were reporting a significant drop in annual sales. To combat these challenges, manufacturers streamlined operations by shutting down extraneous lines, exiting underperforming businesses, trimming personnel and making other cost-saving decisions.
As 2010 draws to a close, most nonwovens executives agree that the worst is behind us. Hygiene markets, which were not heavily impacted by the economy, seem to be stronger than ever as manufacturers continue to innovate, while durable nonwovens markets like construction and automotives are starting to see new life. As we move toward the new year, Nonwovens Industry has compiled some of the year’s most important news stories.
Despite worldwide economic difficulties, investment has not slowed down in the nonwovens industry. From the Americas to Europe to Asia and even Africa, nonwovens producers continue to be optimistic enough about the future to build new lines across the globe.
Within nonwovens’ largest technology, spunmelt, recent investment announcements have come from Dounor in France, Avgol in China and the U.S., Pegas in the Czech Republic and PGI in Virginia. These lines represent not only thousands of tons of capacity but millions of investment dollars. Additionally, a number of new lines, announced in 2009, are set to debut as this year comes to an end. They include Companhia Providencia and FitesaFiberweb’s North American lines, Union Industries’ 24,000-ton line in Italy and Toray Advanced Materials’ second Chinese line.
Meanwhile, in more industrial markets, Danish Fibertex said it would add an industrial line in South Africa to take advantage of a number of infrastructure improvements planned for the region. DuPont is building a new facility in Virginia to expand its role in lithium battery technology, and Vita Nonwovens is expanding its North American operation.
In addition to investment, companies outside the industry continue to show interest in nonwovens via acquisition. In 2010, some of the world’s largest makers of nonwovens found themselves under new ownership. At the start of the year, paper and wetlaid nonwovens maker Glatfelter Industries made headlines with its acquisition of airlaid maker Concert Industries. At the time of purchase, Glatfelter said it was attracted to Concert because of the growth potential of its core markets and opportunities for expansion into new markets. When paired with Concert, Glatfelter’s nonwovens sales are estimated at $350 million, making it one of the world’s top 10 nonwovens producers.
In September, Blackstone Capital Partners agreed to acquire PGI Nonwovens, the world‘s fifth-largest nonwovens maker and the top producer of spunmelt nonwovens. This announcement came a few months after PGI said it was exploring ways to maximize shareholder value. In announcing the sale, PGI CEO Veronica Hagen said the transaction was the best value alternative to its stockholders because of Blackstone’s commitment to supporting its strategy of continued growth and investment in proprietary capabilities in markets around the globe.
Beyond the major acquisitions, nonwovens producers have also continued to use acquisitions as a gateway into new markets. Hollingsworth & Vose purchased carbon-containing technology from Fiberweb to better serve the gas phase filter media market, while Ahlstrom expects to expand its Asian presence through the purchase of China’s Purico Group.
China Continues to Shine
The market for nonwovens in China continues to soar, with some experts pegging annual growth as high as 30-40%. Others are more conservative and estimate low double-digit growth for the country. While expansion has been strong across all of the major nonwovens technologies, hygiene companies’ thirst for new markets has led them to invest heavily in the country and their suppliers, and makers of spunmelt nonwovens have followed.
In 2010, Fiberweb raised its bet on China when it partnered with the Chisso Group, a Japanese nonwovens producer, to launch a spunmelt operation targeting the Chinese hygiene market. Fiberweb has been present in China since 2001 with an airlaid operation in Tianjin.
Other big name hygiene suppliers with operations in China include PGI, Avgol and Toray Advanced Materials, which compete with local players including Dalian Ruigang and the Jofo Group.
For now, the western-based nonwovens producers are primarily serving multinational players such as Procter & Gamble, Kimberly-Clark and SCA by helping those companies expand their sales into China, but industry observers say that local hygiene converters are increasing their sophistication and quality—with the help of western suppliers. At the same time, local nonwovens producers are becoming increasingly sophisticated as well as more competitive in the global marketplace.
New Regions Show Promise
China has been on the industry’s radar for a while, along with Latin America and Eastern Europe, but 2010 saw expansion into other new geographical regions.
Danish nonwovens producer Fibertex announced in January it would establish a new operation in South Africa. The new facility will make and market needlepunch nonwovens, primarily geotextiles for road construction, along with products for the growing South African automotive industry. By adding this operation, Fiberweb is hoping to capitalize on growth in South Africa, where plans are in place to invest more than $96 billion in infrastructure improvements during the next five years.
“This is a significant expansion of the infrastructure in large parts of southern Africa which will even be further increased in the coming years. Large road and bridge construction projects have been launched and more are underway. Geotextiles are essential elements to such projects and this is where we come in with our high-tech production at competitive prices,” said Jørgen Bech Madsen, CEO of Fibertex Industrial Nonwovens.
Meanwhile, in May Ahlstrom inaugurated its new medical nonwovens production facility in Mundra, Gujarat state, northwest coast of India during a special ceremony. The plant produces medical nonwoven fabrics for the healthcare industry in India and Asia and will initially employ 70 people. The Mundra plant is Ahlstrom’s first manufacturing facility in India and among its biggest in Asia.
The new plant belongs to Ahlstrom’s Advanced Nonwovens business unit. The investment, including the plant facility, production line and required infrastructure, amounts to approximately €42 million. Ahlstrom’s president and CEO Jan Lång stressed the importance of the plant in Ahlstrom's growth strategy in Asia.
“Ahlstrom has a strong footprint in Europe and the Americas and is starting to establish a solid manufacturing platform in Asia. This plant, with its state-of-the-art technology, competent personnel and an optimal location in the Special Economic Zone and in the vicinity of one of Asia’s biggest ports, will have a key role in our growth strategy in India and Asia. As India is among the world’s fastest growing economies today and the healthcare industry is growing at an annual rate of over 20%, the market for disposable hygiene products is expected to grow significantly in the coming years,” Mr. Lång said.
In March 2010, Procter & Gamble rolled out a new, pulp-less diaper design that is said to offer improved dryness and absorbency while being 20% thinner than previous diaper designs. Introduced through P&G’s premium tier diaper brands, Swaddlers and Cruisers, DryMax has contributed to gains in Pampers’ market share levels and has already begun rolling out throughout Europe.
Industry insiders have been watching the launch of DryMax carefully as it is being hailed as the most significant diaper redesign of the decade. Not only does it contribute to sustainability efforts—reportedly reducing the weight of a billion less diapers in landfills every three years—it has changed the world’s largest diaper maker’s raw material usage significantly.
Of course, this launch has not been without controversy. P&G has had to defend itself against online reports that the new diaper design is causing burning, itching and general diaper rash, claims that were all squashed by consumer advocacy groups in September. The U.S. Consumer Product Safety Commission and Health Canada have found no link between DryMax and diaper rash after reviewing clinical and toxicological data.
Alternative Raw Materials
The use of recycled materials has gained steam in 2010 as companies look for ways to lessen their dependence on raw materials and provide their customers with a more eco- friendly option.
Freudenberg, the world’s largest nonwovens producer, is particularly proud of its efforts in post-consumer recycled (PCR) materials where it uses repurposed plastic water bottles as raw material for its Lutradur Eco range of products.
“Only 25% of bottles in the U.S. are recycled so it’s a problem getting our hands on them, but we have been coming up with new ways to get them as demand has increased,” CTO Thomas Reibelt said. “We have a sister company in Macon, GA, that is helping us source these bottles.”
In response to Freudenberg and other nonwovens producers seeking recycled materials, many raw materials producers are sourcing everything from old tires to carpeting to T-shirt scrap material to make repurposed goods.
In October, carpet maker Shaw Industries and polyester supplier DAK Americas teamed up to launch Clear Path Recycling, a venture created to produce recycled PET (RPET) flake from post-consumer bottles. By the end of the first phase of the project, the operation will have the capability to recycle up to 160 million pounds of PET bottles, which will save over 550,000 cubic yards of landfill space each year.
While few have gone so far as to develop a joint venture company, most fiber and resin suppliers have shown their commitment to recycled materials. Cotton Incorporated is working with a company called Bonded Logic to convert old jeans into insulation; Barnhardt Manufacturing is developing new blends of recycled cotton; and Leigh Fibers has introduced an aramid FR fiber made from cuttings from the manufacturing process for firefighters’ jackets.
“Growth is going to come from the green, sustainability angle. We take the waste and ensure it doesn’t end up on the street and doesn’t go to a landfill. Normally it’s brand new material. In addition to that, there’s post industrial and post consumer. Lots of times, bales of used cloth are turned in and we shred it up,” said George Martin, executive vice president of sales and marketing.
In April 2010, the entire nonwovens industry met in Miami Beach, FL for IDEA 2010, North America’s largest nonwovens exhibition, which is held every three years. The event, sponsored by INDA, featured 379 exhibiting companies from 22 countries, and filled almost 400,000 gross square feet (37,000 square meters) of the Miami Beach Convention Center. Exactly one half of the exhibitors were from outside of the U.S.
In addition, there were approximately 5500 attendees and more than one-third of them came from countries outside the U.S.
“IDEA10 was one of the most successful IDEA shows ever and the continued strong participation of foreign exhibitors and attendees is proof of the show’s importance within the international engineered fabrics community,” said INDA president Rory Holmes. “IDEA10 was truly a global event.”
Of the 379 exhibiting companies, 143 were first-time exhibitors. “These new exhibitors, combined with the continued growth of international participation, speaks well of the continuing vibrancy of the engineered fabrics industry here and abroad,” said Mr. Holmes.
In 2013, IDEA will once again be held in Miami Beach. Next year, it will be Europe’s turn to host the nonwovens community with INDEX 2011, which will be held in Geneva, Switzerland. In 2012, the exhibition will move to Asia.
Most executives familiar with nonwovens are describing their current state of mind as cautiously optimistic. Hygiene markets tend to be recession-proof and as such, suppliers were not as hard hit by the economy as they were in durable markets. However, a more cautious consumer led to pricing competition and an upswing in private label brands. Major brands responded through innovation, raising the bar in the major disposable areas of baby diapers, feminine hygiene, adult incontinence and wipes.
Suppliers in durable markets, namely construction and automotives, were hit much harder by the economic crisis as demand in these areas came to a screeching halt. Nonwovens producers responded in a number of ways. Some, like Freudenberg, refocused their businesses, exiting commodity areas and shutting down underperforming lines, hoping that as recovery continues, they will be stronger than ever, while others, like DuPont, are focusing on new market development as they wait to see if recent upswings are permanent.
“What we are seeing right now is a strong business—pretty much strong demand across a lot of our businesses,” said Thomas Powell, president of DuPont Protection Technologies. “But a lot of this could be inventory restocking. Everyone is trying to find out what is underlying demand and what is inventory restocking.”