01.01.10
Sales: $1.53 billion
Location: Weinheim, Germany
Description: Key Personnel
Management Board: Bruce Olson, CEO; René Wollert, CFO; Frank Heislitz, CTO
Plants
Weinheim, Germany; Neuenburg, Germany; Kaiserslautern, Germany; Greetland, Swindon, Littleborough, UK; Colmar, France; Parets, Spain; Sant’Omero, Italy; Cape Town, South Africa; San Martin/Buenos Aires, Argentina; Jacarei, Brazil; Suzhou, China,; Nantong, China; Yang Mei Tao-Yuan, Taiwan; Tayuan, Taiwan; Durham, NC; Hopkinsville, KY and Pyungtaek, South Korea; Chennai, India
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 TS 16469 certified; 21 out of 23 plants are OSHAS 18001 certified
Brand Names
Vilene, Viledon, Vilmed, micronAir, Vlieseline, Vildona, Fliselina, Lutradur, Lutrabond, Lutrasil, Lutraflor, Evolon, Comfortemp, Celestia, Soundtex
Major Markets
Apparel, automotive interiors, energy, filtration, geotextiles, home & industrial furnishings, medical, personal care
The world’s largest nonwovens producer, Freudenberg, reported increased sales in 2010, thanks to a strong recovery in the global economy. The group’s nonwovens business area combines Freudenberg Nonwovens, Freudenberg Politex, focused on the construction industry, and Freudenberg Filtration Technologies, Freudenberg’s filtration business, which was spun off from Freudenberg Nonwovens in January 2009.
Based in Weinheim, Germany—with plants all over the world—Freudenberg Nonwovens develops, produces and markets nonwovens for a wide range of applications. Nonwovens made by Freudenberg are used as interlinings in the apparel industry as well as applications in the energy market such as battery separators and water blocking tapes for electrical cables. Other markets include medical—focused on traditional wound care applications and ostomy filters—as well as personal care where nonwovens are used in a number of diaper and feminine hygiene applications. Freudenberg Nonwovens also serves the automotive market with products for interior applications such as primary backings for tufted carpets and headliners.
“Freudenberg Nonwovens was positively impacted during 2010 by the stronger-than-expected recovery in the overall global economy which drove an increase in sales of about 15%,” says CEO Bruce Olson. “We also experienced a significant improvement in operating profits due to this strong increase in sales and the positive impact of restructuring and portfolio management measures which were implemented during 2008 and 2009. In this sense, we have experienced both a cyclical and structural recovery in our overall performance.”
To continue these positive results, Freudenberg Nonwovens has been implementing a new organizational structure during the last two to three years that will likely take another one or two years to fully implement. The model has the company moving toward a more regional business unit structure supported by a matrix of strategic marketing units. The regional business units are fully accountable for the operating results within their regions and the marketing units are responsible for the development and global implementation of strategy in the major markets upon which the company focuses.
“Because of the significant differences in process technology and markets served between our spunlaid and staple fiber businesses, we are establishing separate regional business units for each,” Olson explains.
Core markets for Freudenberg Nonwovens’ spunlaid business include automotive interiors, filtration and home and industrial furnishings. In the automotive interiors market, the key factor driving demand for spunlaid nonwovens is the number of automobiles being built on a global basis. Because tufted-carpet systems tend to be used in larger, “luxury” models, the build rate of these types of automobiles is particularly important. In the filtration market, Freudenberg supplies material to its sister company Freudenberg Filtration Technologies where the main use is cabin air filters for the automotive OEM and OES segments. In the home and industrial furnishings market, the major application is a primary backing for carpet tiles. Carpet tiles are used in commercial and institutional buildings as an alternative to broadloom carpets and other flooring systems.
After a couple of tough years, executives report recovery across most segments for spunlaid nonwovens, particularly the automotive interiors and home and industrial furnishings markets. In late 2010, this rebound influenced the company to restart a spunlaid line in Durham, NC, USA, which had been moth-balled during the recent global economic crisis. Additionally, Freudenberg Nonwovens has done some debottlenecking on its newest spunlaid line in Taiwan, which was started up in 2007. Due to the continued strong growth being forecasted in the Asian region, plans to install a third production line in Taiwan are being examined.
We have invested in the debottlenecking of PT 2 because this line, as well as PT 1, is completely sold out,” Olson adds. “We are currently doing pre-engineering work on a third line for Taiwan (PT 3). We will make a final decision on the timing for this investment no later than the end of this year.”
While the spunlaid regional business unit in Asia is the smallest of Freudenberg’s three global units, it is growing much more quickly than the larger European and North American units.
In Europe, Freudenberg Nonwovens continues to operate several spunlaid lines. As in the US, Freudenberg Nonwovens was forced to temporarily idle a polyester spunlaid line in Europe amidst the economic downturn but got that line running again in March 2010. Meanwhile, the company continues to review its presence in a number of markets, particularly those deemed to be commoditized. The company has exited polypropylene commodity markets for hygiene but continues to focus on niche hygiene markets as well as automotives, carpet backings and geotextiles.
Also included in Freudenberg’s Spunlaid division is Evolon, the company’s brand name for its specialty, bicomponent microfilament spunlaid product—which continues to perform well in many technical areas. Currently, producing the material in Colmar, France, the company is looking into ways to debottleneck and expand the capacity of this line to support growth in a number of markets.
Growth opportunities also exist in the staple fiber business. Major opportunities in this business include automotive headliners, battery separators, water blocking tapes for cable wrap, advanced wound care, ostomy bag filters and acquisition and distribution layers for baby diapers and feminine hygiene items.
In tufted automotive interior carpet systems, Freudenberg Nonwovens continues to have a leading position supplying spunlaid primary and secondary backings. To defend itself against lower cost needlepunch carpet systems, Freudenberg has introduced the patented Lutraflor system which is a composite spunlaid/needlepunch staple fiber construction offering better performance and significant weight reduction versus current needlepunch carpet flooring systems.
Asia continues to be a growing market in a number of staple fiber application areas. The company has joint ventures with Japan Vilene in Hong Kong, China, Taiwan and Korea. While these ventures were initially started to help serve customers in the apparel market, they have expanded to serve a number of other markets.
Freudenberg’s largest market continues to be apparel and, despite migration from the US and Europe to Asia, it continues to be strategically important. Freudenberg Nonwovens has a strong presence in China where it has been making staple fiber nonwovens and other interlining materials for many years, operating a wholly-owned subsidiary there since 1998.
“Freudenberg has established itself as the leading, full-line interlining solution provider in Asia for the branded, value-driven global apparel producers who have outsourced production from Europe and the US,” Olson says. “We believe the migration to Asia has reached an equilibrium point and may begin to reverse itself, particularly as it relates to ‘speed-fashion’ producers, due to rapidly increasing labor costs and the demand to serve local markets quickly. We do not expect a full-scale reversal of the migration trend.”
From a product standpoint in the apparel market, Freudenberg has been focusing most of its attention on broadening its product line beyond nonwovens for ladieswear, which is where the company started. Efforts continue in broadening and strengthening product line offerings for the shirt segment of the apparel market. In the past 12-18 months, Freudenberg has added significant technical, sales and marketing resources in the menswear segment to help it develop new and improved canvas and weft-inserted products and substantially increase sales.
Apparel is not the only area where Asian growth is a focus. In fact, through a stream of joint ventures and wholly-owned subsidiaries throughout the region, Freudenberg has a strong foothold in this important emerging economy.
“Because we have been active for so long in Asia and have benefitted from joint venture partners such as Japan Vilene Company and Far Eastern, we have not really faced many cultural challenges in penetrating the Asian market,” Olson says. “We have also worked very hard at developing and promoting local people into key management roles rather than trying to run our businesses with too many German and Japanese expats.”
Focusing on exploiting its businesses globally will continue to help Freudenberg Nonwovens grow its business moving forward. Additionally, the company will rely on diversity, flexibility and adding value in the long term. “Given the relative maturity of the technology for producing nonwoven base materials, we will continue to diversify our business portfolio to become a global provider of performance technical textile solutions,” Olson concludes. “In this regard, we will place more and more focus on adding value through the downstream converting of base technical textile materials which we will source using clear ‘make versus buy’ criteria.”
