Can cotton companies counter cost concerns?

Remember the realtor who talked about the three most important considerations when buying property...location, location, location? It appears that in the cotton for nonwovens business, the answer may be cost, cost, cost...and maintaining control of its fluctuations.

This year, cotton prices are high. Does that mean they'll stay high? Absolutely not. Are these high prices dissuading potential nonwovens manufacturers from using cotton as a raw material? Absolutely possible. Are the benefits of cotton worth the price? Again, the answer is possibly.

So where does this leave manufacturers of cotton for nonwovens? While they may have a hard road ahead, they also have many advantages on their side. According to Cotton, Inc., Raleigh, NC, the marketing arm of U.S. cotton growers, the Cotton Seal is the second most widely recognized symbol in the U.S. and cotton in general has a very favorable image across all industries. The comfort and environmental attributes of cotton contribute additional positives to the mix, providing a formula for strong growth in personal care and disposable end uses where these characteristics add to the overall appeal of the product.

So What About The Cost?

Yet cost remains the deciding factor in many cases and the issue, quite simply, is the law of supply and demand. According to figures from Cotton, Inc., cotton was consumed by U.S. mills at an annual rate of 10.3 million bales in February, up from 10.1 million bales in January. This is the greatest domestic mill use experienced in more than 20 years. Cotton currently holds 56% of the fiber going into apparel and home fabrics and Cotton Inc. is projecting a market share increase to 60% by 1997.

The demand, obviously, is great; it is now a matter of increasing the supply. George Hargrove, vice president-sales and marketing, Barnhardt Manufacturing, Charlotte, NC, commented on this. "While the price of cotton is high right now, we expect it to flatten out after October, when the new cotton crops are in," he said, adding that early reports by the U.S.D.A. are that substantially more cotton is being planted this year. In the last eight years, in North Carolina alone, said Mr. Hargrove, the amount of acres of cotton planted has grown from 40,000 to 400,000. In the Southeast U.S., the figure has increased similarly, to two million acres.

"This supply and demand situation has scared some people off," said Mr. Hargrove candidly. "There has been more interest in cotton among nonwovens manufacturers, but while domestic farmers are responding, people are hesitant because of the pricing. Several big companies are actively working on nonwoven projects using cotton," said Mr. Hargrove, "and it could result in big numbers, but at this point it's all projected."

Raw cotton price fluctuations have traditionally been a concern for nonwoven manufacturers, said Bart Morse, general manager, Veratec Natural Fibers Group, Walpole, MA, the largest U.S. supplier of cotton for nonwovens, and although the raw fiber prices are sometimes high, they generally correct themselves quite well. "Supply and demand fluctuates; if there's a shortage of cotton, farmers plant more. I have seen the price range from as low as $.35 to as high as $1.00 per pound. But neither lasts very long," said Mr. Morse.

Outside the U.S., the market is also very cost conscious. U.K. supplier Edward Hall, Whaley Bridge, England, reports significant increases in prices of both raw cotton and comber noil in the last six months. With the anticipated increase in crop volumes, however, Ian Hollis, marketing director, said they are expecting price levels to drop to more traditional levels over the next 12-24 months. "Edward Hall has responded to high pricing and tight availability by widening our purchasing net and using our indepth fiber knowledge to ensure satisfactory supplies," said Mr. Hollis.

Other Cotton Concerns

Another concern for nonwovens manufacturers has been the processability of cotton on nonwovens machinery. At Veratec, new opening capacity for its "Easy Street" super-opened cotton is being added to address this issue. "This increase was done in response to market growth," said Mr. Morse. "We are targeting nonwoven roll goods manufacturers that produce hydroentangled, chemical bonded and thermal bonded materials on high speed machines. With the right customized finish, our "Easy Street" super-opened cotton runs better and addresses the need for enhanced processability"

He also pointed out the inherent advantages of kier bleaching over continuous bleaching. "We can achieve a wide range of temperatures with kier bleaching, offering a high level of purity as well as a great deal of flexibility. With our super-opened cotton," he continued, we have taken away the continuous bleaching advantage of the processability with the individualization of the fiber. When our fiber is super-opened, it is uniform in its presentation to the carding machinery and is as good as or better than continuous bleaching. We have the best of both worlds."

Continuous bleacher Edward Hall commented on the attributes of its manufacturing process. "Using the unique Edward Hall |Luxicot' manufacturing route, there are no detrimental downstream effects on the environment," said Mr. Hollis, "and the process has a further advantage of having very low water usage compared to traditional cotton kiering processes."

The issue of cleanliness of the fiber is also one that must be addressed, particularly in the nonwovens industry. In order to meet fiber cleanliness standards, Cotton Inc., working jointly with nonwovens machinery manufacturer J.D. Hollingsworth, Greenville, SC, has developed the "Lintmaster" opener/cleaner. The Lintmaster process operates at rates of 600-800 pounds per hour with minimum fiber damage and without adding undesirable neps, producing a consistent bleached cotton staple fiber for roll goods production.

Veratec is addressing this issue as well, adding state-of-the-art precleaning equipment to its site in Griswoldville, MA. The equipment will remove trash - such as stem and leaf - from the raw cotton and upgrade cleanliness by reducing the non-lint content in the bleached cotton by 85-90%.

Expansion In The Ranks

In terms of expanding markets, all the major suppliers are concentrating on expanding either geographically or within various market segments in the nonwovens industry. Edward Hall reports several development projects have come to fruition with nonwovens manufacturers bringing retail cotton products to market in the last year. "The Japanese market, with consumers' high lifestyle demands, is leading the way in introducing various wiping products based on Luxicot. The combination of natural cotton and spunlacing technology is a perfect match," explained Mr. Hollis, "and the resultant high quality products are well liked by Japanese consumers. Spunlaced manufacturers in other markets are showing interest on the back of the Far Eastern success."

Japan has also become a target market for Barnhardt, as Mr. Hargrove said the market is much farther along than the U.S. "We are working on developing this market, but it takes a long time," said Mr. Hargrove. Europe is another area in which the company is interested, but at this time Barnhardt's sales are almost exclusively U.S.-based. Nonwovens make up about 20% of the market for Barnhardt's cotton.

In terms of expansions, Barnhardt doubled capacity in 1992 and while the line is not running to full capacity, Mr. Hargrove said they had allowed extra room for expansion when the line was constructed. The company also continues to concentrate on its "High-Q" bleached cotton developed specifically for nonwovens. The company is also continuing development of various finishes for nonwoven applications.

Veratec continues to concentrate primarily on the North American market, although it is investigating other possibilities. "There is a lot of opportunity outside North America too," said Mr. Morse. "We will be able to capitalize on our relationships with customers and our international contacts through Veratec and International Paper."

The company's expansion at its Griswoldville site continues. Veratec has been adding capacity annually through a debottlenecking operation, which is expected to be reach its high point in the next 18 months. The company is also running a bleaching operation at its Toronto, Canada facility. Mr. Morse hinted that the group is working on a further expansion outside of those two sites, but the time frame and location have not been released.

"Overall we're very happy with the performance of our Easy Street cotton," said Mr. Morse. "The Natural Fibers Group was formed in 1987 to focus on bleached cotton as a growth business because we had substantial excess bleaching capacity; we have now increased capacity 30% and, with a lot of development work, the nonwovens business continues to build. We are working on technical developments that in a year or two are expected to do things for cotton that have not been done before," he said.

Another cotton bleacher has recently appeared on the scene as well. Texcot Bleachery, Lubbock, TX, is a new company established solely to supply bales of bleached cotton to the industry. It has ordered a continuous cotton bleaching line and early reports are that it will target high quality markets such as medical nonwovens. The line, which will reportedly have a 20 million pound annual capacity, is expected to be onstream in mid-1995.