Location: Weinheim, Germany

Sales: $1.4 billion

Description: Key Personnel
Management Board: Stephan Tanda, president and CEO, Christoph Josefiak, managing director of technical; Walter Schwarz, managing director, North America; Georg Brasch, managing director, finance and administration
Worldwide Divisions: Andreas Kreuter and Gerhard Schaut general managers of interlinings; Bill Casey, general manager of tuft; Jörg Sievert, general manager of filter

Plants
Weinheim, Germany; Neuenburg, Germany; Kaiserslautern, Germany; Greetland, U.K.; Colmar, France; Barcelona, Spain; St. Omero, Italy; Cape Town, South Africa; San Martin/Buenos Aires, Argentina; Jacarei, Brazil; Suzhou, China; Changchun, China ; Nantong, China; Yang Mei Tao-Yuan, Taiwan; Tayuan, Taiwan; Durham, NC; Hopkinsville, KY; Pyungtaek, South Korea (Korea Vilene Company)

Processes
Drylaid staple fiber, wetlaid, spunbonded, meltblown, electrostatic spun microfiber, needlepunched, thermal bonded, chemical bonded, water entanglement

ISO Status
All locations are ISO 9001 and ISO 14001 certified; locations serving the automotive industry are QS 9000 certified; 25% of the plants are OSHAS 18001 certified

Brand Names
Vilene, Viledon, Vilmed, Pellon, MicronAir, Vlieseline, Vildona, Fliselina, Lutradur, Lutrasil, Evolon, Comfortemp, Novolon

Major Markets
Apparel interlinings, apparel outer fabrics, filtration, medical, protective clothing, automotive interior trim, electrical insulation, electrical specialties, home furnishings, industrial wipes, hygiene, shoe components, coating substrates, carpet backings, landscape fabrics, geotextiles, agriculture, furniture and bedding and industrial nonwoven specialties

With sales holding steady at $1.4 billion last year, Freudenberg Nonwovens, Weinheim, Germany, continues its reign as the world’s largest roll goods producer. The business highlights in 2004 include double-digit growth in Asia and Latin America as well as the roll out of some interesting new direct-to-market products in the filtration market, according to president and CEO Stephan Tanda.
 
Additionally, this spring Freudenberg completed its $40 million corporate restructuring program, announced in 2002, which was designed to meet customer demands more quickly. In a nutshell, the plan streamlined the company’s five divisions—interlinings, filter, tuft, hygiene/medical and technical nonwovens—to operate with increased customer focus. At the heart of this plan was reconfiguring the divisions to be responsible for product development, marketing, sales and services as well as for production and the plants and the lines themselves. Now, each Freudenberg facility is responsible for serving specific market segments rather than offering a full range of products. To achieve this, Freudenberg had to install new equipment and transfer some older equipment.
 
In Europe, the reconfiguration plan called for the replacement of two base lines in Kaiserslautern, Germany, which are now responsible for the tuft, filtration and hygiene/medical segments, the addition of a new printing line and a new filtration line as well as the modernization of two existing base lines in Weinheim, Germany, which now houses the interlinings and filtration businesses. Also as a result of the restructuring, Freudenberg’s Parets, Spain and Neuenberg, Germany facilities house the technical business, and the Greetland, U.K. facility is responsible for hygiene and medical products. Freudenberg’s Evolon microfiber nonwovens are made in Colmar, France.
 
Meanwhile, in the U.S., lines have been transferred from the Lowell, MA facility, which was closed by the end of 2004, to Durham, NC and Hopkinsville, KY. The transfer affected products targeting home furnishings and automotive applications.
 
Also included in the reconfiguration was the implementation of Six Sigma manufacturing practices across the entire group. This system enables Freudenberg to work on improving yields daily and has already led to a 10% capacity increase, according to Mr. Tanda.
 
Beyond North America and Europe, Freudenberg has announced plans to build a new line in Jacarei, Brazil, the facility’s fourth. “We are seeing good growth in Latin America and it is particularly a good time for growth in the hygiene segment there,” Mr. Tanda explained. Freudenberg’s Latin American operation also includes a plant in San Martin/Buenos Aires, Argentina.
 
In Asia, Freudenberg’s most recent expansion effort is a new spunbond line in Taiwan, announced in June. The 12,000-ton-per-year polyester spunbond line is set to start up by the end of 2007 in Ta-Yuan, Taiwan, where it will join a similar line. According to executives, the new line will enable Freudenberg to increase its production capacity for tuft backing substrates and enhance its global supply flexibility to its customers. The added capacity is expected to meet demand for the polyester-based products for the next eight to 10 years.
 
Another business being boosted in Asia is interlinings. In May, Freudenberg strengthened its position here through the purchase of Nantong Hymo Co., Nantong, Jiangsu Province. Purchased through Freudenberg’s joint venture with Japan Vilene, Freudenberg Vilene International, Nantong Hymo is the market leader in shirt interlinings in China as well as one of the leading finishing companies for woven and weft interlinings in China. It was established in 1985 and is today renowned in China and beyond for its high quality finishing technologies as well as for its exceptional service level and delivery reliability, according to Freudenberg. In 2004, Nantong Hymo generated $22 million in sales, produced more than 30 million square meters of interlinings and employed 292 employees.
 
The acquisition will extend the leading market position of Freudenberg & Vilene as dedicated suppliers to the garment industry and further speed its growth in Asia, the world’s  largest textile region. After completion of the acquisition, Freudenberg & Vilene’s interlining business will have some 1000 employees throughout Asia, will operate five factories—in Suzhou, China, Nantong, China, Seoul, Korea, Yang-Mei, Taiwan and Chennai, India—and will generate sales of $150 million.
 
Also reinforcing Freudenberg’s position in the Chinese interlinings market is its decision to add a fourth line in its Suzhou, China facility.
 
These investments follow the creation of a joint venture, announced in May 2004, in the filtration segment. Freudenberg, Japan Vilene and Chinese partners have formed Freudenberg & Vilene Filter (Changchun) Co. Ltd., which acquired the filtration business of Changchun Autofilter Company. This venture is supplying motor and cabin air filter housings as well as filter elements to leading automotive manufacturers in Northern and Western China and is helping fuel Freudenberg’s position in the Chinese automotives market, particularly with its micronAir cabin filters.
 
“Asia is growing across the board and we are positioning ourselves to benefit from it,” Mr. Tanda said. “We are increasingly becoming a global company with German roots.”
 
Globalization efforts have occurred throughout Freudenberg’s five business segments, which are now structured to span the globe. This view of each market allowed Freudenberg to respond quickly when the interlinings segment was hit by the U.S. textile industry’s migration to China. Not only did the aforementioned Chinese investment strategy begin, but also a downsizing of the North American facility was instigated, including the closure of a Nashville, TN-based customer service center. Europe continues to be in an in-between stage, according to Mr. Tanda, with some textile brands still manufacturing goods locally and others sourcing them from Asia.
 
Freudenberg’s tuft business, encompassing its spunbond polyester output, has been growing steadily at 2-3% annually but concerns over escalating raw material prices continue to be an issue, particularly in the automotives segment where price increases are hard to pass on. In fact, the automotives industry’s unwillingness to absorb price increases has led to the closure of several tier one and tier two suppliers, a situation that concerns Freudenberg executives. “You have to really watch payment schedules and monitor the financial health of your customers,” Mr. Tanda said.
 
In hygiene and medical, Freudenberg has avoided pricing issues by concentrating on more sophisticated, value-added products such as topsheets, barrier leg cuffs, acquisition layers and textile backsheets as well as products for incontinence and feminine hygiene and nonwovens for wound care applications.
 
Increasing in importance to Freudenberg is the filtration market, where it continues to roll out products and announce investment strategies to grow its business worldwide. On the new product front is micronAir Proline Diesel, which filters diesel particles out of the interior air of automotives. While only 40% of cars in the U.S. are equipped with interior filtration products, they have become standard on European and Japanese cars. Expansion of this market in the U.S. has reportedly been hindered by OEMs’ unwillingness to invest in features that are not safety-related or designed to increase the comfort or aesthetic qualities of the car. GMC’s Suburban and Tahoe sports utility vehicles are examples of two cars that once used a cabin air filtration system but now do not.
 
Now, Freudenberg is hoping to boost awareness of the benefits of these systems through a public relations effort designed to increase the role of its micronAir cabin filters in the U.S. The company has teamed with Detroit-based Bianchi Public Relations to work with OEMs to show them how the benefits of an interior filtration system outweigh their cost, often $10 or less. Bianchi will also promote consumer awareness of these systems. According to a consumer study conducted by The Doring Company on behalf of Freudenberg, some 82% of consumers said they would pay for the added value of an interior filtration system.
 
Freudenberg’s fifth segment, technical nonwovens, includes a wide range of smaller niche and specialty applications. In North America major areas of interest include fire blockers for the mattress industry—driven by state and federal regulations—window shades, automotive interior applications and hoodliners, while in Europe cable wraps, battery separators, automotive interiors, fiber-reinforced plastics and acoustics are showing promising activity. “These differentiated products can command some very attractive prices,” Mr. Tanda explained. “As our customers differentiate and expand their products, so can we.”
 
Speaking of product differentiation, Freudenberg continues to focus on its Evolon continuous filament spunlaced nonwoven. Launched in 1999, Evolon’s good drapability, soft feel, high tensile strength, excellent comfort properties and good launderability make it ideal for many applications. According to Mr. Tanda, recent progress has been made in the specialty wipes, antimite bedding, technical packaging and artificial leather markets as well as in four or five other undisclosed markets. “We are really examining one application at a time because each is so highly technical and requires a lot of development,” he said.
 
Currently, Evolon is produced on one line in Colmar, France, which continues to have plenty of available capacity for future growth.
 
Another focus beyond Freudenberg’s five key segments is Novolon, a new technology that can transform a two-dimensional substrate into a three-dimensional product to improve performance in outdoor gear, bedding, medical, filtration media and household cleaning applications. These fabrics are currently being made on a start-up line at Freudenberg’s Durham, NC facility, which deep molds both woven and nonwoven substrates to achieve the effect.
 
While officials expect that new technologies, like Evolon and Novolon, will be important to the future of the company, a focus on innovation throughout all business segments will ensure continued growth for this nonwovens leader, according to Mr. Tanda. And, as other companies grapple with capacity issues, Freudenberg can continue to focus its efforts on new products and technologies. “We have been able to escape some of the problems in the industry,” Mr. Tanda explained. “We don’t buy off-the-shelf equipment so we have avoided some of the capacity issues that have been plaguing the industry.”