BioPlastics in the Nonwovens Industry Possibilities or Pipe Dreams?
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1 BioPlastics in the Nonwovens Industry Possibilities or Pipe Dreams? David Rousse, President INDA, Association of the Nonwoven Fabrics Industry
2 What Are Nonwovens Nonwovens are Engineered Fabrics A primarily fibrous assembly which has been engineered to some level of structural integrity by physical and/or chemical means Nonwovens are NOT Paper Woven Knitted Tufted 2
3 What Are Nonwovens Thousands of End-Use Products Disposable Products Durable Products Largely made from olefinic resins (PP, PET, PE) 3
4 Disposable Consumer Products 4
5 Industrial and Durable Uses 5
6 The Global Nonwovens Market Nonwoven Material Dollar Sales and Annual Growth Rates 50 Billion US$ 6.3% $ % $ $ % $36.4 Rest of World 20 $ % $ % $8.3 $ % $11.8 North America f Source: INDA/EDANA Worldwide Outlook for the Nonwovens Industry 6
7 North American Nonwovens Market Nonwoven Fabric Sales by Type, Durables $3.5b 38% Disposables $5.8b 62% Source: INDA North American Nonwoven Industry Outlook 7
8 North American Disposables Market 5.8 billion dollars, 1.6 million tonnes, Tonnes Absorbent Hygiene 657 1,716 Air/Liquid Filtration Wipes 351 1,012 Indicates BioResin Opportunity Medical/Surgical billion dollars 1.2 million tonnes Proective Apparel Dollars Other Disposables Tonnes Million Dollars ,000 1,500 2,000 Source: INDA North American Nonwoven Industry Outlook 8
9 North American Durables Market 3.5 billion dollars, 0.9 million tonnes, Tonnes Transportation Building Construction Home and Office Furnishings Indicates BioResin Opportunity Geosynthetics billion dollars 0.7 million tonnes Apparel Dollars Other Durables Tonnes Million Dollars ,000 Source: INDA North American Nonwoven Industry Outlook 9
10 Drivers of Bioresins into Nonwovens Consumer Desire to Support Environment Corporate Sustainability Initiatives Government Regulations Cost Volatility 10
11 Consumer Desire To Support the Environment Consumer awareness regarding petroleum-based products Growing number of consumers are willing to pay for greener products However, consumers are not willing to sacrifice product performance But, corporations/institutions are not willing to pay more for greener products 11
12 Corporate Sustainability Initiatives Walmart s Material Efficiency scorecard Every supplier rated P&G Sustainability Initiative Replace petroleum-based materials with sustainably sourced renewable materials K-C s ecological program In 2010, goal for net sales in 2015 from environmentally innovative products = 25% 2014 = 52% 12
13 Government Regulations Public Procurement Requirements Federal BioPreferred Program o Mandatory federal purchasing o Voluntary labeling initiative State and Local Activities 13
14 Government Regulations Ban of non-biodegradable plastic bags State and cities have or are putting in place plastic bag fees, taxes and bans 14
15 Cost Volatility Bio-based resin costs have historically been perceived to be more stable than petroleum-based resin costs. Oil dropping from $140/bbl to $40/bbl has disrupted this perception 15
16 Nonwovens By Process North American Capacity by Process, 2014, 2.7 million tonnes Resin Based Spunmelt 34% Wetlaid 20% Airlaid 7% Staple Fiber Based Drylaid 39% Source: INDA North American Nonwovens Supply Report,
17 Resin-Based Nonwovens North American Spunmelt Resin Consumption, 2014 Industrial Hygiene Components 2% Polypropylene 10% 69% Polyester Agricultural/ Landscape Carpet Backing Filter Media 19% 973k tonnes Diapers & Incontinence Products Feminine Hygiene Products Surgical Drapes and Gowns Wipes Polyethylene Nylon/Rayon/Other
18 Staple Fiber-Based Nonwovens North American Staple Fiber Consumption, 2014 Automotive Fabrics Automotive Barriers Automotive Insulations Bandages Home Furnishing Components Wipes 22% 7% 12% 1.7m tonnes less cellulose and mineral 857k tonnes 7% 4% 28% Polypropylene Polyester Bicomponent/ Other Synthetics Wood Pulp Viscose (Rayon) Cotton/ Other Natural Fibers 20% Mineral Fibers
19 BioPlastic Market Opportunities Nonwoven End-Use Markets Consumer Wipes Absorbent Hygiene Product Components Reusable Shopping Bags Automotive Components and Engineered Structures Medical/Surgical Products Agriculture/Landscape Fabrics 19
20 Wipes Consumer Wipes Portion Drivers Diverse array of segments, price points, demographics to find a niche Highly active segment; many new and innovative products released each year Messaging is read by consumers; want vs. need Unitary construction Challenges Sales Tonnes Growth Bioresins must be spun then chopped into staple fiber Interaction with lotion/additives is critical $691 million 7% NA Market 239 thousand 10% NA Market 5.0% tonnage annually 20
21 Wipes Consumer Wipes Portion Sales Tonnes Growth $1.0 billion 11% NA Market 351 thousand 14% NA Market 5.0% tonnage annually Opportunity Strong potential for Bio-resins in the CONSUMER segment Cost can be built-in with convenience premium $$$$ 21
22 Absorbent Hygiene Baby Diapers, Incontinence, Feminine Hygiene Sales Tonnes $1.7 billion 19% NA Market 657 thousand 27% NA Market Drivers Growth Strong interest in sustainability on behalf of consumers Large multi-nationals (P&G, KC, Fitesa) currently exploring use of polymers from renewable materials Growing concern with landfills vs beneficial reuse 4.1% tonnage annually 22
23 Absorbent Hygiene Baby Diapers, Incontinence, Feminine Hygiene Challenges Sales Tonnes Growth $1.7 billion 19% NA Market 657 thousand 27% NA Market 4.1% tonnage annually Producers large in size; few in number Consumer hygiene products are high volume/low margin Not a lot of play to absorb higher costs currently associated with bioresins Technical concerns with thermal resistance, polymer density, etc., give manufacturers reason to pause Lengthy and rigorous product qualification process 32 components in a diaper; 30 olefin based 23
24 Absorbent Hygiene Baby Diapers, Incontinence, Feminine Hygiene Sales Tonnes $1.7 billion 19% NA Market 657 thousand 27% NA Market Opportunity Slow adoption due to costs, performance, and qualification issues Private Label manufacturers willing to carve a niche will take up cause before multi-nationals widely adopt bioresins Diapers w/pla inner/outer layers (The Honest Company) $$$ Growth % tonnage annually 24
25 Reusable Shopping Bags Grocery, Department, Promotional Drivers Billions of plastic bags are used in U.S. each year; less than 5% are recycled States and cities working on legislation to tax or ban the use of plastic bags Properties/functionality demands are far less critical Challenges Cost 25
26 Reusable Shopping Bags Grocery, Department, Promotional Opportunity Strong ecological drive for reusable bags; bags made with bioresins will be even more attractive Unitary construction and opportunity for value tiers/branding help $$ 26
27 Transportation Primarily Light-Vehicle, Internal and External Sales Tonnes $703 million 8% NA Market 106 thousand 4% NA Market Drivers North American industry now in significant growth mode; currently 40 parts are or include nonwovens Growing segment of buyers who will pay more for green car Lighter weight of nonwovens supports increased usage Challenges Cost and performance Bioresin capacity Growth % tonnage annually 27
28 Transportation Primarily Light-Vehicle, Internal and External Sales Tonnes Growth $703 million 8% NA Market 106 thousand 4% NA Market 11.1% tonnage annually Opportunity Bioresins have good potential in acoustic insulation, carpets, headliners $$ 28
29 Medical/Surgical Surgical Drapes, Apparel, Wound Care Sales Tonnes Growth $861 million 9% NA Market 171 thousand 7% NA Market 1.8% tonnage annually Drivers Hospitals are being pushed to go green Bioresins create new category of tissue scaffolds that dissolve in body; high value/low volume Challenges Purchasing groups will not accept higher costs on the large volume drapes/gowns Approvals/qualifications of FDA 29
30 Medical/Surgical Surgical Drapes, Apparel, Wound Care Sales Tonnes Growth $861 million 9% NA Market 171 thousand 7% NA Market 1.8% tonnage annually Opportunity Highly specialized opportunity for new category $$ 30
31 Drivers Geosynthetics Agriculture/Landscape Portion Property and functionality demands far less critical Disposal issue for current petroleum-based fabrics Challenges Cost is the driver in professional markets Opportunity Consumer market potential is real $ Sales Tonnes Growth $103 million 1% NA Market 35 thousand 1% NA Market 2.8% tonnage annually 31
32 Possibilities or Pipe Dream Definitely good possibilities already in works High volume nonwoven uses very cost sensitive Tissue scaffolds show NEW category potential vs. REPLACEMENT Fertile area for development 32
33 Be Careful What You Wish For! 2+ million tonnes bioresin capacity today 235 million tonnes petroleum polymer consumption Science is there for biopolymers to replace 90% of petroleum polymers 33
34 Thank You Questions 34
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