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Part 2: The state of the industry

February 1st, 2014 / By: / Feature, Industry News, Markets

Part II focuses on five end-product markets, primarily in the U. S.: safety and technical products, narrow fabrics, geosynthetics, truck covers and tarpaulins, and fabric graphics.

Safety and technical products

The global safety and technical products market was estimated to be $22 billion in 2013. Growth worldwide is 6 percent annually. Slow economic growth worldwide tempered growth in this market in 2009; yet, the safety and technical products market bounced back to achieve 5 percent growth in 2010.

This market in the U.S. was worth $5 billion in 2013, with growth generally 5-7 percent annually. Profit margins in the U.S. safety and technical products supplier market are 17 percent, with large multinationals investing in acquisitions and new technologies that make it difficult for smaller companies to enter the market and compete.

The U.S. and Europe account for more than half of the global industrial protective clothing market. Worldwide, the thermal clothing market in the Asia-Pacific region is forecast to grow the fastest; it was $430 million in 2013. Growth in Asia will be driven by new manufacturing works and construction projects underway in the Middle East, India, China and Vietnam. Additionally, apart from being the world’s most populous countries, China and India have a large number of unprotected industrial workers. This offers untapped potential for future growth. With Asian countries becoming the hub of global manufacturing operations, the business case for worker protection products will only get stronger.

Outlook

In an IFAI safety and technical products survey administered in October 2013, safety and technical product suppliers and manufacturers reported they expect sales will increase 6 percent in 2014 compared with 2013. They should experience a stable, somewhat improved performance in sales in 2014. Markets such as military clothing, construction and industrial, especially the automobile market—will maintain a strong influence on the safety and technical products market in 2014. End product manufacturers (EPMs) in traditional safety and technical products markets will continue to face tough competition from inexpensive imports from China.

Narrow fabrics

The `a ~Narrow Fabrics Institute~ (NFI) commissioned a study of the North American narrow fabrics market in 2013, which covered the U.S., Canada and Mexico. In-depth surveys, interviews with industry participants, and secondary research were employed to gather information for the study.

NFI study summary. There are several significant market segments within the narrow fabrics market, ranging from seat belts for the automotive industry to leashes for pets. At IFAI, we focus on five key market segments: webbings for automotive seat belts, military textiles and clothing, safety products such as harnesses, transportation products such as tie-downs and slings, and medical products such as gauze and bandages.

The U.S. narrow fabrics market grew an estimated 2 percent in 2013; over the next few years the strongest growth will be in Asia (China) at 6 percent and in South America at 5.5 percent, while the U.S. will continue to grow at 2 percent annually.

Seat belts. The main growth area over the last few years has been webbings for seat belts. The sales of new light vehicles in the U.S. grew 8 percent in 2013—reaching 15.5 million vehicles, which translates into 233 million meters of seat belt fabric sold.

Military textiles and clothing. Spending on these products in the U.S. decreased 16 percent in 2012 compared with 2011, but the level of spending for textiles and clothing for U.S. troops by the U.S. Department of Defense and the Defense Logistics Agency (DLA) increased 6.3 percent to $1.7 billion in 2013. Sales growth in 2013 for military-related narrow fabric products increased 1 percent compared with 2012.

Safety products. This segment (harnesses in particular) grew 4 percent in 2013 as construction began growing again, facilitated by government action: the U.S. committed $100 billion to federal highway and transit programs over the next two years and the Canadian government committed $70 billion over the next 10 years for infrastructure and buildings. Construction is expected to grow 3-5 percent per year over the next few years in the U.S. and Canada.

Transportation. Tie-downs and sling sales in the transportation market are growing, but U.S. tie-down manufacturers are feeling the effect of lost sales due to inexpensive imports from China and Korea. The upside is that this market is growing 3 percent per year as web tie-downs are replacing wire rope and chains.

Medical products. This market grew 6 percent in 2013 and is expected to grow another 6 percent in 2014. It has a bright future in the U.S. due in large part to this country’s 80 million baby boomers.

While the U.S./Canadian specialty fabrics industry has become smaller because of worldwide economic woes since 2009, the narrow fabrics market has held its own. Small to midsized companies (10-250 employees) have found their niches in markets such as medical and safety. Industry participants have become price competitive with imports, so some companies that moved production facilities overseas are now returning to the U.S. and Canada.

Geosynthetics

Geosynthetic products, manufactured by about 50 companies for the U.S. marketplace, include geotextiles, geomembranes and geogrids, which are used in erosion control, road construction and other infrastructures. In 2013, the size of the U.S./Canadian geosynthetics market was $2.2 billion. U.S. growth was up 3 percent in 2013, a nice improvement over 1.5 percent in 2012.

MAP-21, a law that reauthorized U.S. surface transportation laws at current spending levels through September 2014, went into effect Oct. 1, 2012, alleviating some of the uncertainty for highway and bridge construction projects. The passage of MAP-21 helped the U.S. geosynthetic market achieve improved growth in 2013.

Uncertainty about the level of federal support for state highway programs after September 2014 will weigh down the road pavement market in 2014, but the U.S. geosynthetic market is expected to achieve a growth rate of 4 percent in 2014.

A significant soft spot in the 2014 forecast for the U.S. geosynthetic market is the lack of coal ash regulatory stability. Three years after unveiling its proposal to regulate coal ash disposal in 2010, the `a epa.gov~U.S. Environmental Protection Agency~ (EPA) has delayed the rules. IFAI estimates there were 535 coal ash sites that require new liners as of 2012. Enforcing a liner requirement at these sites could mean $300-$350 million in sales for the U.S. geosynthetics market over the next five to seven years.

Truck Covers and Tarpaulins

The U.S. tarpaulin (tarp) and truck cover market entails a diverse set of applications. Flatbed trailer truck covers are often used to secure heavy cargo such as lumber and steel, and roll-up truck covers or tarps are usually used on dump trucks to secure dirt and gravel. Other tarps may be used for hay and other agricultural products, construction materials, tarps and liners in the waste industry, and covers for sports playing fields, gym floors and storm protection.

Tarpaulins and truck covers (also referred to as truck tarps) are distinctly different product segments. Tarpaulins are generally recognized as a commodity and are often used to protect from wind, rain or sunlight. The military also uses tarps covered with camouflage foliage specific to their area of operation. Truck covers are designed to fit a specific truck or load and are custom made.

The U.S. tarpaulin and truck cover market grew 4.5 percent in 2013 and should expect 5 percent growth in 2014.

Fabric Graphics

Today’s fabric graphics market uses inkjet printing—UV, solvent, latex or dye sublimation—to digitally print graphics onto fabric. Outdoor banners have been and are still typically made of vinyl-laminated polyester secured by grommets. Indoor banners are often digitally printed on polyester, cotton canvas, flexible-face material, nylon and mesh. Companies incorporate extruded framing devices that give banners a taut, neat appearance previously not possible. The banner industry is evolving from cut-vinyl banners to banners printed with large format and wide-format inkjet printers on various vinyl and fabric materials using solvent inks and UV-curable inks.

In 2013, the fabric graphics fabricator market experienced a 3 percent increase in sales compared with 2012, which is the second year in a row this market has achieved positive sales growth. In 2013, total fabric consumed by U.S. and Canadian fabricators was 36.7 million square yards. For 2014, IFAI is projecting a 4 percent increase in fabric consumption, with the total reaching 38.1 million square yards.

Outlook

The biggest growth area for fabric graphic applications will likely continue to be in dye sublimation products. Wide-format graphics products will continue to grow as corporations begin to invest more in promotions and advertising. Noticeable increases in wide-format graphics should occur in vehicle wraps and soft signage, especially point-of-purchase (POP) signage in retail settings. More wide-format printing may also be on stretchy fabrics like polyester/spandex for trade shows and indoor/outdoor banners.

Digital textile printing is a fast-growing market sector reaching 10 percent growth in 2013 compared with 2012. It offers support for customization, facilitates shorter production runs, and because it uses less water and dyes, it’s more eco-friendly. Factors driving growth in digital textile printing include the development of high-speed, high-density industrial inkjet print heads, under $300,000 and in the $300,000-$500,000 range, and new latex and sustainable UV inks.

Smaller businesses may have to consider niche applications or service differentiators to compete with larger, well-equipped fabric graphics shops. Web sales and web applications will continue to enable small shops to compete nationally for business and service smaller, more remote markets.

Many larger digital textile print shops using dye sublimation transfer and direct-to-fabric printing on fabric offer their customers full service solutions. They are investing in new technologies that expand their business, reduce operating costs and increase productivity. Expanding into new markets with equipment they already own or investing in new equipment that provides enough of an ROI may be necessary to continue to prosper.

Specialty fabric outlook in 2014

Specialty fabric manufacturers in the U.S. and other developed countries have the opportunity to increase their share of the market in 2014 and beyond. Opportunities for increased demand exist in a number of market segments, such as automotive, defense, geosynthetics, safety and technical products, and digital textile printing.

In 2014, successful players will be those who invest significantly in new, innovative products, pursue performance-enhancing efficiencies in their operations, and clearly communicate the value of their products and services to their customers.

Jeffrey Rasmussen is IFAI’s market research director. He can be reached at
+1 651 225 6967 or jcrasmussen@ifai.com.

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