The big news in the Middle East and North Africa (MENA) region, at least when it comes to nonwovens, is the decision by Procter& Gamble, to start making diapers near Cairo, Egypt. The company is moving forward with a new 250,000 square meter facility that will initially make only Pampers. While no figures as to how many diapers Procter & Gamble plans to make there have been released, already at least two large-scale nonwovens investments as well as a decent-sized films plant have followed.
Even without these investments, the MENA region is an important one to nonwovens. According to EDANA, in 2010, this region contributed 41.5 million metric tons (compared to 43.8 million metric tons from the NAFTA region) to Europe. While much of the nonwovens supplied were lightweight spunmelt materials, 25% were 150 gsm or higher.
The biggest challenge facing nonwovens producers and converters looking to target the MENA region is the differences in the levels of wealth from one country to the other. In oil-rich countries like Saudi Arabia and the UAE, consumers are used to disposable goods, whether they are made locally or come from international companies, whereas many other nations continue to have little disposable items for things like diapers and feminine hygiene items . . . but that is changing.
“We are seeing huge growth rates—in the double digits—over the next five years in many of the MENA countries,” says Paul Andrews,market manager, MENA region for Bostik Adhesives. “Everywhere from Algeria, Egypt, Iran and Lebanon are giving some big growth numbers. Even the UAE and Yemfen are strong, showing how dynamic this region is.”
Bostik recently completed work on an adhesives site in Egypt. Executives said the decision was influenced by the attractive growth levels and rising birth rates and high populations in the region.
In fact, the MENA region’s one-two punch of high birth rates, often double that of Western Europe or North America, and low penetration rates has led nearly all of the major hygiene products suppliers to focus some sort of resources there in the past couple of years. While a great deal of attention is being paid to Procter & Gamble’s Egyptian investment, Kimberly-Clark has operated a joint venture in Israel for years and SCA has made two significant investments in Turkey during the last year, showing that interest in this region is broad based.
With a population of about 86 million, high birth rates and low penetration, all eyes seem to be on Egypt in the region. Additionally, its position at the top of Africa but near enough to the gulf region and even Europe gives this country a geographical advantage which can explain while even amidst recent political turmoil, investment has been strong in this country.
On the nonwovens front, in 2011, both Czech Republic-based Pegas and Turkey’s Gulsan group announced large-scale spunmelt lines intended to meet the demand for hygiene materials in the country. While neither company specifically referenced the P&G investment in the country, both said the decision was in part influenced by the actions of an unnamed “major customer.”
“Within the scope of its strategy, Pegas has long been monitoring investment opportunities, which could lead to the growth of the company and its expansion outside the Czech Republic,” said CEO Frantisek Rezac at the time of the investment announcement. “The aim of the company is to follow its key customers to areas of their production facilities’ expansion. The construction of a manufacturing facility in Egypt fits perfectly into this strategy. For Pegas, this investment also represents an historical watershed moment, which moves the company forward from its current position as a major European nonwoven textile manufacturer to that of becoming a company with a more global scope of operation and with a focus on fast growing developing markets.
The company sees this as a significant first step on the road to further international expansion in the future.
Pegas announced inMay it would build a nonwovens plant near Cairo, the company’s first investment outside of the Czech Republic.Representing an investment between €55-60 million, the new site will begin nonwovens production late next year when it will make about 20,000 tons of material. Longer term, Pegas expects to add a second line, with a similar output, to the site in 2015-16.
One month after the Pegas announcement, Turkey’s Gulsan said it would also build a nonwovens line near Cairo. This new line, which will be operational in the third quarter of next year, will be a 4.2-meter Reicofil 4 able to make 20,000 tons of material for the hygiene market.
At the time of the investment, Gulsan executives said the decision to invest in Egypt supports its future growth in the industry and will reinforce its position as a major maker of spunmelt nonwovens in the EMEA region.
Beyond nonwovens, films maker RKW has opened a facility in Cairo, representing a $30 million investment, and adhesives maker Bostik is now present in the country.
“We looked at several countries but Egypt really stood out because it’s closer to Europe and Africa even though its still considered to be in Africa,” says Khaled Kleib, managing director, Bostik Middle East. “It does make sense to have a plant when you look at the population in the country and surrounding region. This is really a region that is rich with opportunity.”
Nonwovens activity in this oil-rich nation is hot, driven not only by consumer demand but also by government efforts to create a local market for petroleum byproducts, i.e. polypropylene. Already, there are a number of nice-sized local players and many of these are in expansion mode as they seek growth in the region.
Mada Nonwovens is currently building its second polypropylene-based spunbond line which is scheduled to come onstream in 2012. The new machine is a six-beam (SSMMMS), 4.2-meter Reicofil 4 with20,000 ton capacity, says company president Kari Granfors.
“The quality demands in the Middle East are the same as in Europe and the US,” he explains. “The international companies like Procter & Gamble, Kimberly-Clark and Unicharm all have strong market positions in the Kingdom of Saudi Arabia. In my opinion, the growth rate here is higher than in Europe and the US.”
Ian Disley, director of sales and marketing atSaudi Advanced Fabrics, agrees on the importance of this market. While his company’s targets medical markets in addition to hygiene, he said he sees increased interest in both markets regionally.
To that end, the company is currently adding its third spunmelt line, which will be up and running by early next year.
“Our strategy has always been to invest in the latest technology to expand SAAF’s international business in the medical and hygiene fields,” says Abdulmohsen Al-Othman, managing director. “This investment continues that strategy and will enable us to further develop with our strategic partners worldwide.”
Saudi German Company (SGN) is also underway with a major capital expansion program that will double its hygiene nonwoven capacity by the third quarter of this year. This investment included the construction of a new 4.2-meter Reifenhauser line that was scheduled to be delivered early this year as well as upgrades to the site’s existing Reifenhauser lines in Al-Khobar, Saudi Arabia.
While executives would not comment on the investment, they would say that SGN was established in 1996 and currently sells nonwovens in 16 countries on five continents.
Turkey has been a nonwovens haven for sometime as a vibrant textiles industry began diversifying into nonwovens in the late 1990s. From a roll goods standpoint, much of the activity revolves around locally based producers such as Gulsan, Mogul andVateks who have been quietly investing in a diversified range of technologies to target growth both in the MENA region but also in Europe. In fact, interest in Turkey has become so great that EDANA has chosen to hold its next Nonwovens Symposium, an event typically held in Europe, in Istanbul this year.
“The growth of nonwovens’ usage locally and also the position of Turkey to serve different markets (is contributing to this interest),” says Serkan Gogul, commercial director of Mogul. The textile background in this country has helped entrepreneurs from this field target nonwovens.”
Mogul started out in polyester spunbond and meltblown nonwovens but has more recently been investing in spunlace technology to target wipes as well as some technical applications.
On the end use front, SCA is one hygiene manufacturer keen on growth in Turkey. In 2011, SCA acquired stakes in two hygiene manufacturers based in Turkey. In July, SCA purchased a 50% stake in Komil, the fourth largest maker of baby diapers and feminine hygiene items in Turkey, and in August, the Swedish firm said it would acquire 95% of the Turkish hygiene products company San Saglik, producer of incontinence care products, from the family-owned MT Group.
“The acquisition will enable us to establish powerful hygiene products operations in Turkey in the fields of baby diapers and feminine care products. The business will also provide us with a platform for our incontinence care products in a key growth market with 70 million inhabitants and a fast-growing population,” said Jan Johansson, president and CEO of SCA.
One of the world’s largest nonwovens manufacturers in the world, Avgol got its start in Israel and the company continues to operate its headquarters in Tel Aviv where it runs six lines. Recent investments have been based around the globe in countries like Russia, China and the US.
Other Israeli producers include Shalag Shamir, Hogla Kimberly, Albaad and Spuntech, many of whom, like Avgol, have taken their success in Israel to new investments in places like the US. Experts say that this global investment has more to do with politics than economics. Because Israel and the US have such good relations and because the Israeli consumer goods market is so small, companies have sought the larger consumer market the US can offer.
Magic in the Middle East
While Egypt, Turkey, Saudi Arabia and Israel have the most sophisticated nonwovens markets in the MENA industry, other countries are also seeing activity. For instance, one of the world’s largest cotton suppliers, Ihsan Sons has diversified into spunlace production, in 2005 and is now selling 100% cotton wipes and medical products and a few years ago a small outfit was started in Bahrain.
All of these producers are well poised to take part in the considerable growth on the horizon for the MENA region. As a market with populations significantly weighted toward the younger side with some 60% of the population younger than 18, there will definitely be a strong demand for baby diapers moving forward.