However, all good things must come to an end, or so they say, and the rate of new lines being added has begun to slow during the past few months as companies wait for a few already-announced lines to come onstream and for the market to absorb all of this new capacity.
The never-ending cycle of companies alternating between aggressively investing in new capacity and then cautiously waiting for the market to absorb this capacity is nothing new to the spunmelt market. The massive capacity, not mention the significant investment, associated with each production line necessitates that the industry see a slowdown in new spunmelt machine builds every few years.
That is not to say that investment will pause completely. Many manufacturers will look to increase and expand their business through machinery upgrades. New demands from hygiene companies for increased softness, better fit and other attributes will force them to (for more on the spunmelt market, turn to page 30). Additionally, demand in some developing markets like South America, which has not seen much investment recently, and Southeast Asia and India, where growth continues to be very strong, could justify new lines.
As new investment tapers off, merger and acquisition activity will likely dominate the headlines in spunmelt over the next months or years. We’ve already seen a few significant acquisitions begin to reshape the market during the last 12 months and many key executives think more acquisition is the only way many companies can survive. Some even say that no one is safe from acquisition—every company in nonwovens is a potential target—and how companies partner up will change the landscape of the industry....until it’s time for the next surge of new lines.