THE TECHNICAL TEXTILES INDUSTRY. World Market Trends, Drivers and Prospects. David Rigby

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1 THE TECHNICAL TEXTILES INDUSTRY World Market Trends, Drivers and Prospects David Rigby 1

2 David Rigby Consultant in performance Textiles TT & NW Effect Textiles (e.g breathable) Fabrics and Materials Work for Business owners &CEOS Strategy, Marketıng, Innovation, Market Research STRATEGIC MARKETING 2

3 25 Years in TT&NW A great prıveleage 155 projects, 105 clients, 22 countries Covered almost all types of materials, machinery, products, end uses, customers, value chains Published 8 reports forecasting future markets of TT&NW and components 3

4 Key Management Issues Segmentation Which technology / product / market segments to focus on? Business models How best to operate? These are topics for oday : for existıng and wanabee TT&NW businesses 4

5 Technical Textiles and Nonwovens (TT&NW) An attractive sector Size, growth rate Defendable segments and niches But more complicated more variety in: End uses, value chains, business models Materials and products Technologies, Machinery So we need to take much more care when entering the sector Or when expanding or diversifying if already in it Key question : how to define and asses, from a company s point of wiev, the overall attractiveness of a segment? 5

6 Technical Textiles and Nonwovens (TT&NW) An attractive sector Size, growth rate Defendable segments and niches But now more complicated; more variety in: End-uses, Value Chains, Business Models Materials and Products Technologies, Machinery So now need to take much more care when entering the sector Or when expanding or diversifying if already in it Key Question: How to define and assess, from a company s point of view, the overall attractiveness of a segment? 6

7 Strategic Marketing Approach for a Company. high B A A Inherent segment attractiveness C B A C C B low low Achievable competitive strength, in the segment high 7

8 Inherent segment attractiveness example Factor Weight (%) Market size 10 Market growth 25 Cyclicality 5 Competitive intensity 5 Entry barriers 25 Power of customers vs suppliers 15 Stability 5 Potential for adding value % Different businesses could use different factors and weights 8

9 Competitive strength criteria example Factor Weight (%) Technology fit 35 Cultural/strategic fit 20 Existing market presence 10 Existing relationships 15 Access to materials % Different businesses could use different factors and weights 9

10 Overall segment attractiveness Opportunity (fabrics) Relative market size (0-10) Achievable competitive strength (0-10) Inherent segment attractiveness (0-10) Overall attractiveness 1 V-belt A 2 Abrasives A 3 Uniform B 4 Awnings B 5 Filter B 6 Wound dressing C 10

11 Overall segment attractiveness- for a weaver high Inherent segment attractiveness B Filter C A B Abrasives Uniform A V-belt A C Wound C dressing B Awnings low low Achievable competitive strength high 11

12 Some Overall Market Drivers Vary among the different products and markets GDP; GDP/head; disposable income Industrial production: autos, filtration Agricultural production Legislation: safety, environment etc 12

13 Overview Forecasts Application Areas Application Area Years CAGR% Agrotech 1,173 1,381 1,615 1, % 3.2% 3.9% Buildtech 1,261 1,648 2,033 2, % 4.3% 5.0% Clothtech 1,072 1,238 1,413 1, % 2.7% 3.2% Geotech % 4.6% 5.3% Hometech 1,864 2,186 2,499 2, % 2.7% 2.7% Indutech 1,846 2,205 2,624 3, % 3.5% 4.4% Medtech 1,228 1,543 1,928 2, % 4.6% 4.3% Mobiltech 2,117 2,479 2,828 3, % 2.7% 3.4% Packtech 2,189 2,552 2,990 3, % 3.2% 3.8% Protech % 3.3% 4.0% Sporttech ,153 1, % 3.1% 3.7% Totals 13,971 16, , % 3.3% 3.8% Of which Oekotech % 6.0% 6.9% 13

14 Some Innovations End Uses, Markets Geotextiles Water management Protection bomb blast Medical arteries, tissue scaffolds, prostheses Filtration all particle sizes China, India, Brazil 14

15 Some Innovations - Products Spacer fabrics (3-D) Auxetic fabrics Multi-layer (multi-function) fabrics medical, geotextiles Smart fabrics, coatings and composites monitor, report, react Flexible solar panels Architectural membranes 15

16 Some Innovations - Processes Tetraxial weaving 3-D hydroentangling Multi-layer lamination Plasma treatment of fabrics to produce functional properties Coating with PTFE and silicone polymers 16

17 Some Innovations - Materials Cheap stretch fibres Auxetic polymers (expand when stretched) Complex yarns: bi-component, coextruded, core/sheath, sea/island Natural fibres in composites: for autos etc Phase change materials (PCMs) Nano-technology 17

18 Changing Sector Dynamics Product and market maturity: EU,NA DCs: BRICs, Turkey Imports from DCs Import substitution by DCs Slowdown in new technologies More knowledgeable End-Users Emphasis on better performance Emphasis on better value cost down 18

19 Secondary performance characteristics now being addressed PRIMARY (achieved) strength Fire retardancy resistance eg abrasion acid etc EMR shielding filtration etc SECONDARY (needed) improved performance cheapness lightness usable lifetime recyclability ease of after-care comfort etc 19

20 Leads to more complex products More components Textiles, plastics, foams, films, metals, powders, paper, finishing chemicals, effect chemicals, plasma treatment etc Joining technologies adhesives coating/laminating entangling etc engineering of flexible materials - AFM Impact on R&D and New Product Development activities A BROADER MATERIALS-BASED INDUSTRY 20

21 New product development Technologies, materials Market needs: functions, value Products, performance levels, costs 21

22 The Technology Push approach TECHNOLOGY-PUSH drives innovation TECHNOLOGIES materials, processes We have a new material process effect - what can we do with it? a good enough breakthrough product customer needs new performance, new products new end-uses OPPORTUNITY-DRIVEN many possibilities diffuse - how to focus NPD? many cycles many failures 22

23 Features of Technology Push New fibres (aramids, speciality PES) New machinery multiaxial warp knitting New fabric types spacer fabrics Need to organise pull through as fast as possible Can lead to significant and lasting competitive advantage 23

24 The Market Pull approach Customer says (after several cycles): I now understand how it works! I have a specific end-use product/ performance/cost problem Can you solve it for me? PROBLEM-DRIVEN ownership focused supply chain position specific end-use MARKET-PULL drives innovation precise performance specifications CUSTOMER constant product improvement and cost reduction a product to meet the precise specifications technologies, materials, processes 24

25 Examples of Market Pull Automotive components and assemblies (seats, airbags, headliners etc) Medical dressings Geotextiles etc 25

26 Balance of PUSH and PULL within a business or Group depends on Business strategy being followed Driving force; business model Mental maps: e.g. technology follower Unique capabilities, core competences Existing supply chain positions NPD capabilities 26

27 Value/Supply chains - now a major factor Car manufacturer Hospital Moulder (first tier) Scalpel Steriliser, packager Anaesthetic syringe Laminator (second tier) Technical textile producer (third tier) Processing Chain (automotive headliner) Nonwoven swab Needle Assembly Chain (surgical procedure pack) Suture 27

28 Some very big players involved Major customers Machinery suppliers Conversion to final product: the textile industry Large materials producers: e.g. chemicals polymers fibres plastics 28

29 Some consequences of all this Back-selling: specifications, committees Intellectual Property (IP) issues Multi-component products; developed collaboratively Costing/pricing method changes : from production cost plus a profit margin = selling price (cost plus) To target selling price minus a profit margin = target production cost (market-based) Leads to cost/benefit engineering product redesign, new materials cheaper manufacturing methods 29

30 Business Models, Strategies, Tactics Some clear guidelines above on technology/npd policy supply/value chain strategies Collaboration within the value chain Look now at other key aspects of business models/strategies 30

31 Company strategies - Driving Force MATERIALS AND PRODUCTION TECHNOLOGIES PRODUCTS END-USES PRODUCTION driving force CUSTOMERS, MARKETS AND SUPPLY CHAINS PRODUCT driving force David Rigby Triangles Model MARKET driving force 31

32 How to operate each Driving Force? Driving Force Production (eg NW roll goods) Typical characteristics - stable products, single technology high volumes, lowest cost, strong control; engineers Product (eg filters) Market (eg medical) - Many end-uses/end-users, problem solving, multi-technology, many products, spare capacity, loose control, textile technologists - Few customers, strong relationships, identify customer needs, make or buy; customer-facing marketing/selling teams 32

33 When to change your Driving Force A Business s Driving Force tends to drift over time from Production to Product to Market Driving Force Experience shows that a business with a Product Driving Force and many product variations can be hard to make profitable and/or grow The situation needs to be monitored in each planning round. 33

34 A possible approach to entering TT&NW Use existing skills and experience as far as possible Be clear about the Driving Force(s) you are comfortable with Assess available capital sources how much to spend? Focus first on growth segments in home markets Industrial: auto, other manufacturing Consumer : hygiene, clothing Construction Government spending priority areas: medical, military, police, fire service, infrastructure, (road, rail, services etc) Find contacts who can introduce you to contract opportunities in the private or public sector Start a business or acquire one? Take a medium-term view about pay-back 34

35 Summary TT&NW is an attractive sector Opportunities exist in many segments But it s maturing and changing You need to understand, focus, and act smarter But there are good rewards for those who do! 35

36 THANK YOU FOR LISTENING QUESTIONS? PANEL DISCUSSION 36

37 Contact Details David Rigby Associates (DRA) Technical Textile Strategy and Marketing Consultants 24 Prince s Road Stockport SK4 3NQ, UK Tel: d.rigby@dratex.co.uk Web: Skype: david.rigby90 37