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James River nonwovens purchased by Holzstoff.

The constantly changing international nonwovens scene erupted once again in mid-February with the acquisition of the James River Nonwovens Div. in the U.S. by Holzstoff Holding AG, Switzerland, for $175 million in cash. The sale includes James River's nonwovens manufacturing operations in Simpsonville, SC; Washougal, WA; Milford, Nj; and Contonment, FL, as well as the company's 100% interest in HJR Fiberweb, Norrkoping, Sweden.

The purchase by Holzstoff, which already owns French nonwovens producer Sodoca, Biesheim, gives the Swiss holding company nonwovens roll goods sales of approximately $200 million. James River Nonwovens, Greenville, SC, was already the 11th largest nonwovens producer in the world (ninth in the U.S.) with $125 million in roll goods sales in 1989, according to the Nonwovens Industry Top Nonwovens Companies survey last year. Sodoca was number eight in Europe with $45 million in annual sales and Fiberweb AB, the former James River joint venture with MoDo, had 1988 sales of $27 million. Its new sales volume would make Holzstoff the sixth largest nonwovens company in the world.

The combined Holzstoff nonwovens forces in Europe and the U.S. make it a formidable worldwide presence in the lightweight nonwovens area. Both Sodoca and HJR Fiberweb have substantial market share in the hygiene sector in Europe, as does James River in the U.S.

Holzstoff, Basel, Switzerland, is a manufacturer and distributor of paper and synthetic nonwovens with operations in Switzerland, Germany, France, Italy and Belgium, with current corporate sales of $600 million. Holzstoff executive vice president Guido Patroncini told Nonwovens Industry it purchased the James River operation for its global focus.

"First of all, our intention is to be in nonwovens, because clearly it remains a large potential market," he said the day following the announcement of the acquisition in mid-February. "If you want to be in this market you have to be a global supplier." He added that Holzstoff and James River have had a number of close contacts for the two years leading up to the acquisition.

The organizational arrangement of the Holzstoff nonwovens business will place all three nonwovens operations in their own operating spheres. The U.S. operations will tentatively be called Fiberweb North America and will be headed by Roger Fehrman, who was previously vice president and general manager of James River Nonwovens. Commenting on the acquisition, Mr. Fehrman said that "as a result of the combining of the three companies, our ability to satisfy our customers' needs on a global basis is greatly enhanced. We are committed to excellence, our customers' success and reaching our combined full potential."

HJR Fiberweb in Sweden will remain under the direction of managing director Ulf Scharin. Sodoca, in France, will continue to be headed by general manager Pierre Vauterin.

"We are used to running our business in a decentralized way," Mr. Patroncini said. "We believe actions should be taken where the business is located. Our new nonwovens operations will run their businesses themselves with strategic direction from Holzstoff."

The James River Perspective

From its point of view, James River Corp., Richmond, VA, had decided to sell its nonwovens operations simply because, according to the official statement, it "no longer fits its long-term strategies and the resources allocated to this area should be redirected toward its core businesses," James River is an integrated manufacturer of pulp, paper and converted paper and plastic products and has a current annual sales of approximately $6 billion.

James River had entered into the acquisition negotiations with Holzstoff as an extension of on-going joint venture discussions, according to Dennis Tavernetti, who was previously director of business development at James River and will now be responsible for worldwide business development and strategic planning. He said that the former James River Nonwovens unit contributed less than 2% of James River corporate sales. Nonwovens now account for about 25% of Holzstoff annual turnover; before the sale nonwovens were about 10% of the Holzstoff business.

"It was awfully difficult to have such a relatively small business inside such a large organization at James River. It was tough to give it the attention it needs," Mr. Tavernetti told Nonwovens Industry. "It made sense for James River, given its rapid expansion in the Towel and Tissue Div., to give the management of those businesses the support rather than giving the attention to a business that will never be a large percentage of total sales."

James River Nonwovens had undergone a reorganization in the past year designed at focusing its efforts on nonwovens mill roll and insulating its roll goods operations from the converting business of the corporation. It will continue to be a primary manufacturer of carded, thermal bonded, spunbonded and melt blown nonwovens to domestic markets.

James River's nonwovens operations were estimated at $170 million in sales in 1988, but this reorganization, which dropped one technology, reassigned another to a different division, left the geotextiles business and transferred its converted products unit to the Towel & Tissue Div., made a smaller, more focused business. Its brand names include "Polyweb" (melt blown), "Airtex" (air laid), "Cerex" (spunbonded nylon) and "Celestra" (spunbonded polypropylene).

The European Situation

Mr. Patroncini emphasized that the two Holzstoff nonwovens units in Europe-Sodoca and HJR Fiberweb-will remain as independent operating companies reporting to a corporate nonwovens group in Switzerland.

The primary responsibility of Fiberweb in Sweden will be to continue to service the absorbent products business throughout Europe with its "Holmestra" spunbonded nonwovens. It is in the midst of a $29 million expansion that will bring its annual spunbonded capacity to 16,000 metric tons a year. This new capacity will produce heavier weight polyester spunbonded nonwovens (either thermally bonded, resin bonded or needlepunched) and will serve the European industrial market, particularly the expanding roofing segment.

In a move that turned out to be a prelude to the Holzstoff purchase, James River had acquired the remaining 50% interest in Fiberweb AB from its former partner, MoDo, of Sweden, which had expressed a desire to sell its share of the business. Mr. Tavernetti explained that the purchase of the entire Fiberweb business allowed James River to have more flexibility to seek a partner; he added that if the Holzstoff purchase had not come about James River would have looked for another joint venture partner for Fiberweb.

James River and Holzstoff.- A European Perspective

The acquisition of James River Nonwovens in North America and Europe was coordinated by Guido Patroncini, executive vice president at Holzstoff AG, and Dennis Tavernetti, director of business development at James River Nonwovens. The goal of Holzstoff, Basel, Switzerland, in the recent past has been to seek an opportunity to take the company into the international top rank of nonwovens producers.

On the day of the public announcement of the international acquisition (Feb. 22) Nonwovens Industry European correspondent Clare Haddad had a lengthy conversation with Mr. Patroncini and also with the two men who will be directly responsible for Holzstoff's nonwovens business in Europe-Ulf Scharin, managing director of HJR Fiberweb, and Pierre Vauterin, general manager of Sodoca. What follows are Ms. Haddad's comments and observations on the impact of a move that puts Holzstoff among the worldwide nonwovens elite.

Both James River and Holzstoff AG are paper manufacturing concerns that have diversified into the nonwovens business. While James River is a leading world player in the specialties business and is growing in the hygiene papers sector, Holzstoff's paper interests are in communications papers. Holzstoff sees it as an important strength that none of its paper businesses are in any way competitive with its nonwovens operations.

James River has made a strategic decision to concentrate its resources and efforts on its core business, which remains the paper market. To this end it is withdrawing from the nonwovens business. It was the closeness of relations between Holzstoff/Sodoca and personnel at James River and its subsidiaries during the past few years that led to this takeover without any competitive auction for the James River nonwovens business.

That means that personnel at James River's U.S. operations and at Fiberweb in Sweden know, like and trust their new holding company and believe that the transition will run smoothly. Everything bodes well for a secure and exciting future for this new global nonwovens company. Customers may look forward to gains in choice from the combined pool of nonwovens production technologies, market and product knowledge.

I would like to record the interesting interview I conducted with Mr. Patroncini on this memorable day for the nonwovens business.

Ms. Haddad: Congratulations: what are you going to do with it now that you have got it?

Mr. Patroncini: There is a simple answer. Nonwovens is a promising and growing market for the future and if you want to survive in it you need a global base. From the Holzstoff Group's perspective we see a marketing based and market driven business. If we want to compete it is imperative to invest heavily in new technology and R&D. In order to support this R&D function you must have sales volumes, which implies worldwide business.

It sounds to me like you are saying that the nonwovens industry, like the diaper business, is advancing so fast technologically that globalization is imperative for survival, unless you want to be a very small fish in a very small pool.

Yes, exactly so. The nonwovens of the future will be different from those we know today. Without very large scale investment you will only be a small "me-to" factor in one country, but no more than this. There will be a huge gap between the significant multi-national players; there is no middle ground. You must invest in R&D or you might not make it from the productivity point of view. Only companies with the latest technology will be able to produce the nonwovens of the future.

Clearly, only those companies with sufficient sales volume to support the necessary R&D, licensing of ideas and so forth will be able to achieve the quality/cost performance which will be necessary for profitability in the nonwovens business around the corner. These things become very expensive.

Will the companies in North America, Sweden and France be combined under one umbrella or will they continue to operate as self determining profit centers for the Holzstoff Group?

Our general organizational belief at Holzstoff is that we must be market driven. We must develop and grow by responding to our customers' needs. Thus, Sodoca, Fiberweb and James River Nonwovens in the U.S. will continue as they are with the company manager of each company running his own business.

At the same time, we will work hard to exploit the excellent synergies that exist and use them to build on the strengths of each company. Roger Fehrman will be responsible for our business in the U.S., Ulf Scharin will be in charge at Fiberweb AB in Sweden and Pierre Vauterin will likewise continue to run Sodoca S.a..r.l. in France.

In order to make full use of all of our strengths we will focus strongly on building "competence centers" for the future. For example, if one company excels in supplying nonwovens to meet the needs of a specific sector and has built up good relationships thereby with the customers in that sector, it will be that group subsidiary which becomes the competence center in that area. For example, Sodoca is the leading company in nonwovens for agricultural applications within our new group and so it is Sodoca which will be the competence center here. If another group company is working in the same sector, they can then feed off and build on this centralized knowledge.

You sound excited and optimistic.

Yes, I am. It is a great opportunity and I worked for three years to find a way to take Holzstoff forward into the global nonwovens business. We had lots of possibilities in the meantime to take small steps, such as adding an extra carded line, but these small steps would never have gotten us where we had to go. The decision of James River to concentrate on other strategic priorities outside of the nonwovens business and our good links with James River made it all possible.

The following are conversations with Ulf Scharin, managing director, HJR Fiberweb, Norrkoping, Sweden, and Pierre Vauterin, general manager, Sodoca, Biesheim, France.

Ms. Haddad: Congratulations on becoming part of the Holzstoff Group. I hope that the new owners will help you to develop your business profitably. What comments do you have about the takeover and what it means for Fiberweb?

Mr. Scharin: As you know, two years ago James River bought 50% of what was then Holmen Fiberweb and, more recently, when the MoDo Group bought Holmen, MoDo sold the other 50% to James River, making us a James River subsidiary. Since then we have been enjoying good success and expanding fast. We have a new spunbonded polyester and polypropylene line coming on stream early, on July 1, and we have put up new buildings, more than doubling our factory space.

What the takeover means is that we will run Fiberweb as successfully as we have since 1985. Holzstoff Holdings has a very small top administration and they intend to keep it small, with Guido Patroncini at the helm. We, as a subsidiary, will continue to operate with complete autonomy. This is very important to us as we are very successful and it means that we can continue with our plans. We at HJR Fiberweb and the James River Nonwovens companies in America believe that the nonwovens group, along with customers and suppliers, will benefit from the development planned by the Holzstoff Group.

It is good that we remain allied with the nonwovens companies in the U.S., until now owned by James River Nonwovens. I would not be happy if we had been separated because we have had a close technological exchange with the James River plant. It was the synergy between James River Nonwovens and Fiberweb that gave us a lot of our technical advantages. The incorporation of James River melt blown into our product range has been a tremendous advantage to Fiberweb.

As far as the new group goes, we are the only company with spunbonded polyester production and this gives us a lot of possibilities on the technical side. I am very positive about it all.

How quickly will the new group be in full operation?

The transition period is likely to take us until the end of March to complete. There is no doubt that this is all going ahead, but it will take time. After all, the James River Nonwovens business is very large, with total sales of James River Nonwovens and Fiberweb last year $140 million.

Ms. Haddad: Can you tell me what this mammoth takeover means for Sodoca?

Mr. Vauterin: Sodoca and our holding company Holzstoff were concerned about the future-nothing made sense unless we could grow big. Even though we grew internally, it was necessary to do more, to make a really big leap forward, if we were to be a significant player in the future nonwovens business.

The takeover is very good news for us as it means we can achieve two of our goals. The first is to reach a good size in the European nonwovens business; we will be about fourth in terms of volume, which puts us in a much more favorable position.

Secondly, it helps with international growth with our presence in both continents enabling us to reach what will be the minimum size for worldwide success. Without achieving this we would be joining the club of the lowest price products where no development is possible and you are just talking about low cost production. I really expect that the cross fertilization of ideas between us at Sodoca and Fiberweb and James River in the U.S. will be exciting. We should make very good partners; James River, for example, has the greatest expertise in the melt blown area. We at Sodoca are unique in the group because we have backwards integrated into polypropylene fiber production and also we have a lot to offer the other members of the newly-formed group through the development of our new spunbonded technology.
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Title Annotation:includes related article
Author:Jacobsen, Michael; Haddad, Clare
Publication:Nonwovens Industry
Date:Mar 1, 1990
Previous Article:U.S. nonwovens in Europe.
Next Article:Don & Low making a mark in European nonwovens.

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