Fibers Move East
Preliminary results from two upcoming man-made fiber market studies
Fiber Technology
By John Luke
Fibers Move EastPreliminary results from two upcoming market studies track the movement of
man-made fiber production to Asia.The shrinking man-made fiber industry in the industrialized world
and the concomitant explosive rise of production in the developing economies of Asia are
well-documented. The logic is brilliant in its simplicity: Asian economies built large export
businesses and programs by vertically integrating fiber, fabric and garment manufacturing, thereby
insuring that the entire value added in the supply chain remains in the country of origin. Driven
by apparent comparative advantage in wages and enticed by the siren call of reduced unemployment
and acquisition of hard currencies to fuel further expansion into a full range of consumer goods,
Asian countries crafted and implemented well-designed programs to capture global garment
manufacturing business.As a result, pressure built on fiber and fabric manufacturers in
industrialized nations to create substantial changes in operations, export commitment, survival and
ownership of manufacturing assets. Producers in the United States and Europe ran to specialty and
niche products, which, while profitable in their own right, cannot provide sufficient volume or be
sufficiently profitable to support the large fiber and fabric manufacturing facilities established
through the 1960s, 70s and 80s to service the huge apparel and home fashions needs of growing and
increasingly affluent consumers.Increasingly, historical U.S. fiber manufacturing assets are being
sold at bargain prices to international (off-shore) owners. Two new market studies will be released
in 2005: Shape of the Manmade Fiber Industry in 2015 and Polypropylene Fibers in 2015. These new
reports will study fabric and garment manufacturing trends, as well as the economics and logistics
of major suppliers to the downstream industries. The following are some preliminary conclusions and
the projections may be modified slightly in the final reports.Total ProductionBased upon United
Nations data, world population will reach 6.812 billion people by 2010, a compounded annual
increase of 1.13 percent from the turn of the century. World per-capita production of man-made
fibers rose from 7.94 pounds per person in 1985 to 12.35 pounds in 2000, an annualized increase of
2.99 percent, most of which came between 1995 and 2000 when production surged a compounded 4.86
percent per year, driven by enormous increases in Southeast Asia in an export response to a
regional recession and economic crisis. Since repetition of such level of activity is unlikely, the
research is forecasting a lower rate of per-capita growth through the first decade of the new
century. Given the energy drag created by unrest in the Middle East and possible banking problems
in several Asian nations, it is hardpressed to forecast total production much in excess of the
levels between 1980s and early-90s. Combining the projected per-capita production rate increase of
2 percent per annum for the decade with expected world population of 6.8 billion people yields a
production of all man-made fibers of 98.275 billion pounds in 2010 and, adding in cellulosics,
total man-made fiber production of 102.175 billion pounds.GeographyLong the preserve of Western
Europe and the United States, fibers now are produced worldwide with recent emphasis on a few Asian
economies, particularly China, Taiwan, Korea and most recently, India.In 1990, Europe and the
United States controlled 58 percent of manmade fiber production. By 2002, that dominance had
dwindled to 33 percent and is projected to drop even lower to 23 percent in 2010. In the late
1990s, Japan reduced its production while Korea grew through the 90s only to scale back recently.
Most growth came from expansions in India and China. In 1990, China represented barely 8 percent of
total man-made fiber production; by 2002, it produced nearly 30 percent almost a tie with the
combined United States and Europe production.Meanwhile, India began a program aimed at achieving a
dominant position in fiber, fabric and garment manufacturing. The Indian government established
commerce councils aimed at strengthening and assisting investment in textile and apparel
operations. From a virtually nonexistent position in the 90s, production in India has risen to
more than 5 percent of the worlds supply of man-made fibers today, with programs in place to
expand further.ProductsLooking ahead to 2010, polyester and olefin will likely continue to dominate
the growth. Other fibers will struggle to maintain their positions and several will enter the
decline phase of their product life cycles.Acrylic: Recent world production of acrylic fibers has
stagnated at the 6-billion-pound level, most of which (58 percent) is produced in China and Europe.
Acrylic is gradually losing the price battle to polyester and increasingly is relegated to bulk and
wool-substitute end uses. Acrylics excellent chemical resistance makes it suitable for a multitude
of markets and the fiber will continue to shine in water and gas filtration uses in response to
clean water and air initiatives; however, growth in traditional apparel and home fashion uses is
limited at best. The study expects the year 2010 to demonstrate a slightly decreasing production
pattern, probably heading for serious decreases in production in the second decade.Cellulosics
(excluding cigarettetow or Lyocel): Viscose-based cellulosic fibers lead the race to oblivion.
Lyocel offers an environmentally attractive substitute to traditional viscose and, to the extent
that producers want rayon, Lyocel will expand and satisfy the need. Among the regions where
cellulosics are produced, Europe is closing viscose operations and China likely will follow suit
under environmental pressure from the World Trade Organization.Alternatively, there may be
increasing emphasis on cotton or, most likely, higher level blends of polyester with cotton,
thereby stretching the available cotton supply and absorbing the expected deluge of both filament
and spun polyester.Nylon: Nylon seems to be losing share to polyester, overwhelmed by sheer volume
if not performance. In carpets, staple nylon gradually is being replaced by filament; tires
increasingly use polyester over nylon and many woven industrial and apparel fabrics seem to favor
polyester. Nylons dyeability is an advantage but not sufficiently so to overcome the supply and
variants available in polyester.Olefin (excluding cigarette tow): In 2002, Europe and the Western
Hemisphere produced approximately two-thirds of the worlds olefin supplies (excluding cigarette
tow) with China adding an additional 17 percent. Generally, olefin (polypropylene) is a fiber for
home and industrial applications, such as in carpets and disposable diaper cover stock. As Asian
economies improve from the problem days of the late 90s, they will increasingly embrace textile
materials containing polypropylene, possibly starting with geotextiles in the race to create
additional infrastructure and arable land for foodstuffs.Polyester (excluding bottle resins): As
recently as 1990, world polyester production (filament and staple) totaled 20 billion pounds
annually. In 2002, production had more than doubled to exceed 46 billion pounds. The world man-made
fiber industry shipped more polyester in 2002 than it had shipped in total product 12 years
earlier! This increase forever changed the world map of fiber production.In 1990, the West and
Europe accounted for 43 percent of total world polyester production. By 2002, the balance had
shifted dramatically. First, Korea made a run in the 90s but lately appears to have reduced its
ambitions. Taiwan maintains a posture similar to Korea. The big player obviously is China, where
polyester production grew from a 12-percent share of a 19-billionpound market in 1990 to 37 percent
of a 46-billion-pound market in 2002. However, this rate (more than 20 percent compounded annually
from 1995 through 2002) cannot be sustained, and it is projected that China will produce
approximately 36 billion pounds of polyester in 2010, a 10 percent annually compounded rate from
2002. This effectively will force the rest of the world to limit polyester production to 2002
rates.ConclusionThe speed with which Asia moved to dominate man-made fiber production is
astounding. The commitment is complete and the world man-made fiber industry will never be the
same. It is obvious that production asset investments of the recent decade are world-class in
efficiency and quality with the world consumer receiving the benefits there from. The
industrialized world must move on and let the developing world be satisfied by lower returns on
investment, either through lower local funding costs or government subsidized manufacturing aimed
at employment and/or accumulation of strong currencies to be used for continued economic
development. Either way, the new nexus of the man-made fiber business is Asia.
Editors Note: John Luke is president of Five Twenty Six Associates. The firm specializes in
strategic market analyses of world man-made fiber and fabric industries. He also is adjunct
professor of marketing at Philadelphia Universitys College of Textiles and Science. He can be
reached at lukejeluke@netscape.net.
Fall 2004
