Karen McIntyre, senior editor10.09.13
The big news this year in airlaid was the recent merger of Georgia-Pacific (G-P) and Buckeye Technologies, which this summer created the world’s largest maker of airlaid nonwovens for a number of markets. Together, the two companies will have combined airlaid sales of about $400 million as well as a huge fluff and dissolving pulp businesses to supply this airlaid output.
The merger between the two companies, announced in April, was finalized in late August. Under the terms of the deal, Buckeye stockholders received $37.50 per share in cash and Buckeye is now a wholly-owned subsidiary of Georgia-Pacific.
“This transaction enables our stockholders to realize significant value, while also representing an important next step in the growth of Buckeye Technologies,” says John Crowe, chairman and CEO. “We are pleased that Georgia-Pacific recognizes the significant value of our company’s special and unique assets, talented employees, and research and development capabilities. Georgia-Pacific’s acquisition of Buckeye will provide our company and our employees with exciting future growth opportunities. We will continue to execute on our business plan in partnership with a committed new owner that has a long history of delivering superior business performance through its dedication to operational excellence and innovation.”
Buckeye makes multibonded and latex bonded airlaid at sites in Gaston, NC and Falkenhagen, Germany for markets including wipes, feminine hygiene and adult incontinence. Georgia-Pacific’s airlaid output mostly fuels its large consumer products business. Sources close to the deal say that G-P, which has been owned by Koch Industries since late 2005, had been looking at the Buckeye business for several years. While the company was primarily interested in the pulp and cotton cellulose businesses at Buckeye, the airlaid business is expected to remain in tact.
“Buckeye Technologies’ competitive assets and capabilities strongly complement Georgia-Pacific’s existing cellulose business and products. The talented employees, innovation capabilities, advanced technologies and specialty fibers and nonwovens businesses of Buckeye Technologies will provide a significant platform for continued growth and success,” says Jim Hannan, CEO and president, Georgia-Pacific.
As the airlaid industry waits to see the fallout from the Buckeye/G-P deal, the market’s other major players continue to focus on future growth prospects. These players include EAM, which has been owned by Domtar, the maker of Attends adult incontinence products and a diaper business previously owned by AHP, since last year; Glatfelter; McAirlaids; Fitesa; Duni and Kimberly-Clark.
These major players still remember the great North American airlaid surge of 2000—when literally hundreds of thousands of airlaid capacity came onstream at once, creating hard times for everyone involved—and have been slow to add new lines, even in a marketplace where demand is starting to outpace supply.
“It’s hard to get capacity,” says consultant Phil Mango. “In North America, it is very tight. We used to always be able to source material in China but no more.”
In addition to a spate in new capacity additions—the last one was added by McAirlaids in late 2011—this tightening can be blamed on the closure of Buckeye’s Delta, British Columbia plant in 2012, the opening up of new markets like medical pads and the purchase of EAM by Domtar who uses much of this maker’s output to fuel its businesses internally.
Domtar expands
In May 2012, EAM, the airlaid core business once owned by Rayonier, was purchased by Domtar, a maker of paper and hygiene products, in a deal valued at $61 million. At the time of the acquisition, executives said the deal would give Domtar long term research capabilities to further differentiate its full line of adult incontinence products while integrating the best available technology to grow existing businesses.
“EAM’s patented airlaid manufacturing process provides the performance, quality and cost competitiveness that we believe to be keys to success in the personal care market,” says John Williams, Domtar president and CEO.
Most recently owned by Kinderhook Industries, EAM Corporation produces airlaid and ultrathin laminated absorbent cores with brands such as NovaThin and NovaZorb used in feminine hygiene, adult incontinence, baby diapers and other medical, healthcare and performance packaging solutions. The company operates a 71,000 square foot facility with a state-of-the-art research campus and production lines in Jesup, GA.
EAM Corporation had annual sales of approximately $45 million in more than 50 countries and a total of 53 employees.
Pulp maker Rayonier originally developed the NovaThin technology and sold it to Kinderhook, a New York-based private equity firm, in 2005.
At the time of the acquisition, industry observers expected Domtar to backward integrate the business to fuel its adult incontinence business. Later that month, this speculation gained more ground when Domtar said it was acquiring AHP, a major manufacturer of store brand baby diapers in the U.S. in a deal placed at $272 million.
While it is unclear how much, if any, airlaid will be used within the AHP diaper business, the acquisition is intended to provide meaningful market expansion opportunities and innovative product development capabilities with Domtar’s existing personal care business, as well as synergies to the bottom line, according to Williams.
“This acquisition will add a key product line to our offering, a competitive manufacturing base to our existing footprint and solid access to the retail channels for our adult incontinence products,” says Michael Fagan, senior vice president, personal care, Domtar. “AHP invests heavily in research and development and brings to the marketplace quality products, a highly trained workforce and the know-how to service large retailers. I am also impressed with the substantial investments made in the past five years in the facilities, which will limit the capital requirements for the foreseeable future.”
Amidst these acquisitions, Domtar has made no plans to add a second airlaid line to its operation, but the company has pledged to invest $100,000 in its Attends facility in Greenville, NC during the next three years and industry experts predict a second airlaid line, likely at the Greenville, NC site, might not be far off for the company.
“As a wood fiber innovation company with a global sales footprint in pulp, paper and absorbent hygiene products, North Carolina is a big part of our growth story,” says Williams. “With a fluff pulp mill and bio-chemical plant in Plymouth, a personal care manufacturing facility in Greenville, as well as our global personal care headquarters in Raleigh, this state is a symbol of Domtar’s past and future working together for long-term prosperity.”
Good for Glatfelter
When paper maker Glatfelter purchased the airlaid business of Concert Industries three-and-a-half years ago, executives said it was part of a move to expand its scope in engineered materials. This strategy has so far paid off for the company, which increased the operating profit of this division from $11.6 million to $26.7 million between 2010 and 2012 while gaining market share and expanding its presence.
Jonathan Bourget, vice president and general manager of Advanced Airlaid, says these increases are largely the result of efficiency improvements but price increases, including one announced in July, have also played a role.
“We are very cautious about the pricing element,” he says. “Because of the significant cost increases we faced over the past year, we have been obligated to raise prices recently, and will continue doing so only when absolutely necessary. However, we are committed to making airlaid a long-term competitive solution and we continue to invest in our assets and in our innovation capability to ensure this is the case.
“I can’t say that I am seeing an increased competition from other materials,” he continues. “However, alternatives do exist, and there have been developments in the works for some time to substitute airlaid. This keeps us focused and I think we need to be paranoid in a healthy fashion to ensure we keep up with our innovation pipeline.”
While some industrial markets for airlaid are emerging, Glatfelter continues to focus on personal care markets including feminine hygiene, adult incontinence and wipes in areas where products can benefit from having differentiated characteristics. The company has stayed away from areas that can be easily commoditized.
Growth within personal care markets depends largely on demographics. In more mature areas, growth is in the low single digits (2-4%), save for adult incontinence, which is growing at a healthy clip. Meanwhile, emerging markets, in Asia and India, are growing in the mid-teens (13-17%).
To help capitalize on growth in the Far East, Glatfelter has established a sales office in Suzhou, China, not far from Shanghai. For now, the company is fueling growth in the region from its site in Falkenhagen, Germany.
“This region has the most promise in terms of growth and we are definitely interested in establishing a more definitive presence there. We have some ideas on how to execute this, but no concrete plans have been made,” Bourget says. “For now, it’s been good for us to just work on better understanding the market.”
Glatfelter’s latest European investment was a third line that as added in late 2010, not long after the company purchased the airlaid business from Concert Industries. When Concert announced the new line in 2009, executives said the 30% capacity increase would help it meet demand in Europe and Asia.
Representing Europe’s largest recent investment, the Glatfelter line added about 20,000 tons of capacity to the market. Another 7,000 tons came onstream in Turkey last year when newcomer Karweb started a new line furnished by Dan-Web International.
This new capacity has not been quickly absorbed by the market due in part to a weakened economy, particularly in the southern countries. During these tougher times, consumers are not as likely to buy more sophisticated personal hygiene products that contain airlaid nonwovens.
It is this soft economy in fact that has postponed the closure of at least one European line. In May, Duni said it would close one of its three airlaid lines in Sweden in a move to exit the hygiene market and focus more intently on its tabletop business.
Duni’s core business comprises products, which enhance the atmosphere around the set table and it is there that the company says it will focus on growing. The new Evolin tablecovering material, for which Duni has made significant investments in production within Rexcell in recent years, provides a good example.
This move would affect about 110 employees and Rexcell, not wishing to add to Sweden’s unemployment problem, has instead chosen to seek a buyer for this airlaid line. This has been difficult because of the high costs of shipping hygiene products out of the not-so-central Sweden.
“The European suppliers are not as full as they were five years ago,” Mango says. “The type of airlaid being made for hygiene applications is just not as demanded in Europe as it once was and it is very difficult to convert these lines to make them capable of making wipes materials. A lot of lines can make hygiene materials but it’s not as simple to make wipes and still make money.”
In fact, the many types of airlaid and how these types apply to the consumer market made it quite difficult for manufacturers to truly assess the state of the market.
“The biggest problem with airlaid is that from afar it looks like there is a lot of capacity but there are so many different grades that it is not the simple,” says Mango. “Ask 10 different people about the state of the airlaid market and you will get 10 different answers.”
The merger between the two companies, announced in April, was finalized in late August. Under the terms of the deal, Buckeye stockholders received $37.50 per share in cash and Buckeye is now a wholly-owned subsidiary of Georgia-Pacific.
“This transaction enables our stockholders to realize significant value, while also representing an important next step in the growth of Buckeye Technologies,” says John Crowe, chairman and CEO. “We are pleased that Georgia-Pacific recognizes the significant value of our company’s special and unique assets, talented employees, and research and development capabilities. Georgia-Pacific’s acquisition of Buckeye will provide our company and our employees with exciting future growth opportunities. We will continue to execute on our business plan in partnership with a committed new owner that has a long history of delivering superior business performance through its dedication to operational excellence and innovation.”
Buckeye makes multibonded and latex bonded airlaid at sites in Gaston, NC and Falkenhagen, Germany for markets including wipes, feminine hygiene and adult incontinence. Georgia-Pacific’s airlaid output mostly fuels its large consumer products business. Sources close to the deal say that G-P, which has been owned by Koch Industries since late 2005, had been looking at the Buckeye business for several years. While the company was primarily interested in the pulp and cotton cellulose businesses at Buckeye, the airlaid business is expected to remain in tact.
“Buckeye Technologies’ competitive assets and capabilities strongly complement Georgia-Pacific’s existing cellulose business and products. The talented employees, innovation capabilities, advanced technologies and specialty fibers and nonwovens businesses of Buckeye Technologies will provide a significant platform for continued growth and success,” says Jim Hannan, CEO and president, Georgia-Pacific.
As the airlaid industry waits to see the fallout from the Buckeye/G-P deal, the market’s other major players continue to focus on future growth prospects. These players include EAM, which has been owned by Domtar, the maker of Attends adult incontinence products and a diaper business previously owned by AHP, since last year; Glatfelter; McAirlaids; Fitesa; Duni and Kimberly-Clark.
These major players still remember the great North American airlaid surge of 2000—when literally hundreds of thousands of airlaid capacity came onstream at once, creating hard times for everyone involved—and have been slow to add new lines, even in a marketplace where demand is starting to outpace supply.
“It’s hard to get capacity,” says consultant Phil Mango. “In North America, it is very tight. We used to always be able to source material in China but no more.”
In addition to a spate in new capacity additions—the last one was added by McAirlaids in late 2011—this tightening can be blamed on the closure of Buckeye’s Delta, British Columbia plant in 2012, the opening up of new markets like medical pads and the purchase of EAM by Domtar who uses much of this maker’s output to fuel its businesses internally.
Domtar expands
In May 2012, EAM, the airlaid core business once owned by Rayonier, was purchased by Domtar, a maker of paper and hygiene products, in a deal valued at $61 million. At the time of the acquisition, executives said the deal would give Domtar long term research capabilities to further differentiate its full line of adult incontinence products while integrating the best available technology to grow existing businesses.
“EAM’s patented airlaid manufacturing process provides the performance, quality and cost competitiveness that we believe to be keys to success in the personal care market,” says John Williams, Domtar president and CEO.
Most recently owned by Kinderhook Industries, EAM Corporation produces airlaid and ultrathin laminated absorbent cores with brands such as NovaThin and NovaZorb used in feminine hygiene, adult incontinence, baby diapers and other medical, healthcare and performance packaging solutions. The company operates a 71,000 square foot facility with a state-of-the-art research campus and production lines in Jesup, GA.
EAM Corporation had annual sales of approximately $45 million in more than 50 countries and a total of 53 employees.
Pulp maker Rayonier originally developed the NovaThin technology and sold it to Kinderhook, a New York-based private equity firm, in 2005.
At the time of the acquisition, industry observers expected Domtar to backward integrate the business to fuel its adult incontinence business. Later that month, this speculation gained more ground when Domtar said it was acquiring AHP, a major manufacturer of store brand baby diapers in the U.S. in a deal placed at $272 million.
While it is unclear how much, if any, airlaid will be used within the AHP diaper business, the acquisition is intended to provide meaningful market expansion opportunities and innovative product development capabilities with Domtar’s existing personal care business, as well as synergies to the bottom line, according to Williams.
“This acquisition will add a key product line to our offering, a competitive manufacturing base to our existing footprint and solid access to the retail channels for our adult incontinence products,” says Michael Fagan, senior vice president, personal care, Domtar. “AHP invests heavily in research and development and brings to the marketplace quality products, a highly trained workforce and the know-how to service large retailers. I am also impressed with the substantial investments made in the past five years in the facilities, which will limit the capital requirements for the foreseeable future.”
Amidst these acquisitions, Domtar has made no plans to add a second airlaid line to its operation, but the company has pledged to invest $100,000 in its Attends facility in Greenville, NC during the next three years and industry experts predict a second airlaid line, likely at the Greenville, NC site, might not be far off for the company.
“As a wood fiber innovation company with a global sales footprint in pulp, paper and absorbent hygiene products, North Carolina is a big part of our growth story,” says Williams. “With a fluff pulp mill and bio-chemical plant in Plymouth, a personal care manufacturing facility in Greenville, as well as our global personal care headquarters in Raleigh, this state is a symbol of Domtar’s past and future working together for long-term prosperity.”
Good for Glatfelter
When paper maker Glatfelter purchased the airlaid business of Concert Industries three-and-a-half years ago, executives said it was part of a move to expand its scope in engineered materials. This strategy has so far paid off for the company, which increased the operating profit of this division from $11.6 million to $26.7 million between 2010 and 2012 while gaining market share and expanding its presence.
Jonathan Bourget, vice president and general manager of Advanced Airlaid, says these increases are largely the result of efficiency improvements but price increases, including one announced in July, have also played a role.
“We are very cautious about the pricing element,” he says. “Because of the significant cost increases we faced over the past year, we have been obligated to raise prices recently, and will continue doing so only when absolutely necessary. However, we are committed to making airlaid a long-term competitive solution and we continue to invest in our assets and in our innovation capability to ensure this is the case.
“I can’t say that I am seeing an increased competition from other materials,” he continues. “However, alternatives do exist, and there have been developments in the works for some time to substitute airlaid. This keeps us focused and I think we need to be paranoid in a healthy fashion to ensure we keep up with our innovation pipeline.”
While some industrial markets for airlaid are emerging, Glatfelter continues to focus on personal care markets including feminine hygiene, adult incontinence and wipes in areas where products can benefit from having differentiated characteristics. The company has stayed away from areas that can be easily commoditized.
Growth within personal care markets depends largely on demographics. In more mature areas, growth is in the low single digits (2-4%), save for adult incontinence, which is growing at a healthy clip. Meanwhile, emerging markets, in Asia and India, are growing in the mid-teens (13-17%).
To help capitalize on growth in the Far East, Glatfelter has established a sales office in Suzhou, China, not far from Shanghai. For now, the company is fueling growth in the region from its site in Falkenhagen, Germany.
“This region has the most promise in terms of growth and we are definitely interested in establishing a more definitive presence there. We have some ideas on how to execute this, but no concrete plans have been made,” Bourget says. “For now, it’s been good for us to just work on better understanding the market.”
Glatfelter’s latest European investment was a third line that as added in late 2010, not long after the company purchased the airlaid business from Concert Industries. When Concert announced the new line in 2009, executives said the 30% capacity increase would help it meet demand in Europe and Asia.
Representing Europe’s largest recent investment, the Glatfelter line added about 20,000 tons of capacity to the market. Another 7,000 tons came onstream in Turkey last year when newcomer Karweb started a new line furnished by Dan-Web International.
This new capacity has not been quickly absorbed by the market due in part to a weakened economy, particularly in the southern countries. During these tougher times, consumers are not as likely to buy more sophisticated personal hygiene products that contain airlaid nonwovens.
It is this soft economy in fact that has postponed the closure of at least one European line. In May, Duni said it would close one of its three airlaid lines in Sweden in a move to exit the hygiene market and focus more intently on its tabletop business.
Duni’s core business comprises products, which enhance the atmosphere around the set table and it is there that the company says it will focus on growing. The new Evolin tablecovering material, for which Duni has made significant investments in production within Rexcell in recent years, provides a good example.
This move would affect about 110 employees and Rexcell, not wishing to add to Sweden’s unemployment problem, has instead chosen to seek a buyer for this airlaid line. This has been difficult because of the high costs of shipping hygiene products out of the not-so-central Sweden.
“The European suppliers are not as full as they were five years ago,” Mango says. “The type of airlaid being made for hygiene applications is just not as demanded in Europe as it once was and it is very difficult to convert these lines to make them capable of making wipes materials. A lot of lines can make hygiene materials but it’s not as simple to make wipes and still make money.”
In fact, the many types of airlaid and how these types apply to the consumer market made it quite difficult for manufacturers to truly assess the state of the market.
“The biggest problem with airlaid is that from afar it looks like there is a lot of capacity but there are so many different grades that it is not the simple,” says Mango. “Ask 10 different people about the state of the airlaid market and you will get 10 different answers.”