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No raw deal for nonwovens suppliers.

No Raw Deal For Nonwovens Suppliers

With many of their nonwovens customers reporting solid - if not spectacular - years in 1991, the raw material suppliers to the nonwovens industry echo the industry-wide feelings that the business has weathered difficult economic times and should benefit from the anticipated upturn in the next six to 12 months.

These companies, primarily engaged in supplying fibers and binders to the specialized needs of the worldwide nonwovens industry, also followed their customers' lead in the development of new products in areas affected by the current business climate. As in most of the rest of the nonwovens industry, for raw materials suppliers this again meant that the environment played a crucial role in any new product development efforts.

It appears the nonwovens industry, or at least it raw material supplier segment, was able to sidestep the brunt of the economic troubles in 1991. "It seems that very few of the people we are doing business with in nonwovens are down this year," said Howard Katz, director of marketing and sales, emulsion polymers, Resin Div., National Starch and Chemical, Bridgewater, NJ. "If we look across the board at our customer base, we don't see many customers taking less product this year."

With the coverstock producers all reporting exceptional performances this year, it follows naturally that their suppliers would also be satisfied with 1991 activity. "We are in the midst of a baby boom, with 4.1 million births expected this year," explained Laura Jezyk-Geiman, marketing associate at Hercules, Norcross, GA. "That, coupled with the innovations in diapers, mainly in the leg cuffs, has led to increased use of coverstock, which is good news for us." Hercules is a supplier of primarily polypropylene staple - and some polyethylene staple - to the diaper coverstock industry.

Among the other key factors affecting business:

* The economy was week for most of the year, hurting some industrial segments such as transportation and construction, but the strength of other markets, such as diaper coverstock, allowed diversified suppliers to stay ahead of the game.

* The formaldehyde issue became prevalent among raw material suppliers, especially the binder companies, most of whom have developed or are developing formaldehyde-free alternatives.

* Pricing pressures peaked early in the year and then leveled off for most of 1991. Most suppliers foresee some raw material price increases in 1992, even at a time when it is more difficult for them to raise their own prices.

* Supplier/customer relationships have become even more important in the nonwovens industry as producers demand that their raw material suppliers become part of the solution rather than part of the problem.

Tough Economic Times: In The Past?

The economic situation in a year that started with a war and was plagued with some level of recession in most parts of the world had a varied impact on the suppliers to the nonwovens industry. Primarily it was their customers feeling the pinch that forced suppliers to seek different means to maintain their profit margins.

Chris Vance, account manager at polyester fiber supplier Hoechst Celanese, Charlotte, NC, told NONWOVENS INDUSTRY that when he meets with customers their first concerns are always about the economy. Here, too, he found mixed signals.

"Many of our customers are in markets such as apparel, automotives and construction that were all hurting from the economy but are starting to come back," he said. "In the nonwovens area from a supplier's viewpoint, there were some areas that really didn't blink because of the recession and others that really suffered. Because of this mix, the upswing has not been as dramatic as it has been in some traditional markets, but then the downswing wasn't nearly as dramatic either."

The economy and an uncontrollable business factor affected Courtaulds Fibers, Axis, AL, for most of 1991, said nonwovens business director Warren Shiner. "Our customers still see it as a recession out there," he said. "For us it is a bit of an unusual situation because we always looked at nonwovens as less sensitive to a recession. But the truth is we are feeling the affect in nonwovens but we are not feeling it in conventional textiles."

Courtaulds Fibers, the largest remaining U.S. supplier of rayon staple, continues to view nonwovens as a stable business even with the economic and supply questions. The rayon suppliers are still feeling the negative affects of the Avtex Fibers' closure three years ago; last year there were still fiber shortages so demand kept up while producers sought alternatives. Now that they have found other fibers to replace rayon in some applications, rayon suppliers are feeling the effect of the cutbacks. "While some companies have eliminated some of their dependency on rayon, they will come back to rayon as they become more comfortable with the supply situation," Mr. Shiner said.

The economy has played a significant role in the business at Sequa Chemicals, Chester, SC, in the past year and after a rough start the situation is starting to look a bit brighter, according to market analyst Paul Erlandson. "It would be a very good year for us if we could ignore the first quarter, but right now we are looking for a strong finish," he said. He classified the current outlook in the nonwovens industry as one of "sensible optimism."

The Environmental Factor

It is impossible to turn anywhere in the nonwovens industry and not encounter the specter of the environment. The material suppliers, a step removed from the disposability debate surrounding diapers and medical fabrics, nonetheless are facing environmental concerns of their own. Number one among them is the demand for formaldehyde-free raw materials. Almost every binder supplier has jumped on the bandwagon created by the formaldehyde concern.

"After performance, the environment is the major factor in product development," Mr. Katz, of National Starch, said, "and the single most important factor in the environment is formaldehyde. All products now being developed take into account how we can upgrade earlier technology to more environmentally compatible systems."

National Starch, which will be coming out with a new family of low formaldehyde products by the end of the year, continues to address the issue on three levels - the formaldehyde in the binder, in the plant and in the finished product. "Every aspect has to be addressed," Mr. Katz said.

"The environmental factors are no doubt influencing our business and are affecting our customers," added Rich Ruzzini, marketing manager, lightweight nonwovens at Rohm & Haas, Philadelphia, PA. "The whole issue of formaldehyde has led us to develop low formaldehyde materials that will allow them (customers) to reduce or eliminate them from their products," he said.

Yet at least one supplier feels it was government legislation and not customer demand that drove it to develop its own line of low formaldehyde binders. Joe Molinari, marketing manager for nonwovens and textiles at Air Products and Chemicals, Allentown, PA, told NONWOVENS INDUSTRY that "there has not been that much pressure from our customers in this area."

Air Products introduced its low formaldehyde binders earlier this year and is following that with a line of flushable binders to be introduced at the end of 1991. "We have spent a considerable amount of money on research regarding the environment," Mr. Molinari said. "We have been watching the regulations around the country, both on a state and federal level, concerning formaldehyde and that is what pushed us to act." The same goes for the development of the flushable binders, he said. "If there wasn't the overall concern about the environment we would not have started these types of projects."

John Kolackovsky, business manager at Rohm Tech, Fitchburg, MA, a supplier of acrylics and thickeners to the nonwovens and textile industries, said the environmental impact has reached all the way down to new product development. The company's anticipated introduction of a formaldehyde-free binder containing no toxic substances at all is scheduled for late 1991 or early next year.

"On one hand the concern over the environment has been beneficial to us because none of our products contain VOCs (volatile organic compounds," he said. "There has also been the great interest in formaldehyde-free products. Where three years ago people were just talking about it, now they are really pursuing the idea." He estimated that about 10% of Rohm Tech's customers have an on-going interest and there are a number who have made it their number one objective for the next year. This interest is primarily in the U.S.

Turning Concern Into Profit

All the concern over the environment and formaldehyde, however, has yet to translate into positive economic terms, pointed out Mr. Erlandson, of Sequa. One of the key factors in Sequa's business this year has been the impact of the Federal Clean Air Act and its various relatives at the state level. "A lot of people are having to watch their stack emissions and are having to reduce their formaldehyde emissions," he said. "The interest in some of the products that would help in these areas has been heightened, but it will be a while before the economic demand is there." Earlier this year, Sequa introduced a high modulus, high compression resistant binder material called "Permaloft" for highloft applications.

With much of the new development within the nonwovens industry seemingly directed at the binder-free technologies, it has been a struggle for the binder supply people to maintain their market share. "There has been a general trend toward looking at binderless systems, but we have been able to maintain a sizable business in spite of the problems," Mr. Ruzzini, of Rohm & Haas, said. "There has been a lot of growth in the alternate technologies, but latex bonded products are still a sizable market."

The Price Is Not Always Right

As Mr. Erlandson said, the demand for new "environmentally friendly" products is there, but the suppliers thus far have seen little return for their developmental efforts. Beset by these product development costs along with environmental expenses of their own, they are also girding themselves for another round of raw material price increases in 1992.

Mr. Katz expects his costs to rise in the next year after a relatively stable second half of 1991. "From the raw material end of the business we are hearing that prices have bottomed out and will pick up next year. Where this year has been flat to down, 1992 will probably be flat to up in terms of pricing," he said. That, of course, will put additional pressure on the profitability of nonwovens raw material suppliers.

"The pricing pressures are as strong now, maybe evens stronger," agreed Mr. Kolackovsky, of Rohm Tech. "While raw material costs are responding a little, customers are drawing the line on increases." Rohm Tech is also feeling the cost pinch more so because of demands placed by the environment. "We are spending a lot money on our environmental controls," he said.

Mr. Ruzzini, of Rohm & Haas, was more exact. He recalled that there were severe cost pressures once Operation Dessert Shield started a year and a half ago and it affected business and profitability in the third and fourth quarters of 1990 and into the first quarter of 1991. This has lessened to some extent now, "with some prices seeing relief, but our overall costs are higher than they were then (in mid-1990)." Part of the increased cost are the investments being made by Rohm & Haas on cleaner processes and emissions control and other environmental activities.

And For The Future? Patience

It will take time for these new nonwoven raw material applications to have the financial impact the suppliers are counting on, but for now the continued new product development will focus on specialty areas. Many suppliers have a difficult time revealing even a portion of the work in which they are involved.

Bob Daniel, manager-specialty fibers at BASF Fibers, Williamsburg, VA, said that BASF's new "Resistant" conductive fiber, a carbon suffused nylon fiber that is now finding applications in needlepunched overlays for carpet backing and in filtration media, is also being used in a number of unidentified (to BASF) areas. The fiber is produced by carbon suffused to the outer surface of a filament nylon, a procedure that literally welds the carbon to the nylon to give a flexible but durable antistatic fiber. BASF is producing it as a monofilament or multifilament and as a staple for nonwoven applications in 16 to 21 denier in lengths from 1/8 to eight inches.

"There has been an incredible amount of interest, much of it in proprietary areas that even we aren't sure about," Mr. Daniel said. "Quite frankly, we are just looking for and finding quite a bit of interest in nonwovens. But because it is new it takes quite a bit of time for these industrial applications to develop." The push into the carpet area started about two years ago, he said. "Our plan is for continued development, particularly in filtration and other specialty nonwoven applications."

With a number of recent new product introductions about to come to fruition, Hoechst Celanese, which has focused on its new "Celbond" bicomponent and its "Celwet" polyester for the past year or so, is more than aware of the lengthy development times for new products in the nonwovens industry.

"Neither one of these is your typical vanilla polyester," explained Mr. Vance, referring to Celbond and Celwet. "They are specialized products for specialty applications and it takes a year or more to find the applications most suited for them. Both are real hot right now in terms of activity and there will be some more commercial programs known soon."

Hercules is another supplier working closely with customers on new product development and has experienced first hand the intricate details involved in the process. It has introduced two new fibers for the coverstock market in the past year. One, called Type 196, is a higher strength coverstock fiber that allows producers to achieve, substantially increased strength and increased line speed. "It is a product we developed by working closely with our customers and we jointly developed it with them," Ms. Jezyk-Geiman said. The other new product is a hydrophobic fiber for the coverstock on the upstanding leg cuffs, where fluid repellency rather than absorbency is mandated.

At Courtaulds Fibers, too, the long term development of its "Tencel" fiber will begin paying off in 1992 when the North American plant in Alabama comes on-stream. Much of the interest at Courtaulds has been in three areas: its 1.1 denier fiber, its specialty multilobal fibers (Fiber ML) and a microdenier fiber under development.

Like the nonwovens industry in general, Courtaulds in adapting to a new reality in raw material supply. "We have to now take into account that rayon has gone from a commodity product to a specialty product," he said. "That means doing some different things in terms of product development and marketing."

That, too, can be said of the nonwovens industry as a whole as it adapts to a new reality in raw material development and marketing efforts in the 1990s.
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Title Annotation:economic and environmental factors affecting the nonwoven fabrics industry; includes related articles
Author:Jacobsen, Michael
Publication:Nonwovens Industry
Date:Nov 1, 1991
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