Dornbirn Man-made Fibers Congress 2016

Transcription

1 Ladies and Gentlemen! First of all, allow me to warmly welcome so many of you here today. In particular, I am pleased that a large number of participants from countries outside of Europe are our guests in Austria. Let me begin by taking a look at our industry. Once again we are operating in a gratifying business environment after many years which were not so good. Growth prospects are intact. In 2015 we witnessed global production growth of about 4.8%, or more than one percentage point higher than in the previous year. In other words, our industry is back on track. However, the low oil price is a problem for us: At prices of about USD 40 per barrel, large volumes of high quality fibers are being sold on the market at very low prices. These fibers should actually cost much more, because they offer much more than the current price of approximately USD 1.2/kg in Asia indicates. The selling prices of polyester have only been going downhill for the last five years. These low prices have led to a distortion of inter-fiber competition, which is not a good thing. Naturally, all of us are not completely innocent when it comes to the poor price situation for polyester. These prices are a consequence of enormous surplus production capacities which have been built up in the industry in recent years. Based on current growth rates, these capacities are so high that they would be sufficient to cover demand over the coming four to five decades. These excess capacities are more than just a latent threat or dark clouds on the horizon. For this reason, we should urgently consider whether it would make sense to reduce capacities for standard polyester fibers on a larger scale once instead of repeatedly increasing volumes. In contrast, demand for wood-based cellulose fibers is very high at the present time, which has resulted in a double-digit rise in selling prices this year. For the first since 2010, viscose fiber prices have been higher than cotton prices for a longer period of time (since 2015), also in those areas where they belong both technically and qualitatively! As to carbon fibers the strong demand has led to a substantial increase in prices against the backdrop of limited production capacities. The cotton industry is going through turbulent times. Following the Chinese government policy to build up inventories back around , these inventories are now being reduced, putting pressure on prices. At the same time, reduced subsidies to farmers in certain areas, climate impact as well as higher returns for farmers from alternative crops have reduced the cotton production levels. Unfortunately, there is a danger that excess production capacities for cellulose fibers and other products will arise as a consequence of the good price situation. If this happens, our industry would saw off the branch we are sitting on, which in turn would have painful consequences. 2016_Rede_vdK_Engl.docx Page 1 of 5

2 Commoditization of high quality products is, in fact, a general trend in every industry. However, this trend is intensified the more additional capacities come on stream and cannot be immediately absorbed by demand. Let us learn from the mistakes of the past! In contrast, the experience we have gained in recent years has shown us that specialization and the identification of new niches are rewarded by the market. In any case, specialty products are by far less severely affected by recent price volatilities than standard products. There are also a series of other potential dangers which we as managers and product developers are unable to influence. For example, this includes political threats which can lead to entire sales markets being suddenly called into question in a matter of just a few days. We are seeing this now in India, where the local textile industry has complained about the negative effects of the government s anti-dumping policy. A few Indian fiber and spinning companies may be pleased with the artificially high prices for yarn, but this reduces export opportunities for the manufacturing and processing industries. Our Indian colleagues in the textile processing sector even believe that their very existence is threatened by the current situation. Trade barriers are always an obstacle to fair competition, and we should continuously take a firm stand against them. They have rarely solved problems, but for the most part have only delayed the implementation of appropriate solutions. After this brief glance at the present situation, let me now focus on our common future. The successful future of industry is based on the supposition that we will get fair prices on the market for our products. We can only generate healthy profits if we obtain fair prices. Only healthy earnings enable us to finance the crucial innovations which our customers and also consumers rightly expect from us. Good products must come at a price. And these prices create the financial basis for better products in the future. Perhaps we should be inspired here by the experience of the pharmaceutical industry. Actual production costs for the tested drugs only comprise a fraction of the selling price. If the pharmaceutical industry had only calculated production costs, today we would still be at the level of the herbalist priest in medieval times, and we would consider bloodletting to be the biggest achievement in the field of medicine. Today s earnings serve as the basis for the innovations of tomorrow! Why should this principle also not apply to our industry! 2016_Rede_vdK_Engl.docx Page 2 of 5

3 This raises the issue of how our industry can obtain fair prices on the marketplace. From my point of view, there is a clear response to this question i.e. by further specializing production and thus further enhancing the added value for our customers! If we offer our customers new and improved functionalities and can effectively explain to them what their specific benefits are, then everyone along the entire value chain will benefit. Many of us are already on the right path. This translates into offering the right fiber or blend for every area of application. This path opens up many innovation opportunities for which the marketplace is prepared to pay a premium compared to standard fibers. Let us take the speedy development of technical textiles as an example. The breadth and depth of this market hardly existed 20 years ago. We currently see growth rates of more than 4% in both volumes and revenues. The technical textiles industry is one of the most innovative industries in the world. New applications are being developed in a broad range of end-uses, such as healthcare, agriculture, construction, automotive, environmental protection. Just to name a few. But also in this attractive segment, continuous innovation is key and will need to be financed. But for more on this exciting segment, I let you enjoy the insights from Mr van Delden who will speak later today. Allow me now to focus on another aspect which is decisive for the success of our industry, namely Social acceptance. Humanity is well on track towards consuming about 100 million tons of fibers annually, including cotton, just a few years from now. This is also a huge amount from a physical point of view. Many people justifiably ask what happens to the fibers when they are no longer in use. Some of these fibers are even intentionally sold as disposable fibers for single use only, for example most nonwoven fibers. We have to answer this legitimate question regardless of whether this involves synthetic fibers or cellulose fibers like cotton or viscose. This is because we in our role as the fiber industry are at the beginning of the value chain. Last year I spoke in detail about the growing importance of recycling textile fibers. I also discussed the numerous and promising approaches to polyester fiber recycling. 2016_Rede_vdK_Engl.docx Page 3 of 5

4 I will speak about one project in an exemplary manner which we at Lenzing introduced to the public a few weeks ago, and which we are proud of. We developed a new TENCEL fiber which uses cotton fabric waste as a raw material. This means that we can combine our TENCEL fibers, which are already very environmentally compatible, with products from these recycling materials, thus further reducing the ecological footprint of the new fiber. Inditex is the first textile manufacturer to test this innovative fiber. Other brands will follow. One of these is Patagonia, who will launch its first product made from the new fiber in spring of The challenge in this project is to coordinate various partners along the value chain. All partners have to work together to make this work. Complexity in fiber blends, dyes and finishes, as well as designs are critical aspects to consider in a closed loop process. This is why the partnerships of Lenzing with the retailers on the other end of the value chain are so important for the overall success of this project. I am sure that we will also see further projects in this direction in the years to come, and they will not always be from Lenzing, the company I represent. A lot of positive developments are in the makings here. The objective must be to more strongly integrate the concept of the circular economy in the fiber industry. Our goal must be to offer products made of renewable raw materials and fibers with the least possible environmental impact when they are processed along the value chain. Only then will we be able to achieve a fair premium in the future for such products. The challenge of achieving this lies in communication and cooperation. We will only ultimately get positive feedback from consumers in the form of their purchasing behavior if we are able to communicate and explain the benefits along the entire value chain right up to the end user. I will only be prepared to pay a higher price if I am aware of the advantages and understand them. What do I specifically mean by explain? For example, in the nonwovens segment, one could proactively focus on the issue of the biodegradability of the fibers. In the textile segment, we could showcase the ecological advantage of spun-dyed fibers. I mean the fact that problematic dyes will not end up in the wastewater when the fibers are processed. The conservation of natural resources is something which can be explained to the consumer, who is also increasingly demanding this. This is no longer just an issue reserved for a small avant-garde. In addition, in the light of the need to conserve resources, we will also have to focus even more on improving the quality and durability of the products made of our fibers. From the consumer s point of view, the purchase of fewer but qualitatively better, more expensive products manufactured in a 2016_Rede_vdK_Engl.docx Page 4 of 5

5 clean manner comprises a more environmentally friendly solution than owning many cheap goods which are produced under questionable conditions. Naturally we can communicate these benefits together with our partners along the value chain, who will in turn give us the relevant customer feedback. Afterwards, you will also have the opportunity to get insights on what the European Union is considering as actions on this topic during the presentation of the high-ranked representative from Brussels, Mr Julio Cardoso. Ladies and Gentlemen, Our industry, our ways of thinking and solutions we offer are becoming increasingly complex. And the fiber industry is increasingly emerging as a know-how-intensive industry. For this reason, we should use this as the basis for positioning ourselves more strongly in the public eye. I believe intensified public relations are just as crucial as intensified lobbying with public authorities and opinion leaders. We require a much greater willingness to support our industry. Many opinion leaders see the fiber industry in Europe as a consequence of past events as one which is in danger of closing down or being relocated to other regions in the world. The rapid technological and ecological changes occurring in recent years have not yet really been embedded everywhere in people s minds. If we succeed in this positioning, then we will generate even more interest in research and development. Even more young people will commit themselves to scientifically working for the industry, because we will continue to be attractive in the future as a driving force behind industrial research. Thus we have come full circle to our conference here. Dornbirn 2016 is testimony to the strength which our industry boasts as we look ahead to the future. In this spirit, I wish all of you exciting, eventful and insightful days here with us in Austria. Robert van de Kerkhof CCO Lenzing AG President of the Austrian Man-Made Fibers Institute 2016_Rede_vdK_Engl.docx Page 5 of 5