Huntsman: Committed To Environmental Performance
Rohit Aggarwal, Huntsman Textile Effects' global vice president of strategic marketing and planning, discusses his company's sustainability focus and the market situation.
Jürg Rupp, Executive Editor
TW : The big issue for Huntsman TE was the fact that jobs in Europe and the United States were cut. What are the main reasons for this move?
Rohit Aggarwal : We operate in a highly competitive environment with increasing raw material costs, so as a global business, we can only remain cost-competitive with the right cost structure in our operations. The Textile Effects global landscape has changed, and, like any business, we need to constantly evaluate and adapt our strategy to ensure that we are able to compete at a global level and build a sustainable business for the long term. Over the last two years, we have been operating in an environment where many companies are exiting Europe to streamline their global businesses.
We must continue to focus on optimizing our business process to ensure we continue to respond globally to market opportunities and see sustained growth.
TW : How do you see the current market situation?
Aggarwal : Asia is the world's largest market for textile chemicals, and, over a number of years, there has been a steady shift from the West to the emerging markets of Asia by the producers and biggest buyers of dyes and chemicals. As the population increases and with the rise of the middle classes in China and India, we expect to see an increase in the demand for textile effects. Quality and safety will continue to be the core values, coupled with shorter delivery times.
We also expect to see a rise in local brands coming onto the market, which is where Huntsman TE can really play a significant advisory role to help those brands develop innovative products to enable them to compete in the global market.
Environmental challenges including water and gas shortages in countries like India and Bangladesh bring a great opportunity for Huntsman TE to drive innovative solutions to minimize those environmental issues.
TW : Which markets are important for you?
Aggarwal : All the markets have their uniqueness, and we pride ourselves in delivering a personalized, total-solutions service across all areas of the manufacturing process to each of our customers wherever they are. In regards to Huntsman TE's global 2010 revenue, 23 percent was from America, 27 percent from Europe and the remaining 50 percent from Asia Pacific. By 2015, we see India and China as key markets, followed by Brazil, Indonesia and Vietnam. South Korea, the Philippines, Pakistan and Bangladesh are also developing markets to watch over the next five years.
The textile sector in India is growing at approximately 8 percent per year, and it is anticipated to reach $110 billion by 2015 with an export value of $45 billion.
TW : What do you see as advantages or strengths in the Chinese market?
Aggarwal : In China, the textile industry accounts for a 30- to 35-percent share of Asia's textile industry and 25 percent in the global market. In 2010, China's textile and apparel exports increased by 23.6 percent over the previous year.
Research And Development
TW : What percentage do you spend on R&D relative to turnover?
Aggarwal : R&D is the lifeblood of TE and should be for any business that wishes to stay competitive. Huntsman TE currently spends about 5 percent of its total sales earnings on R&D.
TW : What are your R&D priorities?
Aggarwal : Sustainability issues, especially water and energy consumption, will increasingly impact both mill and consumer buying decisions. More than one billion urban residents will face serious water shortages by 2050 as climate change worsens the effects of urbanization, with Indian cities among the worst-hit. By mid-century, some 993 million city dwellers will live with less than 100 liters (26 gallons) per day of water each — roughly the amount that fills a personal bathtub — which is considered the daily minimum. An additional 100 million people will lack what they need for drinking, cooking, cleaning, bathing and toilet use.
Overcapacity and migration to Asia will put pressure on prices in mature dye and chemical technologies. And, the importance of biotechnology in industrial chemical innovation will increase, and oil-based technology will decline.
Huntsman Textile Effects spends about 5 percent of its total sales earnings on R&D. Priorities include sustainability issues, especially water and energy consumption.
TW : Can you explain some of the current fashion trends?
Aggarwal : Performance and convenience — garments that look new after 20 washes and don't require ironing; colorfastness; and comfort. Then, innovative solutions, with improved performance and higher productivity, that at the same time bring significant water, energy and operating cost savings. A very important issue is an environmentally friendly protection technology — a new generation of polyester flame retardant that is free of halogen, antimony and formaldehyde. Fabric enhancements with silicone softeners for all end products like knit apparel, shirts, and bottomweights are also important.
TW : Where is the focus in retail?
Aggarwal : Major retailers are increasingly concerned about substances of very high concern (SVHCs), one of the criteria being scientific evidence of probable serious effects to human health or environment. Many major retailers – including H&M, Marks & Spencer and Hugo Boss — are adding SVHCs to their own restricted substance lists to ensure that SVHCs do not exist in the goods nor are used in their manufacturing process. The health risk for workers exposed to SVHCs is not in line with the ethical values. Thereby, suppliers are seriously scrutinized even in cases where the concentration limits are not reached. The commercial pressure is also steadily growing and having a greater impact than compliance.
TW : What do you expect in 2013?
Aggarwal : Raw material, labor, land and energy costs have already doubled in the last couple of years. With growing wealth, consumers are not going to be satisfied with basics, but will be looking for more luxury. In our specific market, fashion, quality and brand names will be the trend. \
Cotton prices look set to increase until the end of the year, which will impact supply and demand. The sharp rise of cotton prices has also made textile manufacturers shift their focus to ramping up polyester yarn production capacity. The fall in cotton production over the years has also driven the use of polyester by the textile sector.
Sustainability Above All
TW : What are the main requirements from your global customers in the next few years?
Aggarwal : Sustainability and environmental excellence are critical focal areas — Huntsman TE is committed to lead as an environmental solutions provider developing a range of technologies that help reduce the impact of manufacturing on the environment and help reduce overall costs. Competition will emerge between domestic and international brands, and the path of survival will revolve around endless innovation, leapfrogging the market.
Sustainability is important for the long-term future of the industry, and for our customers in India and China, who, for example, need to meet new local legislation on water and energy saving. As prices escalate, pollution increases and concern for the environment grows, converters, retailers, brand houses and consumers all over the globe are clamoring for higher sustainability.
We are living sustainability through comprehensive product stewardship, which is an integrated process for identifying, managing and minimizing environmental, health and safety (EHS) impacts at every stage of a product's life cycle. With our forward thinking in EHS philosophy, we are already on top of the environmental legislation (REACH [Registration, Evaluation, Authorisation and Restriction of Chemical Substances] in Europe, for example).
We constantly strive to reduce resource consumption and waste in our manufacturing processes for dyes and chemicals. Decades of innovation have also led to the creation of shorter processes that consistently produce the right results the first time, thereby minimizing energy and water consumption, as well as minimizing waste, in textile processing.
TW : How do you achieve all that?
Aggarwal : We were the first dye maker worldwide to operate a plant to the ISO 14001 EHS standard, are a founding member of bluesign®, and operate a responsible-care product stewardship whereby we track all of our products and provide ongoing help and support to customers in their safe handling and use of our products.
Textile Effects has been actively involved in developing the bluesign standard from the outset. Huntsman places high value on practicing product stewardship in a fully integrated manner. This starts with the approach to innovation of processing solutions as well as effect ingredients and continues through to the disposal of the final textile article. We see the concept of sustainability as the interdependence of ecological responsibility, economic development and social responsibility. The bluesign standard represents the ideal platform to ensure a proper balance of these different criteria, and serves as a compass through the complex textile value chain, ensuring that in the end, the consumer can expect safe and quality textile products.
Huntsman Textile Effects is one of the founding members of the Sustainable Apparel Coalition, working with the industry to reduce emissions and harmful substances in the manufacturing and supply chain process.
TW : You are considered to be a market leader in your business area. What would you do to keep this position?
Aggarwal : At Huntsman, we focus on three main targets: to provide cost-efficient technical processes and solutions that are sustainable and support the local environment; to deliver high-quality, innovative goods backed by our product stewardship commitment; and to expand our ability to serve the local market with a fast and flexible response.
TW : How would you control that situation?
Aggarwal : Well, we may not be in a position to control raw material prices, but TE can combat price explosions with innovative solutions. In addition, we help cut costs and shorten lead times by locating our formulation and distribution centers (FDCs) close to our key customers so that we can be flexible to deliver what they want as quickly and efficiently as possible.
Recently, we announced a new distribution center in Qingdao, China. Karachi, Pakistan was opened in 2011. The close proximity allows us to meet customers' needs as quickly and efficiently as possible. It also enables us to utilize local raw materials wherever possible to save freight costs and not incur duties.
TW : What are the biggest challenges?
Aggarwal : One such challenge includes tighter rules for manufacturers in regards to energy savings.
This is not a challenge for us as we recognized this need well ahead of these regulations. Textile processing is the world's second-most water-intensive industry. By 2030, China, together with India, Brazil and South Africa, will be responsible for 30 percent of the world's gross domestic product and 43 percent of the world's water demand. It is imperative that we work together at all stages of the manufacturing chain to develop and adopt innovative technology and offer real solutions — not just in terms of cost savings and product quality, but also in terms of providing long-term sustainability and commitment to environmental performance.
We strongly urge everyone, all stakeholders in the textile chain — dye and chemical suppliers, mills, brands and retailers — to work together for the future of the planet. We need innovative products and processes; the highest standards in product stewardship; cooperation with machine manufacturers and fiber producers, dyehouse auditing; and, not least, communication throughout the textile chain. Those involved at each and every stage in the textile chain need to take responsibility, implement change and spread the word.