Too Efficient
U.S. plants that produce multiple fiber variants with rapid changeovers have best survival
chances. Astute industry observers have long urged traditional U.S. fiber producers
to retreat from their dependence on commodity products and search for value-added opportunities in
niche markets.Analysis of relative labor costs, coupled with apparent national ambitions often
supported by government-sponsored subsidies and/or intervention, leads to an inescapable
conclusion: without similar cost and tax breaks, the U.S. man-made fiber industry has little chance
of achieving equal sales/production opportunities in the world market. Because these are highly
unlikely events in a U.S. economy apparently prepared to sacrifice a domestic industry on the altar
of international trade, survival demands other actions.And, since the United States is home to the
most efficient capital markets in the world, it is natural to explore capital invested to change
traditional channels of distribution as an agent of transition for the U.S. man-made fiber
industry.Opportunities exist so long as the industry continues to focus on the basic proposition of
niche markets. The history of polypropylene fibers and resins is instructive; it is an industry
quite advanced in its management of global marketing channels.Early producers presented
polypropylene fibers as made from burn-off gasses; i.e., raw material values so low as to compete
for chimney time with other nonuseable by-products of petroleum distillation. Price drove a
market-penetration strategy. Several technical limitations, temperature and dyeability
particularly, quickly became the competitive mantras of nylon, polyester and acrylic producers. The
traditional fiber producers laughed at the sometimes clumsy market approaches of large oil
companies as they tried to inject their new miracle fiber into every market. Fiber producers smiled
knowingly as commodity polypropylene headed for low-priced markets consistent with their
introductory presentations.It quickly became apparent, however, that the oil companies felt
uncomfortable producing fibers requiring large customer and technical forces, preferring instead to
trade huge quantities of resins to many smaller, but not necessarily small, converters that
supplied market-specific products and services.The resin supplier sidestepped the host of problems
attendant to servicing a myriad of customers, each with his own equipment, each tuned differently
than any of his competitors. Resin suppliers decided to leave the jobs of market development and
breaking down big resin lots into market-specific quantities and qualities to converters, those
closer to the final market. The resin supplier participated at a level at which it was comfortable,
and the fiber manufacturer acquired an interested partner. The SolutionFaced with some
product deficiencies and non-textile distribution ambitions, polypropylene resin producers opted to
encourage, and in some cases subsidize, installation of smaller-capacity production units that
could be easily adapted and/or adjusted to the demands of specific, smaller, specialty markets.
Polypropylene resin suppliers recognized their limitations, adapted correctly and, in a marvelous
example of macro-marketing, allowed customers to decide what products were needed to satisfy
specific markets. The resin producer could run high-speed, high-volume chip plants, while the
markets of their customers dictated fiber specifications. For example, rope and cordage makers
installed small filament production lines; upholstery manufacturers produced staple in small lots
of traditional upholstery deniers and lengths; and felt producers produced items specially designed
(from a common chip formulation) for nonwoven end-uses. The question now becomes whether the U.S.
industry, to maintain health, can expand some existing markets sufficiently, or must new markets be
developed based upon entirely new raw materials SpecializationIt long has been axiomatic among
U.S. textile manufacturers that easy access to printing, dyeing and finishing operations determines
the success of fabric producers. To an extent, this is an accurate assessment, but it must be added
that opportunities exist to manufacture increasingly specialized items, particularly in industrial
fabrics.Textile leaders long have been in awe of the ease with which a relatively healthy apparel
industry evaporated into Southeast Asia in slightly more than a generation. Similar pressures now
attend the home fashions, linens and domestics industries with, perhaps, a similar pattern of job
export on the immediate horizon. This development appears to suggest that existing fabric
construction systems, even if enhanced by sophisticated fabric surface treatments, are insufficient
to ward off the siege of imports.The surface treatments shown in the table to the right have been
successful in expanding markets, creating niche products and deflecting some of the impact of
increased imports. As noted above, however, even with all these technologies at hand, the U.S.
fiber and fabric industries have lost control of markets in apparel, domestics and some home
fashions. It is possible, but not extremely likely, that these markets will return to the United
States. For example, a recent report out of China details government/industry plans (Five Year Plan
for the Textile Industry by the State Economic and Trade Commission) aimed at expanding the Chinese
textile industry by 6.5 percent annually by focusing on increasing from seven to 20 the number of
fabric producers with more than 100,000 tons of capacity. This type of offshore expansion will
leave domestic suppliers scurrying to find new opportunities, perhaps in industrial fabrics.
Industrial markets focus on end-use specifications often extending backward to raw materials.
Surface treatments often are part of the equation, but, more often, the qualifications include
minimum performance levels not necessarily available in current raw materials. Some of these
characteristics are available through available polymer chemistry softness, conductivity, chemical
resistance, bondability, flame retardancy and reflectance but it is interesting to ask whether
these surface or polymer treatments are sufficiently sophisticated to survive some of the harsher
environments of industrial markets.For example, it is logical to explore fiber and/or fabric
structural elements in composites to replace current metals and plastics. Combining drape and resin
impregnation in complex shapes appears to be a natural marriage. If fabrics can drape attractively
on rapidly going-to-seed baby boomers, why cant they drape equally attractively and structurally in
industrial uses The Corvette body long has been made from impregnated fiberglass; why not other
complex shapes Surface Treatments(Partial
List)coatingsbreathabilitysoftnesswaterproofing/resistanceinsulationconductivityanti-microbialbarriersexpanded
surface (filtration)reflectancebondabilitylaminateschemical resistanceflame
retardancyheating/cooling Returning To The SolutionThe key is trading efficiency for
efficacy; the U.S. fiber industry efficiently produces too much of the wrong things. Why not
provide the right things in the right quantities the effective way of balancing supply and
demandThe man-made fiber industry must drop its dedicated focus on efficiency that resulted in
production lines able to manufacture enough fiber before breakfast to supply half the world. And,
with efficiency as master, the industry couldnt slow down the monster because doing so would breed
inefficiency. The real solution is to slow it down, shut it down and get out of the raw-material
business. Turn raw-material production over to chemical specialists. In the current terminology,
the challenge is to outsource. Fiber manufacturers know their customers, but chemical processors
know raw materials.The fiber manufacturer simply needs to turn these raw materials into salable
products not readily available from cheaper off-shore sources. More importantly, these products
should be designed around end-use specifications worked out by the fiber manufacturer, the customer
and the raw-material supplier.Fiber production tied to the gods of continuous polymerizing creates
the efficiency syndrome and also creates the production and inventory swings so prevalent in fiber
production. Visit machinery and resin suppliers and build nimble fiber plants capable of producing
multiple fiber variants with rapid changeovers. This is not efficient but it is effective. Variants
imply niches, and niches imply value-added/higher profit. Higher profit means survival.Two polymer
programs developing raw-material supply business models, patterned after the polypropylene approach
covered earlier, are Corterra from Shell Chemical Co., Houston, and NatureWorks fibers from Cargill
Dow LLC, Minnetonka, Minn. They appear to be on the right track and offer examples of future fiber
production models.Corterra is Shells trade name for polytrimethylene terephthalate (PTT), a
thermoplastic capable of being spun into fibers and yarns aimed at use in carpeting, apparel,
nonwovens, engineering thermoplastics, films and monofilaments. Shell claims the fibers, chemically
related to polyester through a common ancestor at Calico Printers in the United Kingdom, provide
easy care and stretch, inherent stain resistance, softness, drape and the ability to take bright,
clear colors. More importantly, Shell is and wants to remain a raw-material supplier in a
three-legged marketing program: one leg aimed at textile fibers; one at films; and a third at
resins like bottles. The program focuses on working with a customer to design, and make operable on
existing equipment, raw-material variants suitable for replacement of existing products or
expansion into new markets. Shells initial emphasis with Corterra was on carpets, but the company
is increasingly expanding into more niche-focused end-uses. The combination of nylon and polyester
performance characteristics should create opportunities in non-textile, industrial markets. The
expansion key appears to be installation of production units, larger than prototype but smaller
than current installed capacity, that are suitable for rapid changeovers and aimed at a supply of
multiple specialty fibers to a niche, performance market.Similar reports surround the NatureWorks
family of polylactide (PLA) fibers available from Cargill Dow. The environmental sensitivity
claimed by the company provides a desirable add-on, but not a fundamental business advantage. More
important is NatureWorks product versatility across many markets, with apparent applications in
performance materials. Like Shell, Cargill Dow wants to remain a resin supplier. NatureWorks
materials are the result of basic research, but the marketing approach is applied research.As the
company builds a quarter-billion-pound resin plant in Nebraska, NatureWorks has assembled an
impressive stable of development partners. Among them, Johnson City, Tenn.-based Fiber Innovation
Technology is exploring bicomponent fiber variants. Interface, Atlanta, is producing development
quantities for the commercial carpet market with great interest in the renewable and
environmentally sensitive aspects of the fibers, especially because commercial carpet installations
tend to be replaced more often than household installations.Greensboro, N.C.-based Unifi is
exploring fine-denier-per-filament textured products for apparel and home fashions in both natural
and package-dyed yarns. Parkdale Mills Inc., Gastonia, N.C., is looking at NatureWorks materials in
combination with cotton. ConclusionsRecent experience suggests that efficiency will not
protect the U.S. fiber industry. As noted in the past, the industry passed from net exporting to
net importing in the late 1990s, and, it appears, with continuing low margins surrounding the
current business model, there is little or no opportunity for returns on fiber investments.This
situation relegates a large industry to strategies highly dependent upon the hope that some miracle
will swoop down from the clouds and magically increase domestic market demands or increase the
prices of all textile components available from the developing world. This reactive posture means
business control comes from outside a proposition not likely to work.If efficiency doesnt work,
what will The answer is to change from a raw-material-driven industry to one of raw material
conversion, with polymers supplied by the Shells and Cargill Dows of the world. This change will
create a more nimble and probably smaller, more profitable, value-added, niche-driven industry
emphasizing industrial, non-textile applications and capable of surviving the onslaught of made-up
articles created in economies driven by the efficiencies of cheap labor or government-subsidized
production.
Editors note: John E. Luke is owner of Five Twenty Six Associates Inc., Bryn Mawr, Pa., a
consulting firm specializing in strategic marketing and operations facing textile fiber and fabric
manufacturers. He is also a professor of textile marketing at Philadelphia University,
Philadelphia.
September 2001
