business tive officer of Hoechst's Trevira unit. Although he does not expect Hoechst to rush a sale of thercmainingpolyester business, he does hope a sale will come through soon so that employees and customers can continue with an owner "having a greater interest in thefiberbusiness." Hoechst's acetatefiberbusiness is on the block, too. "I enjoy change, but the present rate of change taxes my enjoyment," says James F. Simmons, president of Hoechst's Celanese Acetate division. "We will be sold, Marc S. Reisch In the developing countries of Asia— but I don't know when," he says; however, C&EN Northeast News Bureau which combined account for just over half he expects a sale by 2000. Given the comof 1996 production—output also grew pany's acetate production in the U.S., Mexihe balance of power in the world's rapidly. For instance, in China, it rose 12% co, Canada, and Belgium, Simmons says he would consider building an acetate facility textile and industrial fiber market annually to 5.8 billion lb. shifted more than a decade ago to And Turkey also made huge strides, in Asia—after the dust settles from the curdeveloping countries, mostly in Asia. U.S. with production growing at more than rency crisis and the business ownership question is ironed out. and Western European producers of 11% per year to 1.1 billion lb in 1996. man-made fibers have realized this and in Dutch chemical producer Akzo Nobel Given these statistics, in part, a oncerecent years have either pressed ahead to mighty chemical giant, Hoechst of Germa- also has been backing out of thefiberbusireinforce their position in developing fi- ny, has decided its future lies largely in the ness for years. In 1986, it sold the bulk of ber markets or decided to leave fibers be- western part of the world in the life sci- its U.S. fiber operations to BASF. Over the hind for higher margin, more promising ences business, and it is in the process of past year, it sold its share in a Mexican products. unraveling its chemical real estate. Hoechst polyester fiber maker, Fibras Quimicas, to its partner Alpek, and Part of the reason that shift occurred is then just a few months that the technology to polymerize and exlater thefirmsigned a lettrude fibers is widely available. Entrepreter of intent to form a neurs in developing countries can easily lijoint venture of its worldcense fiber-making technology and purwide industrial polyester, chase the equipment to make fibers. After nylon, and rayon fibers all, synthetic fibers such as polyester and business with Turkey's nylon have been around for more than 50 Sabancy Holdings. years, and cellulosic fibers such as rayon and acetate have been available since the An Akzo Nobel spokesearly part of this century. man explains, "Akzo Nobel is going for shareholdAnother reason for the shift is that er value, and fibers are low labor rates and modern plants in denot exactly where that is veloping countries along with reasonable possible." While he insists long-distance shipping costs give many Akzo's fiber business is commodity products made in developing more profitable than its countries a distinct cost advantage over competitors', earnings are U.S. or European textiles. Also, as develnevertheless "not so briloping countries become more prosperliant." To expand its inous, consuming their own textiles and dustrial fibers globally as industrial yarns, fiber demand increases it must do, Akzo needs at a much more rapid pace than in EuInspector checks extruded nylon fiber In Anderson, S.C., plant. an "ambitious partner" rope or the U.S. such as Sabancy. World synthetic fiber production (exHowever, one company that does not cept olefin) grew 5.7% annually between signed a letter of intent in August 1997 to 1993 and 1996 to more than 43 billion lb, sell its European polyester fiber business necessarily need a partner—although partaccording to the Washington, D.C.-based to Indonesia's largest fiber manufacturer, ners are helpful—to expand its fiber activFiber Economics Bureau. However, Multikarsa Investama—a sale it expects ities is DuPont. Akzo Nobel recently sold growth varied considerably in different will ultimately be completed despite the its Brazilian nylon 6 activities to DuPont. parts of the world. In Western Europe, current Asian currency crisis. The compa- The Wilmington, Del.-based company also production during those years fell an aver- ny's remaining polyester intermediates has other South American fiber operaage of 0.5% per year to reach 4.9 billion lb and fiber businesses, including those in tions, among them nylon operations in Arin 1996, whereas in the U.S., Mexico, and the U.S. and Mexico, are also up for sale. gentina. Although always a U.S. force in Canada, combined production rose a mod"Despite their historical fiber business nylon, DuPont strengthened its operations est 3.6% annually to 8.7 billion lb. But in franchise, a number of European compa- with the purchase of ICI's nylon business rapidly developing Mexico, it rose nearly nies have priorities elsewhere," says Wil- in 1993, and it now operates a global ny11% a year to 1.2 billion lb. liam B. Harris, president and chief execu- lon business integrated from fiber interme-
FIBER INDUSTRY IN UPHEAVAL
As production grows, manufacturing continues to shift to developing countries
T
16 MARCH 16, 1998 C&EN
diates to nylon 6 and nylon 6,6 fiber for textile, carpet, and industrial uses and nylon resins for engineering applications. "We are a total supplier," emphasizes Ken Wall, director of nylon intermediates and polymers for DuPont Nylon. The company already has a nylon intermediates facility coming onstream in Singapore and a laige intermediates joint venture planned with BASF in China. Both facilities could ultimately supply DuPont fiber facilities in Asia when the need arises. John C. Hunter m, president and chief operating officer of St. Louis-based Solutia, says it is harder for companies to compete in nylon than in other fibers such as polyester or acrylic. The manufacture of nylon 6,6 requires large up-front capital costs, and the technology to produce key intermediates such as hexamethylene diamine is in the hands of only a few players, he says. Spun out of Monsanto in September of last year, Solutia has survived an upheaval similar to the one the Hoechst fiber units are experiencing now, Hunter points out (C&EN, March 2, page 19). Whereas Monsanto decided its focus was in life sciences, Solutia's executive says his company is committed to the chemicals business, particularly nylon. Similar pressures to focus businesses are at work in the recently announced "demerger" of acrylics and rayon maker Courtaulds, says Hunter. But in Courtaulds' case, the financial community has placed a lot of pressure on the London-based company to put its house in order, opines Hunter.
Recent acquisitions, divestitures, and deals reshape fiber business Status
Sterling purchases Cytec acrylic fibers
Completed January 1997
Akzo Nobel sells Brazilian nylon 6 activities to DuPont
Completed April 1997
Kemira sells rayon business to Inti Indorayon Utama of Indonesia
Completed June 1997
Akzo Nobel sells its 40% share in Fibras Quimicas to Alpek, the petrochemical group of Mexican oil company Alfa
Completed June 1997
Hoechst signs letter of intent to sell European polyester fiber business to Multikarsa Investama of Indonesia
Signed August 1997
Tuntex Group of Taiwan to build $560 million polyester fiber plant in Mexico by 2000
Announced September 1997
Akzo Nobel signs letter of intent to form joint venture of its industrial fiber business with Sabancy Holdings of Turkey
Signed October 1997
Courtaulds agrees to buy out partner Hoechst in European Fibers acrylic and rayon joint venture as part of a corporate restructuring
Pending February 1998
Courtaulds said late last month it would spin off its paint business, sell its polymer products business, and put in a significant cost-reduction program in its remaining fiber and chemicals operations. High development costs for its new cellulosic fiber, Tencel, have cost the company dearly. Wild swings in raw material costs and competition from Asian-produced textiles have hurt Courtaulds' fiber sales in Europe and the U.S. Courtaulds' European competitor, Lenzing of Austria, has not done much better for many of the same reasons. It lost more than With the exception of Japan, Asian $50 million in 1997 on sales of countries are fastest growing more than $560 million attribproducers of synthetic fibers utable, in part, to development costs associated with its new % annual cellulosic fiber, Lyocell. Its exMillions of lb 1993 1996 change pansion into the U.S. and IndoChina 4,127.0 5,791.5 12.0% nesian rayon markets has not Taiwan 4,687.0 5,646.0 6.4 protected Lenzing from the South Korea 3,509.7 4,465.6 8.4 earnings drag on its European Japan 3,009.4 3,075.4 0.7 operations. Its U.S. fiber operaOther Asia 3,889.6 5,964.5 15.3 tions lost money last year and North America 7,842.0 8,722.7 3.6 so did its Asian venture known South America 1,063.5 1,041.2 -0.7 as South Pacific Viscose, because of the Asian currency criWestern Europe 4,986.8 4,915.2 -0.5 sis. Lenzing President and CEO Eastern Europe 2,077.8 1,684.1 -6.8 Heinrich Stepniczka and Chief Turkey 765.0 1,050.3 11.1 Financial Officer Peter Skoupy Mideast, Africa & 609.6 823.4 10.5 will leave the company by the Oceania middle of 1998. Some synthetic fiber makers' TOTAL 36,567.4 43,179.9 5.7% customers purchase polymer Note: Includes nylon, polyester, and acrylic fibers but not olefin fibers. Source: Fiber Economics Bureau flakes to extrude their own fiber. The equipment to extrude
fiber on relatively small-scale equipment is widely available. Akzo Nobel operates a unit, Enka Tecnica, to supply customers with yarn production equipment including spinnerets to extrude fiber. Many U.S. carpet makers purchase polymer flakes to extrude their own nylon and olefin fiber, points out a BASF spokeswoman. Other textile makers have taken a more integrated approach. Textileweike Deggendorf recently bought a 51% stake in an Akzo polyesterchip-making facility. The German textile producer will assume complete ownership of the chip facility by 1999. Big fiber makers do not necessarily have an advantage in developing countries because of their size. Textile fiber-making technology is readily available for sale. For between $70 million and $150 million, New York City-based Chemtex can help customers build polyester and acrylic polymerization and fiber production facilities using technology licensed from DuPont for polyester or Sterling Chemicals for acrylic. Costs vary depending on capacity and country of installation, says Chemtex's sales and marketing vice president, Vinod K. Rangra. Despite the Asian currency crisis, Rangra says Chemtex is negotiating to build new polyester and acrylic plants throughout Asia. "We see a big gap between capacity and demand in India and China," particularly for acrylic fiber, adds Rangra. And as Chemtex tries to fill that need, U.S. and European producers are likely to yield increasing market share to commodity fiber producers in developing countries.^ MARCH 16, 1998 C&EN 17
