It makes sense that technical textiles are conquering more and more new application areas and are replacing conventional fabrics. Examples of this include reinforcement materials made of textiles in concrete construction, artificial arteries used in medical technologies and textile sandwich materials in vehicle construction and sport. This list can be extended virtually endlessly.
A few weeks ago, the Rupp Report “Evergreen Industrial Fabrics” took a look at the upcoming Techtextil in Frankfurt, which will take place May 4-7, 2015. The same Rupp Report also mentioned the comprehensive “Commerzbank report” from Jürgen Grebe, Corporate Sector Analyst, German Commerzbank AG. Grebe presented an outstanding report that provides comprehensive insights into the growth perspectives of the technical textiles sector. In some of the upcoming articles, the Rupp Report will highlight important trends, facts and figures of this work.
Despite problems in the traditional textile industry, nonwovens and industrial fabrics are still in the lead regarding profitability and growth. For example, Commerzbank says that the production of nonwovens has increased by 11 percent since 2011. For 2015, it is expected that this sector, including technical textiles, will see a moderate rise of approximately 2 percent.
Germany — A Leader
In this context, Germany plays a leading role in the development and production of technical textiles and nonwovens. The German sector — approximately 600 companies with a turnover of more than 6 billion euros — is regarded as the market leader in Europe. Nearly 50 percent of all German textile production is for industrial applications.
Technology leadership is a key factor for success, Grebe said. “The German sector is regarded — also thanks to the excellent networking with the German research sector, which is itself unique worldwide — as the global technology market leader.” To be unique is essential for a success and every producer must avoid the greatest possible degree competition with suppliers of mass-produced goods and low-quality products, which are primarily produced in Asia. According to Grebe: “The German sector is predominantly the result of a successful structural change on the part of producers of traditional textiles to become highly technical and specialist manufacturers of high-quality textile products.”
Particularly for nonwovens as usually lightweight products, there is no successful way to export on a large scale. However, Grebe said, the best outlook is attributed to the Asian market, headed by China, but also other countries. The export quota for German manufacturers for technical textiles in 2013 grew to 62 percent and to 58 percent for nonwovens.
Even though the global market for nonwovens and technical textiles is undergoing some cyclical fluctuations, it has been, is currently and will continue to be a growth market. Apart from the familiar megatrends such as global demographic growth, urbanization and increasing environmental protection, according to Grebe, market growth is being driven mainly by the continuous development of new areas of application and the trend for new production processes. However, a potential producer has to know what is needed to be successful in this highly competitive market.
Grebe provided some interesting information about strengths, weaknesses and other points to be conserved to be a successful player in this ever so promising market. The major growth potential is the strongest argument for being a part of this sector. This is particularly the case in more highly developed product areas. To be competitive, one must absolutely have a global technology leadership and be highly innovative, with strong links to scientific research institutes. That’s another reason why Germany is the top player, because the country has some world-class institutes and universities dealing with textiles. Technical textiles also need a high degree of specialization, an excellent work force and a top product quality with faultlessly environmental standards.
Weak points, and there are some, include mainly the distinctly cyclical sector trend due to strong economic influences. It needs a high investment intensity and fixed cost burden to be successful, with comparatively high break-even levels. In other words, there is no fast money to generate as a newcomer with technical textiles.
Other obstacles in this challenging sector could be economic downturns in important customer sectors, and in some cases widely fluctuating raw material prices and limited raw material availability due to a growing dependence on imported high-performance fibers. This is mostly the case for Western producers. Not to underestimate is the technical progress of potential competitors; this is mainly the case in emerging countries with questionable laws against product piracy, and the migration of know-how.
However, the opportunities to be an important player in this highly commercial sector are numerous: The development of new products and production processes keeps R&D departments alive and is in many cases the entrance for young people who are interested to work in such an interesting environment. This goes in line with the opening up of new markets, particularly in emerging countries and a desired development and export of strong brands.
No Mass Production
Compared to classic textile products, industrial fabrics are very much tailor-made. That’s why this sector is strongly characterized by SMEs, with a large number of niche players. They must be innovative, clever and very fast. It’s always the same old story: not the big ones are swallowing up the small ones, but the fast swallowing the slow ones. Low-cost producers from countries such as China or India do not have this structure, that’s why Europe, and to a certain extend the U.S. and Japan, are still in the forefront of these markets.
However, it is obvious that these emerging countries in particular are also rapidly gaining in importance as sales markets for German producers of technologically sophisticated products. Though, it must be noted that more and more producers in these countries also are making huge efforts to advance into more high-tech and high-end challenging products. This was illustrated at the last Techtextil, where the number of overseas visitors had grown and, as is typical today, everybody was armed with cameras, or at least, cell phones, even if this is forbidden. This trend seems to be even more evident this year. But that’s another story. The review of this report will be continued.
Editor’s Note: Frankfurt-based Commerzbank AG would like to mention that “any information in this report is based on data obtained from sources considered to be reliable, but no representations or guarantees are made by Commerzbank Group with regard to the accuracy of the data. The opinions and estimates contained herein constitute our best judgment at this date and time, and are subject to change without notice.”
February 17, 2015