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State of the Industry 2015: Part 2

March 1st, 2015 / By: / Feature, Management

It was a year of respectable growth in the specialty fabrics industry and hope for an even better future, grounded in promising statistics.

IFAI surveys specialty fabrics industry end product manufacturers (EPMs) once a year to learn how they are doing and what they anticipate for the future. All but one of the traditional end product market segments IFAI monitors achieved single-digit sales growth in 2014; only the military market showed a decline, with a drop of 6 percent.

Investing in state-of-the-art equipment, lean/quality improvement manufacturing practices, staff training and vastly improved marketing efforts targeted toward the customer have helped organizations in the industry increase sales and profit margins.


Military

The military segment covers safety and protective products (including the use of smart technology) for troops, firefighters and law enforcement. A driving force behind product development for the firefighter, law enforcement and industrial markets, the military’s influence on the safety and protective market will continue well into 2015. Spending on military textiles and clothing decreased 6 percent in 2014, and although spending on military textiles and clothing is expected to be flat in 2015, the level of spending is expected to come in at a substantial amount—around $1.6 billion.

Although the U.S. ended its combat operation in Afghanistan in late October 2014, a smaller force will remain. The U.S. government is also funding new programs to combat the Islamic State (ISIS). Defense budget cuts are expected to result in marginal growth for the global military infrastructure (including clothing and textiles) market.

The U.S. military market is supported by the Berry Amendment, a “Buy American” program designed to ensure a secure source of clothing and textiles for the U.S. military. When President Obama signed the American Recovery and Reinvestment Act in February 2009, the Department of Homeland Security’s Transportation Security Administration (TSA) and the U.S. Coast Guard also became Buy American programs.

Although the U.S. military clothing and textiles market is expected to realize flat growth in 2015 due in large part to the withdrawal of the majority of its troops in Iraq and Afghanistan, the U.S. will continue to be the largest spender on military products in the next decade. Spending will be driven by new initiatives from the U.S. Army to strengthen and regroup its military base in Europe.

Canada is also expected to provide sufficient funding for infrastructure/logistics (including clothing and textiles) according to the Canada First Defense Strategy, which was formulated in 2008. Due to these factors, the U.S. and Canada are expected to remain as the leading military spenders, representing 38 percent of the global market. Asia and Europe are also expected to account for a significant portion of the total military infrastructure (including clothing and textiles) market with about 27 percent of the global market. This will be mostly driven by the efforts of countries such as India, China and Russia to revamp their armed forces.


Advanced technical products

Growth in the U.S. advanced technical products market (ATP) is 6 percent annually; the economic slowdown in the first quarter of 2014 didn’t dampen growth in this resilient market. Growth was buttressed by the improving job market in 2014; growth is expected to be flat in the military area of this market segment but should improve in manufacturing segments such as automotive. Supporting growth in 2015
is an expected decline in unemployment to 5.5 percent;
it fell to 5.6 percent in December 2014, the lowest since June of 2008.

Outlook. In the October 2014 IFAI survey, suppliers and fabricators reported they expect sales will increase 6 percent in 2015 compared to 2014 due to the improved economy enhancing a much improved employment environment. Military clothing, construction and industrial markets—especially the automobile/industrial market—will continue to drive growth. Trends noted include growth in the arc flash and flame-resistant segments.

At IFAI Expo 2014, medical equipment was cited as a market opportunity for growth in 2015. International competition, especially China, was cited as a potential threat to growth, but this was also seen as an impetus for ensuring domestic suppliers continue investing in the necessary resources—people, money and equipment—to improve their business. In fact, some U.S. participants see more opportunity for themselves in international markets, which helps to counter the foreign competition effect.

Leading trends in the advanced technical products market
include increasing:

  • Compliance with government safety regulations (for example, ANSI compliant garments)
  • Adoption of personal safety products in
    emerging markets, especially China and India,
    as their workforces become more organized
    and call for worker safety
  • Employment in developing economies.
    Major efforts are underway in China to develop infrastructure and more advanced markets like automobiles and construction

Narrow fabric

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 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 for wound care.

The overall U.S. narrow fabrics market grew an estimated 2.4 percent in 2014; the rigid market (seat belts, slings, tie-downs, cargo nets) grew 5 percent in 2014; and the elastic market (medical, industrial, recreational, but not apparel) grew 4 percent. Over the next few years the strongest growth will come from Asia (China) at 5.5 percent and in South America at 5.2 percent, while the U.S. will continue to grow at 2–2.5 percent annually.

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 some 6 percent in 2014—reaching 16.4 million vehicles, which translates into 246 million meters of seat belt fabric sold. Spending on military textiles and clothing in the U.S. decreased 6 percent in 2014 compared to 2013 and is expected to be flat at $1.6 billion in 2015. Sales growth for military narrow fabric products was flat in 2014, but may be up
slightly in 2015.

The market for safety products (harnesses, in particular) grew 4 percent in 2014 as markets like construction continued strong growth in 2014. This was supported by government actions; the U.S. government committed $100 billion to federal highway and transit programs in 2014–2015, and the Canadians committed $70 billion over the next 10 years for infrastructure and buildings. Construction is expected to grow 5–6 percent per year over the next few years in the U.S. and Canada.

Tie-downs and sling sales in the transportation market are growing, but U.S. tie-down manufacturers continue to feel the effect of lost sales due to inexpensive imports from China and Korea. This market is growing 2.5–3 percent per year, as web tie-downs continue to replace wire rope and chains. There is also more use of strapping materials (polypropylene, polyester, nylon, or corded/woven) in the packaging industry, as they have become more cost effective, although polyester has replaced much of the higher-priced nylon.

The medical products market grew 5 percent in 2014 and is expected to grow 6 percent in 2015. The U.S. market looms large with its 80 million baby boomers remaining active and requiring medical help in the form of wound care—gauze and bandages, orthopedic braces and castings, for example. The 83 million millennials (people born in the 1980s and 1990s) in the U.S. are embracing innovative smart fabrics, such as wound dressings that change color to indicate an infection.

The smart fabrics market is expected to contribute consistent, above-average growth to the narrow fabrics market—especially as millennials embrace innovative technologies for years to come.

Small to mid-sized companies are common in the narrow fabrics market. Over the past five years or so, they have invested in growth markets such as medical and safety. Inexpensive imports from Asian countries remain a serious competitive threat, especially in the sling market. On a positive note, 2014 saw U.S. companies returning production facilities from overseas to the U.S. and Canada.

3 Innovative Procucts

Here are 3 innovative products introduced in the narrow fabrics market stemming from the wearable medical electronics market.

  • Wearable Advanced Sensor Platform (WASP) for firefighters. Adjustable straps, embedded within a flame retardant shirt, have physiological sensors that track vital signs, such as heart rate, and transmit them to a command station.
  • Bioharness used in patient monitoring. The harness uses straps worn over the shoulder and around the chest that contain an electronic module that monitors and transmits vital signs to a central location for continuous tracking over time.
  • Smart compression sleeve, worn by baseball pitchers on their throwing arm. A sensor calculates changes in the mechanics of the elbow and shoulder angles, release point and other forces that impact the stress of repetitive throwing on the pitcher’s ulnar collateral ligament. Some major league baseball teams are using this product now.

Geosynthetic

The U.S./Canadian geosynthetic market includes geotextiles, geomembranes, geogrids, geosynthetic clay liners, drainage materials, geocells and erosion control material. In terms of value, geomembranes made up 51 percent of demand in 2014. Geotextiles was the second largest segment in terms of value in 2014, with 25 percent of demand.

In 2014, the market size was $2.2 billion. Growth of 4 percent in 2014 was a nice improvement over its 1.5 percent growth rate in 2012. IFAI survey respondents reported they expect sales to be slightly better in 2015 than in 2014.

The U.S. Congress passed the Highway and Transportation Funding Act of 2014, which extends federal funding for highway and bridge infrastructure projects through May 31, 2015. Congress will hopefully seek more of a long-term fix to keep the Highway Trust Fund (HTF) solvent for a few years. The bill has helped the U.S. geosynthetic market achieve improved growth in 2014 over 2013.

The U.S. geosynthetic market is expected to achieve a growth rate of 4 percent in 2015, facilitated by the U.S. transportation infrastructure construction market, which is expected to grow 3.1 percent from $185.9 billion in 2014 to $191.7 billion in 2015. Airport runways and terminal construction is expected to increase 5 percent to $13.1 billion in 2015; bridge and tunnel construction is expected to grow 2 percent from $30.8 billion in 2014 to $31.3 billion in 2015.

The U.S./Canadian geomembrane market was valued at $1.1 billion in 2014. Key markets include infrastructure construction (roads/bridges), the waste management market and mining. It’s expected to grow at 8–10 percent per year from 2015 to 2018, reaching $1.9 billion by 2018. The mining industry has spurred growth in the geomembrane market in the United States and Canada—especially with the surge in U.S. shale operations.

In June 2014, the Water Resources Reform and Development Act (WRRDA) became law. Included is the first-ever geosynthetics language in a U.S. law—a long-sought collective effort by the Geosynthetic Materials Association (GMA). The new law provides funds for flood control, water navigation, storm damage reduction, ecological restoration, dam and levee safety, and water supply projects. WRRDA is important to this market particularly because of its requirement to have geosynthetics evaluated as a component for water-related projects. It gives a green light to 34 water infrastructure projects across the country.

In December 2014, the U.S. Environmental Protection Agency (EPA) announced the first national regulations for the disposal of coal ash generated from coal-fired power plants. The rule establishes safeguards to prevent ground water contamination and air emissions from coal ash disposals. IFAI estimates there are at least 535 U.S. coal ash sites that require new liners. Enforcing the use of liners could mean $300–350 million in sales for the U.S. geosynthetics market over the next 5–7 years.

Trends: Geosynthetics

  • More competition domestically and from imports
  • Continued increase in activity in the mining market, especially shale
  • Continued increase in oil and gas market
  • Increase in the use of geomembrane liners

Opportunities in the U.S./Canadian geosynthetic market for 2015

  • Increase in the railroad market
  • Increase in domestic resin production should help bring down the cost in gas market
  • Continued growth in the U.S./Canadian oil and gas market
  • Enhanced growth from industry efforts to promote the benefits of geosynthetic usage to state DOTs
  • Continued efforts to educate civil engineers about the benefits of geosynthetic usage compared to traditional building materials
  • Continued increase in the use of geomembrane liners

Tarpaulins and truck covers

The U.S./Canadian 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. Roll-up truck covers or tarps are usually used on dump trucks to secure heavy loads such as dirt and gravel. Other tarp applications run from hay tarps to tarps used in the construction industry, as well as tarps and liners used in the waste industry.

Tarpaulins and truck covers fall into different product segments. Truck covers are custom made, designed to protect freight on different types of trucks for various transportation applications. Tarpaulins generally are a commodity. The U.S./Canadian tarpaulin and truck cover market grew 5 percent in 2014 and should achieve another 5 percent growth in 2015 as the U.S. economy continues to improve.

Outlook. In IFAI’s survey, respondents said they expect sales to be somewhat better in 2015, citing consistent 5 percent growth, supported by an improved economy, which will help grow key markets like housing and construction, which means more trucks on the road.

With construction growing (6 percent expected in 2015) in a competitive environment, there will be more demand for lumber and steel tarps, as well as poly and mesh tarps. Additionally, more trucks are using curtains, as opposed to solid enclosures. The freight industry is likely to see a continuing shortage of skilled truck drivers and fewer small shops with their consolidation into larger businesses.


Equipment

The U.S./Canadian industrial fabric equipment market includes fabric equipment for cutting, heat sealing and welding, labeling and marking, grommeting, pattern making, sewing, slitting, tables for cutting and sewing, testing and more. In terms of value, this market was $540 million in 2014, up 8 percent over sales in 2013. It is expected to grow about 10 percent in 2015, reaching about $594 million. Market figures for equipment include accessories and tools, sewing, cutting and patterning, heat sealing/welding, material handling, software, and printing/graphics. They do not include looms.

IFAI’s survey respondents reported they expect sales to be somewhat better in 2015. Equipment manufacturers report that tarpaulins and truck covers, signage and awnings are their top markets. Other significant markets include marine, upholstery, fabric structures, covers and enclosures.

Accessories and tools were used the most—with a favorable usage score of 91 percent; sewing equipment was second with a score of 87 percent.

An important concern for EPMs is when their equipment breaks down and needs repair. EPMs are most interested in receiving training on sewing equipment, heat sealing and welding, and general machine maintenance and repair.


Going forward

Industry participants who actively look for opportunities to exploit in the marketplace and take advantage of them are cementing their place as leaders in the industry. Their position is that they must continue to invest in innovative products and internal business processes each year or run the risk of losing their standing in the marketplace. They are well aware that competitors from across the globe are working vigorously to penetrate and grow their place within their respective markets.

These industry leaders continue to selectively invest in new product development, internal business processes such as supply chain logistics, Enterprise Resource Planning (ERP), and Six Sigma lean manufacturing programs. Such investments have enabled U.S. manufacturers to become more competitive with foreign imports, including China and India, as the costs of production and labor continue to escalate in China, resulting in greater parity with U.S. manufacturers.

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

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