For sale: one nonwovens company.

Which nonwovens company is for sale: Well, if the "rumor mill" is even close tot he truth, then several are for sale or at least discussing the possibilities even as you read this column. It may be the one you are working for, or your company may be about to acquire another nonwovens producer. We have seen numerous nonwoven companies change owners, names and even markets in the past few years. There are those executives in our industry that believe this is a t rend that will continue.

I have written several articles at the end of the year in this magazine that we call "The Year That Was." It is my chance to recall some of the significant happenings of the previous 12 months. You may have noticed that numerous nonwovens companies have been listed there under acquisitions, mergers or takeovers. Obvoiusly there will be more changes in an industry that has demonstrated growth and profits as well as positive indications for the future. However, there are those that believe that this is a trend that will end up with a few companies emerging with control of the major production and markets of nonwovens in the world. How Can it Affect You?

Lets take a look at that concept and see how it may affect us. If a "few" is a dozen, then we may say that a portion of the above trend concept is true today. For the few larger companies in each product end use category do set the stage and, to whatever degree, they do control the market. If th three largest spunbonded nonwovens manufacturers sell a given fabric for a certain price, then will the others be non-competitive: If the three larger carded web or spunlaced manufacturers offer cotton blends in their fabrics, will the smaller producers not attempt to do the same: This is, to whatever degree, controlling the market.

So maybe it won't have much affect on us if one company from somewhere in the world takes over another. Could it be a different situation if the acquiring company is not a U.S. company and is that a growing trend? The answer to this appears to be yes in both instances. Foreign companies are becoming increasingly interested in investments in the U.S. for some obvious reasons. They see an open door here to negotiate a deal in one of the best markets in the world. In North America, they see a larger and more predictable environment in which to work as regards economics, return on investment, raw material availability and developments. In acquiring a company here, a foreign company can establish a platform or base for making additional future investments. If I were in their position, I would invest here; this is certainly the time to do so. Europe Taking Acvantage of Opportunities In The U.S.

Recently I was speaking with an executive that had approached me to assist him in finding a supplier of a certain type of nonwoven. He complained that having recently come to the U.S. from Europe, he is not accustomed to such a wide variation in weight, fiber distribution and, in general, lack of consistency and quality. He commented that he is considering discussing his problem with the European suppliers that did supply acceptable products to his company in Europe. He will tell them of the "opportunity" in the U.S.

A logical sequence of events here could be that the supplier to Europe investigates the situation in the U.S. and decides to invest here rather than expand there. He may find that it is much more advantageous to acquire a company in the U.S. with its suppliers, customer base and marketing capabilities than to begin from scratch. After an acquisition, he would bring in a team of his people from the European operation to improve and standardize the manufacturing as well as train the operating personnel.

What are the repercussions here? First of all, the company looking for an acceptable product now has a supplier. The company that was acquired should have a better opportunity for success, with its employees enjoying the same benefits. Maybe this company with its improved products is able to raise its quality, so its competitors must also raise their standards, which should be good for our industry. In this situation, if there are negatives, or losers, it may be the domestic investors. So Why Sell?

This bring up another interesting point, why does the owner want to sell in the first place? I will leave the "financial analysis list" to those teaching the course, or perhaps I should leave it to your attorney. That way we can look at the real reasons.

Greed rates high on the list, but there are many other reasons as well, such as family-owned business that has become a burden to the remaining executive who longs to retire. A large corporation may sell for any number of reasons, from divesting a division in order to get funds to expand another or to become less diverse, and concentrate its marketing efforts. A company may be behind in technology, lack modern equipment and be in need of funds to maintain a competitive position, so selling is the better choice rather than facing bankruptcy. Poor management has also taken its toll, but even they may know when it's time to sell.

The reasons and the logic is buy and sell will undoubtedly increase along with the number of companies acquired in the U.S. in the forseeable future. Our current lack of research and development commitment, major product innovations, loss of basic equipment manufacturers and our poor attitude regarding quality, along with our desire to purchase "quality" goods, will entice many foreign companies to invest here.

It seems ironic to me that a country that is supposed to be so aware of and skilled in "marketing" does not recognize the marketing opportunities under its nose, while the Europeans certainly seem to. Tom Holiday is a well-known consultant to the nonwovens and textile industries whose column on a wide range of nonwovens related topics appears every month in Nonwovens Industry, Mr. Holiday operates his consultancy firm, Thomas M. Holiday & Asociates out of his office at 25 Edgewood Road, Yardley, PA 19067; [phone].