The Year That Was 2011

December 2, 2011

New investments dominated the headlines but that wasn't the year's only story.

The Year That Was 2011

New investments dominated the headlines but that wasn’t the year’s only story.

Twelve months ago, the nonwovens industry seemed to be in a resurgence period. More companies than ever before were investing in technology, some in areas that had seen little or no nonwovens investment; and many of the companies that had reported sales decreases in 2009 were finishing up the year on the plus side. While no one had a crystal ball, it looked as if things were going good for nonwovens.

And, by all accounts 2011 was a good year for nonwovens. Raw material prices, while not down, were somewhat more stable than they were in 2009 and 2010 and global markets for industrial applications continues to rebound. Meanwhile, hygiene, a market that was never really impacted by economic pressures, continues to enjoy nice growth in developing regions while continuing to increase its sophistication in developed areas.

The unprecedented rate of investment, unbelievably, continued into 2011 with companies adding new lines across the globe. Of course, the question on everyone’s lips is where all of this new capacity will target as it comes onstream in 2012 and beyond?

Spunbond expansion
Probably the biggest news in the nonwovens industry has been the unprecedented expansion of the global spunbond and spunmelt market with literally dozens of new lines and hundreds of thousands of tons of new capacity set to come onstream in the next 24 months.

New spunmelt investment made the headlines this year as dozens of new lines are planned around the world.

These new lines – being added all around the globe – offer high capacities, superior levels of uniformity, lower basis weights and, hopefully, higher profit margins for nonwovens producers looking to do business in the hygiene market. This new capacity will chase growth in the global hygiene markets in areas like China, North Africa, the Middle East and South America and give established markets like North America and Europe the more sophisticated products they crave.

“Investment in new spunmelt technology is occurring to lower unit cost of manufacture, achieve broadened capabilities, meet growing demand and equip new or renovated plants,” says David Price, an industry consultant. “Producers are making investments in new generation technology to replace aging technology which is no longer cost competitive or capable of meeting demand for strong, lightweight fabrics for hygiene end uses and other growing uses.”

The most recent spunmelt installations not only include the latest advancements in spinning technology introduced in the Reicofil 4 technology platform in 2004, but are also capable of achieving far wider widths and higher yields than previous generations. The lines being announced today typically include wide width, multiple spinning beam lines with annual nameplate capacities up to 24,000 tons. Additionally, the materials being made on the newer machines tout basis weights as low as 12 gsm compared to the norm of seven years ago, which was 18 gsm. This 33% reduction in material weights has not only driven down raw material usage, it has also opened the door for nonwovens to penetrate more areas of hygiene products.

However, with so much capacity coming onstream in such a short period of time, there is some question if it will be too much of a good thing for this market, and could this over investment lead to a period of overcapacity moving forward.

“If all of these lines come into place, I think we will see some tough years—maybe in 2013, 2014 and 2015 there will be some oversupply—and by 2016 or 2017 there will be some more balance,” says Mikael Staal Axelsen, CEO of Fibertex Personal Care, whose new, 22,000-ton Malaysian line is currently coming onstream.

New markets take root
With the spunbond expansion has come investment in areas not commonly considered hotbeds of nonwovens activity. One of themost recent of areas to enter the industry has been Egypt, where two major nonwovens investments, a film line and a major diaper manufacturing line are on the horizon.

In September, Czech Republic-based Pegas announced it would create its first foreign plant with the establishment of a 20,000-ton Reicofil 4 spunmelt line, which is set to come onstream in the second half of 2013.

“We are well aware that the historically first international investment by Pegas demands the cooperation of experienced and proven suppliers and so we have given their selection our maximum attention. Reicofil is our long-term partner and the supplier of all our currently installed production lines. We have good experience with PSG International from the construction of the production plant building built for our latest production line in the Czech Republic, which we are currently putting into operation. We believe that the selection of these two companies guarantees the successful completion of the entire investment,” says František Řezáč, member of the board of directors of Pegas Nonwovens SA and CEO of Pegas Nonwovens s.r.o.

One month later, Turkish Gulsan Group said it would also build a 20,000-ton Reicofil 4 line in Egypt in a move that also represented this company’s first foreign investment. The company says this decision supports its future growth in the industry and the region and reinforces the company’s position as one of the leading manufacturers of spunmelt materials in EMEA (Europe, Middle East and Africa).

What both nonwovens producers did not mention in these announcements, but what is already clear to the industry, is the fact that these investments coincide with Procter & Gamble’s decision to begin producing nonwovens in Egypt. This is also, in fact, what led films maker RKW to establisha 20,000 square foot manufacturing site there.

While Egypt has certainly been in the news lately it is not the only region entering into nonwovens. Among the recent announcements being made recently are Korea’s Toray adding a new site in Indonesia and FitesaFiberweb planned expansion into Peru to grow its business in the Andean region.

China—The growth continues
The market for nonwovens in China continues to witness explosive growth. How explosive is the subject of some debate with some experts pegging it as high as 30-40% and others being more conservative and estimating low double-digit growth for the country.

While growth 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, namely, makers of spunmelt nonwovens have followed.

Western producers currently in Chinese expansion-mode range from PGI, who already has sites in Suzhou and Nanhai and is hinting at establishing a greenfield site in southern China, to First Quality, who is building a spunmelt site in Wuxi, China, to Avgol whose third Chinese line is currently being built.

Moving eastward, Korea’s Toray Saehan is so bullish about China it announced it would add a third line there before it even finished work on its second. When all is said and done, Toray will be able to make 58,000 tons of nonwovens in China.

In August, Japanese nonwovens producer Mitsui Chemicals said it would form a new spunbond nonwovens operation in China to supply the disposable diaper market. According to the company, the facility will begin operation in September 2013 with a 15,000-ton line in Tianjin, China.

Mitsui already operates a 30,000-ton spunbond operation in Thailand as well as a 34,000-ton plant in Japan. In Japan, the company announced earlier this year it was adding a 15,000-ton per year line to start in April 2012. When the two most recently announced investments are complete, the group’s total spunbond capacity will be 79,000 tons per year.

On a more local note, China’s The Jofo Group said in January it would invest more than $60 million in a new 3.2 meter wide, multi-beam Reicofil 4 spunmelt line and a separate finishing line in its Weifang plant in Shandong, China. The line will be delivered in April 2012 and is scheduled to start up in the fourth quarter of 2012.

Currently, there is an existing 4.2-meter Reicofil 4multi-beam line at the Weifang plant, which will be able to make more than 30,000 tons of material after the second line is complete. Jofo will target the rapidly growing disposable hygiene and medical application areas in Asia with the new capacity.

Jofo’s current nonwovens capacity is more than 55,000 tons, and the company has production facilities in Guangdong, Shandong and some other areas in China. The second Weifang line and other ongoing projects will bring the company’s total capacity above 100,000 tons by the end of 2012.

Jofo plans to continue investing in new capacity as well as research and development in the nonwoven areas to forge core competence in supplying premium nonwovens to disposable hygiene, medical, geotextile, industrial and other application areas, according to executives.

Of course, hygiene companies are not the only nonwovens makers with their sights set on China. In 2011 alone, filtration specialist Hollingsworth & Vose said it would build a research and development center in China where it already has a meltblown nonwovens operation. Additionally, Ahlstrom said it would add a wallcoverings line at its Binzhou plant in China, where the company is already manufacturing filtration materials. Deliveries from the new line are expected to start in early 2013.

According to Jan Lång, CEO and president of Ahlstrom, the investment plays a significant role in the company’s growth strategy in Asia. “Ahlstrom has a strong presence in Europe and Americas, and we continue to grow our presence in Asia as well. China is expected to be the world’s largest market for wallcovers in a few years time, offering a significant growth potential in the coming years.”

“We will use Ahlstrom’s extensive know-how and experience in wallcover manufacturing in responding to the market needs in China. We are extremely pleased that we will have the opportunity to grow together with and serve our customers from a local production plant in China,” says Laura Raitio, executive vice president, Building and Energy, Ahlstrom.

Ahlstrom’s Binzhou plant is located in the Shandong province on China’s eastern coast. The plant currently manufactures transportation filtration materials and employs 170 people. The new wallcover materials production line will employ 50 people locally. In addition to Binzhou, Ahlstrom has two other manufacturing sites in Asia; Hyun Poong in South Korea and Mundra in India as well as sales offices in nine major cities in Asia. In total, Asia represents 10% of the company’s sales.

Separation of hygiene and industrial
It seems in 2011, more than ever, we are seeing the separation of disposable and durables in the nonwovens industry as companies that once dabbled in all areas of nonwovens are streamlining their businesses to focus on one side or the other.

Fibertex separated its two businesses—personal care and technical nonwovens—in the beginning of 2011 simply because, according to the company, the two businesses were so different it was hard to report them together to their parent company. Still owned by the same parent, Schouw and Co., the two companies—Fibertex Personal Care and Fibertex Nonwovens—continues to invest and grow for the future, just separately.

“We were already operating very independently, as you can say, as two separate divisions,” says Fibertex Personal Care CEO Mikael Staal Axelsen. “It was getting difficult for them to communicate what the two companies were doing.”

Also streamlining its businesses—but through divestment—are Ahlstrom and Fiberweb. In October, Ahlstrom sold its wipes business to Suominen after investing heavily in it for years. The divestment, the company said, was the result of a strategic review of its business. The company decided it made more sense to invest in markets like wall coverings and filtration.

“We have been building our business portfolio based on offering high performance materials that allow our customers to differentiate and create value to their customers. We will continue to seek growth and global leadership in all segments in which we operate. This transaction allows us to free resources to strengthen and further develop our current businesses, especially in the fast-growing markets in Asia,” said president and CEO Jan Lång in August.

Meanwhile, Fiberweb sold its hygiene business to its joint venture partner FitesaFiberweb in November. The sale, including its independently operated lines in Europe as well as the assets it owned with Fitesa in North and South America, rid Fiberweb of its deal and opens the company up to focusing on its industrial businesses like agriculture and construction.

These moves make a lot of sense. While both are based on nonwovens technologies, the dynamics of hygiene—with its high volumes and low margins—is vastly different from industrial which has more customers and higher margins but much lower volumes.

Designer diapers
As multinational diaper manufacturers have continued to seek ways to differentiate themselves on store shelves and improve their operating margins, the introduction of designer diapers has added a fashion element to the market. Kimberly-Clark started this trend in 2010 when it launched limited-edition jeans style diapers under its Huggies Little Movers premium diaper line.

First introduced in the US for the 2010 summer season to offer parents an alternative to keeping their babies in just a plain white diaper, Huggies jeans style diapers were reintroduced in summer 2011, giving K-C a boost in the diaper wars.

K-C executives describe the product, which was first developed in Israel in 2007, as a replacement product for apparel. “The real insight is that mom’s love seeing babies in jeans but most babies are wearing disposable diapers under their clothing,” says Keegan Coulter, Huggies brand manager. “With the summer heat, fewer layers of clothing will keep baby cooler and fewer outfit changes make mom’s lives easier.”

Priced about 5-7% more per unit than regular Little Movers diapers, the extension was not created to make the company more money but to increase exposure to a broader consumer base. “We think if we get consumers to experience the shape, the fit and the performance of Little Movers diapers, she will stick with the brand above and beyond the limited edition period.”

In addition to the jeans style diapers, K-C has made a couple of other limited edition diaper products—Camouflage diapers and Santa diapers for the holiday season. In conjunction with these launches, K-C has donated to the Every Little Bottom campaign, an organization that gives diapers to parents and children in need.

Huggies Santa diapers were launched for a limited time in late 2011.
“This holiday season, Huggies is allowing parents to celebrate with their little one in a fun and festive way while also focusing in on the message of giving,” says Erik Seidel, vice president, Huggies brand. “As a leading diaper brand committed to raising awareness of diaper need in North America, Huggies is encouraging parents to contribute to this cause by purchasing the limited-edition Huggies Santa Diapers and Holiday Wipes. Together we can ensure that every baby in North America has one of the most essential products they need – diapers.”

Also seeking to up its exposure and its profits is Procter & Gamble who sold printed diapers this summer in Target stores. Pampers Limited Edition prints combined utility and aesthetics so little ones can feel just as fashionable as they are comfortable in their biggest wardrobe staple, their diaper.

“Pampers prides itself on being at the forefront of not only comfort and performance, but also style,” says Fama Francisco, general manager of P&G Baby Care, North America. “A diaper is the foundation for your baby’s wardrobe so naturally we want it to be special. While performance always comes first, we know that design is also important.”

As part of the launch of Limited Edition Prints diapers, Pampers teamed up with maternity designer and television personality Rosie Pope to interpret this season’s hottest trends for moms and babies who want to look their best.

“Recently, when my toddler and I had a day to ourselves, we visited the museums of New York and were both excited by the colorful works of artists like George Seurat,” Pope said. “Since then, I have been so inspired by colorful patterns that I’ve carried that theme through my summer line. I truly believe women can express their personality through printed apparel to create the best looks from casual-chic to mommy glam.”

As companies choose sides in the durables versus disposables game, those companies focusing on durables are really strengthening this market. Trying to rid nonwovens of their reputation as “throw-away” products, these companies are developing higher weight, more sophisticated nonwovens to help them enter new areas of automotives, construction, wall coverings and even apparel.

PGI recently announced technology that it expects to have far reaching uses in a number of industrial markets including healthcare, filtration and new emerging applications. This Arium technology produces a matrix of fibers predominantly sized under one micron in diameter. It can meet the market need for increasingly cost-effective fabrics with improved performance at a value proposition unmatched by any other submicron fiber technology. “While other processes can generate fibers at the submicron level, none can do it as efficiently and with the same commercial level of throughputs as Arium technology,” says Bob Dale, senior vice president of research and development.

Arium is just one example of new durable technologies coming to light as more companies narrow their focus on durable applications. In fact, interest in durables has become so strong, INDA has devoted an entire conference—and adjoining awards completion—to this segment of nonwovens. Held in September in Raleigh, NC, the RISE conference attracted a varied attendance list and its awards competition highlighted a number of interesting nonwovens products across a wide spectrum of industries. The winner of this competition was Aptra Elements, from RKW US, Inc.

Aptra Elements is a metallic, highly reflective, breathable, air barrier membrane made of waterproof, UV-stabilized polypropylene and nonwoven. The material maintains strength and flexibility without metal surface rub-off or oxidation and can be used for multiple uses within the building, architecture, construction, marine, tent and upholstery industries.

“Thanks for the support and for recognizing the amount of work we put into this,” said Morris Collins, president of RKW US in accepting the award. “Hopefully you can help propel it forward and make it a success.”

Alternative raw materials
The use of recycled materials continued to gain steam in 2011 as companies look for ways to lessen their dependence on raw materials and provide their customers with a more ecofriendly 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. Additionally,Freudenberg has as recently as last month reaffirmed its commitment to this technology through the launch of Viledon Hydrotexx ECO, a green filtration media made with post-consumer recycle (PCR) polyester. Manufactured through a spunlaid process, Viledon Hydrotexx is made from repurposed water bottle material at Freudenbergs’ Durham, NC, site, which has been manufacturing with post industrial recycled (PIR) material for several years and has just recently transitioned to processing 100% PCR material.

“By incorporating recycled ECO products into filtration systems and applications, we are helping our customers achieve their own recycle targets and together becoming better stewards to the environment by promoting the use of PCR products,” says Freudenberg’s Chris Murray.

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.

Meanwhile, Shaw Industries and polyester supplier DAK Americas have 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 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 working on developing new blends of recycled cotton; and Leigh Fibers has introduced an aramid FR fiber made from cuttings from the manufacturing process for fireman’s jackets.

More recently, in November, diaper maker Kimberly-Clark formed an exclusivity agreement to sponsor OCS’s Envirocomp facilities in the UK, Ireland, Australia and mainland Europe. These two companies have already established a commercial diaper composting facility in New Zealand, which processed more than 15,000 diapers per day. These diapers were mixed with green waste and turned into compost for commercial gardening or landscaping.

“This sponsorship reinforces our commitment to continuously seek innovative solutions to demonstate how to collect and process Kimberly-Clark’s post-consumer waste and thus reduce the environmental footprint of our products,” says Suhas Apte, vice president, global sustainability for Kimberly-Clark.

Machinery consolidation

NSC nonwovens was the latest machinery company to be purchased by Andritz this year.

First came Oerlikon and its purchase of nonwovens machinery makers like Ason Neumag, MJ Fibretech, Nordson and Fare; then came Trutszchler’s combination of its calendering business with Fleissner’s spunlace operation. And, more recently Andritz has been on a mission to become a machinery powerhouse in the nonwovens industry two years ago, when it purchased spunlace maker Rieter Perfojet and expanded its role in the industry even further in September 2011 when it acquired long-time partner of Rieter Perfojet, Asselin-Thibeau, a global maker of needle looms and other devices to nonwovens production. In announcing this acquisition, Andritz executives said the three formerly separate companies will pool their experience and know-how to optimize existing technologies and achieve the best process results.

History shows that machinery powerhouses are not always the most successful in the industry. Oerlikon acquired nearly every type of nonwovens technology under the sun but has still reported problems, while Reifenhauser has remained a family-owned business but has achieved incredible success with spunbond and spunmelt systems.

Now with a portfolio that includes calendering, spunlace, some spunbond, drying technology and now needlepunch, Andritz is well poised to reach great heights in the nonwovens industry but being many things to many companies can be challenging so only time will tell if this latest machinery conglomerate will be able to dominate in nonwovens.

INDEX 2011—Another success
One of the year’s biggest nonwovens-related highlights was INDEX 11, the European leg of the world’s largest nonwovens exhibition, which was held for four days in April in Geneva, Switzerland. Billed as “The world’s leading nonwovens exhibition,” INDEX featured a diversity of products and services from all sectors of the market—from machinery and raw materials to converted products.

More than 12,600 visitors made their way through the doors of the Geneva Palexpo exhibition center to see the 530 exhibitors from 43 countries in over 21,600 square meters of stand space across 50,000 square meters of exhibition halls.

Visitors attending the show, which ran from April 12-15, 2011,were able to engage with a larger portion of the industry than ever before, as well as take advantage of the special events organized during the exhibition. Special events focused on innovation, nonwovens in packaging and product presentations, as well as introductory lunchtime tutorials to provide an overview of the world-famous EDANA training courses.

“For an industry which has just started to show signs of recovery—now finally rising to levels above those recorded before the global financial crisis, we can be incredibly proud. This challenging commercial context spurred the nonwovens industry, already renowned for its creativity and development, to be even more innovative, and companies are investing in sustainable activities which not only bring a positive effect to the world we live in but also secure the industry for the future,” says Pierre Wiertz, general manager of EDANA, the sponsor of INDEX.

The look ahead
The year 2011 was a year of transitions for the nonwovens industry. Companies in the hygiene realm prepared for growth by either expanding their operations into emerging markets or increasing the sophistication of their existing sites in developed regions. Meanwhile, industrial-focused companies looked toward new market applications with a renewed focus. How these efforts will shake out is anyone’s guess.

Will the spunmelt market crash and burn amidst all of the new capacity coming onstream or will this investment bring more diapers and other hygiene products to more people around the world, improving their lives and the bottom lines of the companies that provide them?

In durables, with the more narrowed focus of companies like Ahlstrom, Fiberweb or Fibertex Nonwovens mean new markets and applications for nonwovens worldwide? And, where will the machinery industry—currently in consolidation mode—fit into this picture. Surely, 2012 will be an exciting year for nonwovens.

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