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1990 annual review & forecast of the nonwovens industry.

1990 ANNUAL REVIEW & FORECAST Of The Nonwovens Industry

There are three things on the minds of executives in the nonwovens industry worldwide as 1990 comes to a close.

The first is the environment and not only its negative ramifications for the beleaguered disposables industry but its positive impact for the filtration, geotextiles and protective apparel nonwovens business. It continues as the overriding concern of executives as they make their 12 month and five year projections into the 1990s.

The second is pricing and its continued impact on every aspect of the business from raw materials to converted products. There seems to be a bit more optimism that recent escalations in raw material costs, which were naturally handed on to producers, converters and, ultimately, consumers, may be slowing in 1991. Of course, that has a lot to do with the third thing on the minds of industry executives.

That final major concern is the Persian Gulf crisis and its effect on a business so dependent on petroleum-based products. In addition, consumer demand for disposables and an array of durable products will certainly be affected by how events progress in the Mideast. This is the ultimate wild card in considering business plans for 1991 and beyond and no one, certainly not the nonwovens industry, is sure how it is going to turn out.

The year 1990 was a good one for the nonwovens industry, with its two major trade shows (despite the on-going debates about their scheduling) providing the impetus for unprecedented activity in new products, acquisitions and globalization. The executives whose comments are included in the next few pages of this Review and Forecast were in the middle of all of the acquisitions and mergers of the past year and offer a unique perspective on their impact on the worldwide business.

As for 1991, there is almost universal expectation of a slowdown in business in general and, therefore, in nonwovens in particular as many of its major markets, especially the industrial segments, face very difficult times in a looming recession. The next 12 months, based on corporate comments contained here, will serve as a time of retrenchment for the nonwovens industry as it sorts out its internal and external challenges and opportunities.

There is cause for optimism, though, and it can be seen in the comments of executives whose companies may face a slowdown in some areas but have diversified enough to take advantage of a strengthening in others. The nonwovens industry has insulated itself well from a downturn in any one particular segment, such as baby diapers, by increasing its presence in others, such as filtration or protective apparel. The companies that have had the foresight to diversify in this manner - and they are in the majority in this business - are more optimistic about 1991 than those that have not seen the light.

Enough of the analysis. Let's allow the industry experts to speak for themselves. Robert Axtell, "Tyvek" business director, DuPont, Wilmington, DE, emphasized that "our business has been and will be operating under challenging economic conditions worldwide." It is good business anytime, but especially now, he said, to focus organizations on customer satisfaction. "The engine that drives customer satisfaction is a passion for continuous improvement," Mr. Axtell said. "Customer satisfaction is a basic business principle and it works. The key for us is to put all of our efforts into making total customer satisfaction a reality."

Michael Donnelly, business director, "Sontara", DuPont, and chairman, INDA, Association of the Nonwoven Fabrics Industry, said that "in 1991 spunlaced fabric users [will be] facing market dynamics that will challenge fabric producers like us to innovate more than ever. Users' concern about disposables, the economy, the cost impact of oil prices and competitive technology will make 1991 an exciting year," Mr. Donnelly said. "At DuPont Sontara, we'll be working with technology partners and also marketing partners to continue to best meet these needs."

Manfred Wennemer, president, Freudenberg Nonwovens, Chelmsford, MA, thought that, despite the fact that 1990 was the year of INDEX and IDEA, it did not bring any major developments in new products or new technologies. "This is the sign of a maturing industry," he said. "The lack of growth and new ideas will also be the main issues for the nonwovens industry for 1991." Growing imports and more competition as a result of GATT tariff reductions and free trade agreements with Canada (and possibly Mexico), greater price pressures, especially with rapidly increasing fiber costs (oil prices) and further concentration of the industry on a worldwide basis through mergers and acquisitions were three trends he cited for the future." All of these trends will be made more severe through a major recession in the U.S. which, I suspect, our customers will be going through," Mr. Wennemer added.

Lee Sullivan, president, Freudenberg Spunweb, Durham, NC, predicts strong growth in Freudenberg's niche markets. "We also continue to invest in the expansion of our spunbonded capacity," he said. "Our Taiwan facility came on-stream in August and is now serving the Pacific Rim countries. Additionally, our acquisition of Rhone Poulenc's Colmar facility has added to our overall capacity and has provided an increased share position in our important roofing market segment." In particular niche markets, "we see our industry continuing to move toward specialized niche services by one or two major competitors who focus their resources on being the dominant suppliers in these niches." His ideas for the 1990's: "Protected niche markets, environmental awareness, further consolidation of companies into multi-national corporations and strategic partnerships between raw material suppliers, nonwoven companies and their customers will all be the focus."

John DiLuzio, director of marketing, Veratec, Walpole, MA said that 1990 was a good year for the nonwovens industry. "Veratec exhibited strong growth in most business segments," he pointed out, "and as we move into 1991 we will be completing a major expansion of our spunlaced operation and adding a new spunbonded line to our already broad technology base." He touched on several of the important elements in the 1991 business environment. "Weakness in the U.S. economy, the impact of oil prices on raw material costs, increased competition in both domestic and off-shore markets and continued industry consolidation" were all factors Mr. DiLuzio felt would impact on the near future. "On the product side," he continued, "we can anticipate continued demand for improvements in disposability features and enhanced barrier properties, particularly in health and medical grades."

Dr. R. Barry Gettins, president, Dexter Nonwovens, Windsor Locks, CT, understated that 1990 - a year that saw his company begin to incorporate the recently-purchased Storalene AB of Sweden into its nonwovens family - was an eventful 12 months for Dexter Nonwovens. He reported that the integration of the newly-named Dexter Nonwovens AB has "come a long way" since the sale was finalized in July. The company's well know PDQ quality program also paid off when its Scottish operation won the first-ever Digital Scotland Quality Award. "The 1990s promise both change and uncertainty," Dr. Gettins said, pointing to near term concerns over energy and raw material costs and the increasing expense of environmental protection, as well as the uncertain political climate in many regions. "Dexter, and those businesses which are diversified both geographically and in the markets that they serve, will be most successful in meeting the challenges of the decade."

Tom Oakley, director, engineered products, Phillips Fibers, Greenville, SC, thought that the durable nonwovens business for 1990 was very good. "Not only did we get the boost expected from our new and developing programs, such as the environmentally-targeted |Fabrisoil' and |SuperGro' products," he said, "but we also had a good year with our textile, industrial and geotextile fabrics. Our enhanced product mix will benefit us in the coming year as our emphasis on developing higher value added products starts to bear fruit," said Mr. Oakley. G. Norman Egner, who is retiring next month as vice president-sales and marketing, Stearns Technical Textiles, Cincinnati, OH, said that Stearns will continue to concentrate on integration of its U.S. and Canadian plants to prepare for the elimination, or at least escalated reduction, of duties. "Our major customers are more quality conscious than ever," he continued," and we will continue to emphasize the need for consistent, high quality production." He predicted that the recession expected in 1991 would affect some of the industries Stearns serves, such as automotives, but he remained optimistic overall. "Many of our major customers should not be affected to any great extent and, consequently, we expect 1991 results to be good, but probably not as exciting as 1990."

Randy Schaaf, president, Ultra Care Products, Marion, OH, thought that 1990 was a challenging year for most diaper manufacturers and especially for the relatively new UltraCare. "While volume was at an all time high, profitability was hurt by aggressive promotion of new product features by branded producers," he said. "With a more reasonable level of sales promotion forecasted for the coming year, the prospects for the diaper industry's overall profitability appears to be much brighter."

Richard Sheerr, president and chief executive officer, Crown Textile, Blue Bell, PA, said that 1990 was a strong year for the company. "We maintained and enhanced our position in our existing nonwoven businesses and expanded into several new specialized segments," he said. "Within the next 12 months and beyond, the textile business will be economically pressured, increasingly global, technologically advanced and highly competitive," Mr. Sheerr predicted. "We expect our market niche approach and our track record of positioning ourselves to customer needs with higher value added products will contribute to our continued nonwoven business growth in 1991."

John Green, product-market manager, Oliver Products, Grand Rapids, MI, labeled 1990 - the company's 100th anniversary - as an excellent year for Oliver. "Our nonwovens business continues to grow, with major increases seen this year in our Tyvek-based products to the medical and specialty markets worldwide," said Mr. Green. He also commented on the company's laminating capabilities, which he said have been developed, but have yet to take off in nonwovens. "We targeted the skin scrub and general wiping markets but did not see the growth we expected," he reported. "The filtration market appears to offer some excellent potential for our dot pattern coating technology and we've also seen excellent growth potential in coating and converting microporous membranes for a variety of specialty markets this year. We expect this to continue."

Henry Hamrick, technical director, Clupak, New York, NY, feels that "environmental issues will present both problems and opportunities for our nonwoven industry well into the next century. Problems are increasing with the enactment and enforcement of more environmental laws and with growing public concerns about the disposability and biodegradability of products from many sources, including our industry." As for the opportunities: "There are opportunities for us here because many offending nonwoven products can be re-engineered to be less harmful to the environment. Also, the use of nonwoven products such as filters, absorbent materials and the like can also help solve many of the environmental problems of other industries. The industry's future success can be assured by our enthusiastic and innovative responses to these evolving events and public concerns," said Mr. Hamrick.

Wells Shoemaker, president, Filterex, Shippensburg, PA, predicted that the use of nonwovens in filtration and separation will continue its gradual expansion both in volume and diversification of products. "A key factor is the sophistication of the technology that now exists in the levels of the nonwoven producer, the filter OEM, the distributor and especially in the user community. This represents a substantial challenge for any would-be rookie company entering the market unless a truly new product was at hand." Mr. Shoemaker also thought that membranes were coming into ever-increasing contact with nonwovens, especially as filtration needs become more stringent. "Nonwovens serve as substrates, reinforcers, separators and prefilters for membranes. Look for greater interplay in 1991."

Lutz Bergman, president, Filter Media Consulting, LaGrange, GA, saw 1990 as a year that was filled with uncertainty, although "businesswise it was much better than predicted by most doomsayers. Filtration didn't see the breakthrough, but the long due new Clean Air Act (NCAA) seems to be a reality shortly." He predicted that 1991 would bring "some interesting new developments in synthetic microfiber technology and further progress in melt blown products and electrets." But the real bread and butter business, he said, will be tied into GNP developments, which may not look too bright. "The specialty companies will be busy, the |me-too' firms will complain loudly and the rest of us will be on the sidelines and observe. In two words," he concluded, "cautiously optimistic."

G. Graham Allan, professor, University of Washington, Seattle, WA, said that during 1990 "interest continued to develop in bicomponent fiber nonwovens containing the polyaminosaccharide, chitosan. This natural polymer from shellfish waste," he said, "promotes wound healing as well as collecting heavy metal pollutants from water and formaldehyde from air." Another focus of current research has been "the remarkable and unutilized" microporous structure of never-dried wood pulp as a means of packaging and providing a controlled release of bioactive chemicals such as growth stimulants and analgesics.

Bart Morse, general manager, Natural Fibers Group, Veratec, Walpole, MA, pointed out that in 1990 the company helped cotton fiber become accepted for use in nonwoven fabrics through the development of its "Easy Street" super-opened cotton. "As nonwovens manufacturers continue to recognize and respond to new consumer preferences, they are naturally focusing on cotton to meet them," Mr. Morse said. He feels that 1991 "should see many of these nonwoven programs build to commercial production in a variety of end use markets, taking cotton from a novelty to a normal part of a nonwoven manufacturers range of products."

Charles Lapidus, vice president-nonwovens, Cotton Inc., New York, NY, is another proponent of cotton in nonwovens, pointing out that the consumer market has undergone a transition of unprecedented magnitude, with pressures ranging from the environment to product quality forcing a re-evaluation of established brand loyalties. "Today, like never before, the consumer is king and must be courted," he said. "Nowhere will this trend impact more heavily than in nonwovens." As a result, better informed, more savvy consumers, who will be the target customers in the 1990s, will fuel accelerated interest in cotton. "They will be checking the fiber content of all products and expecting to find the positive attributes of cotton they're accustomed to in apparel and home fabrics in their nonwovens purchases," he said.

Greg Ward, director-nonwovens, Alpha Cellulose, Lumberton, NC, reported that cotton in nonwovens experienced remarkable growth in 1990. "We believe this represents an increased awareness of cotton's consumer appeal as well as its technical advantages," he said. This has been fueled by new bleached cotton grades that have improved processability. The past year has seen cotton's debut in disposable diapers, wipes and sanitary napkins and cotton is now available commercially in carded, hydroentangled, needlepunched and highloft versions. "Going into 1991 with an uncertain economy and the Iraqi crisis is a bit unsettling despite the strong demand for cotton," Mr. Ward added. "The bright side is that cotton continues to bring a consumer recognizable advantage to nonwovens that can provide positive product differentiation in a potentially tight market."

Ardie Emery, marketing manager, "Lycra XA," DuPont, Wilmington, DE, talked about the challenges and opportunities in the future. "We believe the world is becoming a global marketplace at an increasingly quickened pace," he said, "Political and economic changes in Europe and the Far East will bring many challenges and opportunities. DuPont's theme, 'One Source. Many Resources,' and our commitment to a global presence should align us with the changing needs of our customers in the coming year and beyond."

William Porter, senior marketing representative, Textile Fibers Div., Eastman Chemical, Kingsport, TN, describes 1990 as a year that was filled with challenges, "increasing raw material costs and a general economic slowdown, to name a few." He reported that despite these problems, Eastman had experienced good growth in a number of its nonwoven polyester staple products. "A significant accomplishment this year has been the transition of products from Carolina Eastman to Tennessee Eastman," said Mr. Porter. "As the transition nears completion, we plan to move ahead with efforts on new and improved nonwoven polyester products. We look forward to the challenges and opportunities that 1991 will bring."

Perk Foster, president, Foster Needle, Manitowoc, WI, feels that needlepunched nonwovens, due to their continued success in finding new niches and their acceptance into new markets," stand better than ever to continue or improve upon the 6-8% growth experienced in recent years." But, when the world economy threatened by the Mideast Crisis is factored in, the picture is not as optimistic. "Having spent two weeks in late October traveling in Europe, I have seen firsthand that the nonwovens industry there is in a definite recession," Mr. Foster said; he added that he expects growth rates in the Far East to be reduced by about one-half as well. The Mideast crisis is also affecting the domestic industry, particularly automotives and home building. "It is going to be much slower in 1991, that appears beyond doubt," Mr. Foster concluded.

Michael Spann, president, Groz-Beckert USA, Charlotte, NC, and a member of the INDA, Association of the Nonwoven Fabrics Industry, board of directors, labeled 1990 as "an extremely surprising year" for his company. "We have seen a decrease in our other business sectors (knitting, sewing and shoes) but a strong increase in needling," Mr. Spann said. He attributed this to growth markets such as automotives, geotextiles, filtration and industrial products and an industry emphasis on SPC. "We look forward to continued growth for 1991," he said.

Klaus Maitre, vice president, Dilo, Charlotte, NC, reported that "much to our surprise, for Dilo the last quarter was extremely successful, particularly in the area of technical felts, where we have sold many units, and in geotextiles as well as automotive products." He said the anticipated decline in the value of the German Mark did not take place, while the net price increases for American manufacturers due to the deterioration of the dollar seemed to be limited to just a few projects. "But wherever true needs exist, modernization and plant expansions will proceed," Mr. Maitre said. The environment will continue to play a role here, as well, he added. "This favors the installation of state-of-the-art equipment in the manufacture of technical felts and filter media in particular."

Robert Scott, vice president-marketing, Edward Parkinson, Esmond, RI, said the company's production capacity is fully utilized with a number of large orders for various process winders and off-line rewind slitters for lightweight nonwovens. Parkinson's licensee in Europe is also enjoying a successful year, building the company's equipment to metric standards. "From what we can see," Mr. Scott said, "we are very optimistic about next year in nonwovens and in other areas in which we are involved, such as plastics and paper."

John Raterman, general manager, Nonwoven Business Group, Nordson, Norcross, GA, said that " the relentless drive towards source reduction, as well as the addition of new sophisticated feautures in both the diaper and feminine pad markets" have helped Nordson's business tremedously. "The combination of environmental pressures and polyethylene price increases disposable manufacturers with the impetus to change to [the Nordson] lower temperature lamination process." The worldwide integration of Nordson and Meltex is continuing, he reported," and will continue to provide innovation to the disposables industry."

Dennis Mercer, vice president-marketing, international sales, Mercer Corp., Hendersonville, TN, said, "Increased globalization by several major converters is changing the parameters regarding how one approaches this market as a vendor. Specialized hardware developed for focused applications within the domestic market must be modified to attract similar users located in international locations." Mr. Mercer went on to say that "flexibility regarding the services provided to rapidly changing demands will be key to our success."

Joseph LeMin, vice president, Cameron Machine, Somerset Technologies, New Brunswick, NJ, recalled that "a year ago opinions relating to market conditions for 1990 were at best mixed. There were more than enough negative projections, but there also existed a guarded sense of optimism." He went on to say that 1991 forecasting provides little difference except that optimism was more difficult to find. "With reduced capital spending, additional emphasis is directed toward equipment upgrading," said Mr. LeMin. "Improved tension control, higher operating speeds, handling systems and slitter upgrades are but a few of the enhancements considered. Greater roll quality and increased yields with minimum capital outlay appears to be a target." He continued: "As a producer of capital equipment, we are positioning ourselves to provide this service as well as be sure our structure for supplying new equipment into a tight marketplace is indeed competitive."
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Title Annotation:includes international analyses and related article on Holzstoff Holdings acquisition of James River
Author:Jacobsen, Michael
Publication:Nonwovens Industry
Article Type:Cover Story
Date:Dec 1, 1990
Previous Article:International tariff reduction talks are 'breaking out all over.' (impact of trade agreements on nonwoven fabrics industry)
Next Article:A crystal ball look at the nonwovens industry in the year 2000.

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