The Backing Business: New Innovations and Capital Investments
By Darius Helm
It’s been nearly a decade since the last major transformation in the carpet backing business, a mature industry that has in the intervening years focused more on the greening of its commercial products and modest enhancements that improve the performance of the carpet. Now, with new products coming on the market and new investments increasing domestic capacity, it looks like the backing business is poised for more change.
The turn of the century saw a flurry of technological innovations that significantly improved the finished product, everything from pattern definition improvements to better tuft bind. Those innovations were aligned with marketing efforts that raised the profile of carpet backings and ultimately led the industry toward a deeper understanding of the significance of the different carpet components and how to manipulate them to create a better product. It also showed how backings with performance and sustainability benefits could be a market differentiator that would lead to buyer preference. SoftBac, PatternLok, EcoWorx and KangaBack are just some of the backing brand names introduced at that time.
This was followed closely by a move toward vertical integration by the big carpet mills, acquiring backing firms to move production in-house. This left the independent backing producers to compete for the small and medium sized mills, which account for less than 25% of the carpet market.
Over the intervening years, there have been no massive changes in the backing industry. With its trajectory determined by the rise and fall of the carpet market, the industry is currently on the upswing, up by 3% to 4% (in dollars) last year. One significant long-term development has been increasing competition in the more commodity-based polypropylene primary and secondary backings market coming from the Middle East.
CARPET TILE CHANGES THE GAME
There’s been another significant shift in the carpet business over the last decade, the shift from broadloom to carpet tile. Most of the big mills now report that over half of their commercial carpet sales are from carpet tile. And carpet tiles have different backings, which means that broadloom backings have been losing share.
The standard broadloom backing is a woven polypropylene primary bound with latex to a woven polypropylene secondary, and Propex is the independent supplier with the biggest share of that market, followed by Mattex. Other producers include Don & Low, Etex and Carpet & Rug Backing and Supplies. Shaw, Mohawk and Beaulieu make these backings inhouse, with a combined volume that dwarfs the market for the independents.
It’s worth noting that these producers have been buffered from the full force of the shift from broadloom to tile because the bulk of that shift is taking place among the biggest mills, most of which are vertically integrated, and in the commercial market, where polypropylene woven secondary backings face more competition from a range of specialty backings.
When it comes to carpet tile, the standard polypropylene primary backing won’t work because it won’t lay flat—its low melting point compromises the integrity of the backing when it’s subjected to the heat involved in the application of the secondary backing system. Polyester (PET) has a higher melting point, so polyester backings have become the standard primary backing for carpet tile. Leading producers are Bonar and Freudenberg Nonwovens, both of which make spunbonded nonwoven polyester backings.
Freudenberg Nonwovens is headquartered in Weinheim, Germany, and its U.S. facility is located in Durham, North Carolina. In addition to serving the carpet tile market, Freudenberg also supplies backings to the broadloom and walk-off mat markets. Lutrador is its 100% spunbonded nonwoven polyester backing brand, and that includes Lutrador Eco, introduced in 2010, which is made of 100% post-consumer recycled content, including content from reclaimed drink bottles.
This year, the firm will make significant investments in technology upgrades in both Germany and its Durham, North Carolina facility.
Bonar was formerly Colbond—it was acquired by Low & Bonar PLC in 2012 and merged with its subdivision, Bonar Technical Fabrics—but it still goes to market with its Colback line of carpet tile backings. Late last year, Bonar introduced Colback Profloor, using “biocomponent fiber technology” to create enhanced stitch lock. According to the firm, tiles using Colback Profloor have improved dimensional stability and fewer curling problems, and the construction allows for more complex tuft constructions.
The timing of this introduction may be related to another development impacting carpet tile backings. Polyester technologies have vastly improved over the last few years, and it has led to an explosion of residential broadloom with polyester face fiber—literally changing the face of the industry. And now those developments are starting to impact the backings.
In mid 2011, Propex, which is the largest independent backing producer both domestically and globally, introduced a woven polyester backing for carpet tile called Isis. While Isis is priced higher than nonwovens, it is designed to offer several cost-saving advantages, including better mendability, fewer dropped ends and faster throughput. But its superior stitch lock is probably Isis’ most compelling feature, since it allows for beck dyeing and continuous dyeing, wet processes that can’t be used on carpet tile backed with standard nonwovens. The polyester in Isis is made of 90% post-consumer recycled content from PET drink bottles.
Demand for Isis is continuing to build, with millions of square yards of Isis backed carpet tile produced in the last year by several leading carpet tile mills. That growth in Isis, added to growth in its core business—polypropylene primary and secondary backings—has led to capacity expansions. In 2013, which saw mid single digit growth in Propex’s backing revenues, the firm added 50 million square yards of polypropylene secondary capacity at its facility in Hazlehurst, Georgia, and this year it’s adding Isis capacity. Currently, Isis is made in Propex’s facility in Gronau, Germany, but by this summer the backing will also be produced in Hazlehurst.
One firm that’s also been expanding is Mattex, Propex’s closest competitor in the U.S. market. Mattex has four facilities in the Middle East, two of which specialize in polypropylene backings—its original facility in Jeddah, Saudi Arabia produces both primary and secondary backings, and its facility at its Dubai headquarters, opened in 2005, makes primary backings.
The U.S. is Mattex’s largest market and also its fastest growing—the firm has had a lot of success capturing new polyester carpet business—and as a result it is investing $60 million to build a backing facility in Eton, Georgia. Work started on the facility in October 2013, and it is scheduled to be operational late in the third quarter of this year. Currently, Mattex sells only woven polypropylene primary in the U.S., but the new facility will manufacture three products: woven primary and secondary backing made of polypropylene, as well as a woven primary backing made of polyester.
The polyester backing targets the carpet tile market, competing on some level with Propex’s Isis, though it’s not clear yet how Mattex’s product will be priced. It’ll start off using virgin PET, but the firm is researching recycled content options.
In terms of Mattex’s polypropylene products, the firm will lose the advantage of low raw material costs that it enjoyed in the Middle East. The polypropylene for Mattex’s U.S. production will be sourced domestically at a higher price.
Etex is a smaller Middle Eastern woven polypropylene producer, and the U.S. is its biggest market. Its backings go to both area rug producers, like Maples, and broadloom producers, including polyester mills like Engineered Floors. In the U.S., about a third of its business is in rugs, and the balance goes to both the residential and multi-family markets.
The multi-family market has helped fuel Etex’s growth over the last few years, and 2013 was another good year in that market, though activity slowed in the final quarter.
Don & Low, a Scottish firm that goes to market through Dalton’s Norville Industries, has traditionally focused on woven polypropylene primary and secondary backings, mostly for the residential market. However, in the next few months the firm will be coming out with new products targeting the commercial market, with heavier warp and weft tapes designed to “withstand the more aggressive shifting and higher stitch rates commonly found among commercial carpet styles.”
Though it uses all of its capacity internally, the biggest backing producer, by far, is Shaw Industries. Shaw makes backings for both its commercial and residential products, broadloom and tile, and has been a backing innovator for years. Its SoftBac woven secondary backing, for instance, has a fleece component that reduces scratching and scuffing during the installation process; its cradle-to-cradle certified EcoWorx carpet tile backing is designed to be fully reused at the end of its life; and its StaLok pattern backing system features an enhanced SB latex, which gives a higher tuft bind. Shaw’s most recent backing is Ultraloc, which is used in turf applications.
MULTI-FAMILY GROWTH BOOSTS BACKING SALES
Carpet in multi-family applications tends to have a shorter lifespan than carpet in single-family settings, and through much of this housing recession the multi-family (rental) market has flourished. That means a lot of carpet, much of it using polyester face fiber and virtually all of it using woven polypropylene backings, has shifted to this higher turnover channel, which also operates on thinner margins than the residential channel. And since the multi-family market has to be supplied faster than single-family, it creates a faster rate of carpet sales.
This suggests that carpet and backing volume will undergo a sizeable adjustment when the pendulum swings the other way and the multi-family market starts to cede momentum back to the single-family builder and retail replacement channels, which the impact on revenues from that loss of volume will be mitigated by the higher price points of carpet in the single-family sector.
Carpet fiber tufted into primary backings is most commonly attached to the secondary with a latex binder, which is made of styrene butadiene latex combined with a filler of calcium carbonate. There are other specialty binders out there, including acrylics and vinyl acetate ethylene (VAE) latex, but they only account for a fraction of the market. Latex performs well, but it’s problematic on the recycling side. It’s an emulsion polymer, not a thermoplastic, so it can’t be remelted and recycled, and that’s an issue in the carpet reclamation industry. SB latex and calcium carbonate generally end up as waste.
Another problem in recent years has been the volatility of raw material pricing. Part of the issue is that oil processing yields a higher volume of butadiene than natural gas processing and so, with the expansion of domestic natural gas production, refineries (crackers) that break down fossil fuels have increasingly been shifting their capacity from oil processing to natural gas processing, and therefore butadiene volume has gone down. From 2010 and 2012, when car sales were higher and therefore so were sales of tires (made of styrene butadiene rubber or polybutadiene rubber), capacity constraints led to major butadiene price increases. Soon after, due to various factors, prices fell sharply.
The market has been fairly stable in the last year, with more onshore capacity, reduced demand for car tires and adjustments in buying strategies. However, during that period of volatility, demand grew for SB latex alternatives, including VAE latex.
When butadiene prices were soaring, a number of mills turned to VAE to replace the latex precoat, since at the time it was substantially cheaper. And over the last couple of years there has been a lot of development of VAE latex to try to attain the same performance characteristics as SB latex.
Now that SB latex prices have stabilized and VAE is only marginally less expensive, it’s not as critical to replace latex systems. However, the momentum has already been generated and several firms are working on options. And regardless of raw material volatility, there remains the issue of SB latex and calcium carbonate not being green enough for the increasingly sustainable carpet industry.
One of the latex leaders is Omnova Solutions, a $1.2 billion business that makes performance chemicals for a range of applications, as well as engineered surfaces and fabrics. From its facility in Calhoun, Georgia, the firm produces a range of high performance SB latex products for carpet production, including low ammonia, carboxylated latex. It also has a latex product called Novagreen 7510 with higher solids—56.5% versus around 53% for standard latex—which means less water to be driven out of the product and faster processing speeds.
Recognizing the need for different products to meet the demands of different applications, Omnova is also focused on targeting new markets with modified or entirely new chemistries. The firm is currently doing research on soft fibers to determine the efficacy of latex systems compared to other polymeric materials, and it’s also looking for opportunities in the rug market.
Another latex specialist is Styron, which used to be part of Dow Chemical. The global firm, with 20 manufacturing facilities across four continents, is also a leading supplier of polystyrene and synthetic rubber. In terms of chemicals for carpet production, it generates most of its revenues from its traditional SB latex, but its Enversa Cushion Technology, which has gained traction faster in Europe, is also seeing strong growth, generally competing against attached polyurethane cushion. Enversa is an environmentally friendly carboxylated latex that avoids many of the chemicals, including heavy metals, used in traditional vulcanization chemistries.
Styron has been proactive in its approach to new chemistries. In addition to traditional SB latex, the firm produces high-solids acrylic latex emulsions and other emulsions with special attributes like moisture barriers and high flammability performance. The firm has had a lot of success with alternative chemistries.
Using the firm’s Lomax Technology, Styron generates about 90% of the natural gas usage at its Dalton latex facility from methane recaptured from the Dalton landfill, which reduces the product’s carbon footprint by 60%.
Global Textile Services and its sister company, Textile Coating, have been focusing a lot of their efforts on adding bio-based content to their latex offerings. This is in keeping with the environmental philosophy of the family of companies, which includes Universal Textile Technologies, well known for its polyurethanes with high bio-based and recycled content.
In terms of latex, the focus has been on the incorporating BiOH Fusion into their latex products. BiOH Fusion is a latex displacement system from Cargill that uses bio-based content. Currently, bio-based content is about 25%. It generally costs about the same as the standard latex offerings.
MP Global Products makes underlayments for laminate, wood and ceramic tile, mostly for the residential market. It's had a radiant heat product called Quiet Warmth Fiber for six or seven years, and now it has introduced Quiet Warmth Film, which is less expensive per square foot and should help expand the radiant heat market. It's also easier to install.
Healthier Choice, another underlayment specialist, is introducing a new product this month called OmniChoice, which is a universal acoustical underlayment that can go under any type of hard surface flooring. It's priced below the firm's Sound Solution underlayment, and, like all Healthier Choice products, features bio-based material (soy) and calcium carbonate.
Also in the underlayment business is Diversified Industries, whose underlayments include its Floor Muffler branded products. One of its fastest growing products is Floor Muffler LVT, a polypropylene acoustical backing that's been out for a couple of years.
While Textile Rubber and Chemical Company also has an SB latex division, it’s probably best known for its cushioned polyurethane systems—KangaHyde, KangaBack, Epic and KangaTrac—that serve both the residential and commercial markets. In addition, the Dalton headquartered firm produces thermoplastic resins, adhesives and specialty chemicals for the carpet industry. A couple of years ago, Textile Rubber consolidated three divisions—the Polmer Technology Group (latex), the Polyurethane Group (Kanga), and the ThermoTex Group (thermoplastic polymers)—into TR Polymers Group. The consolidation enables all of the firm’s carpet oriented businesses to go to market in a more streamlined manner. Both KangaTrac and Epic offer 30% post-consumer recycled content.
One of the busiest firms in the industry is Universal Textile Technologies (UTT), which over the last few years has further expanded its sustainable initiatives and gained some good visibility along the way. UTT is best known for its BioCel and EnviroCel polyurethane backing with recycled and soy-based content—total green content ranges from 60% to 85% of the weight of the product. BioCel, which has a thicker precoat, is designed for high traffic commercial applications, like convention centers, and it features a moisture barrier. EnviroCel is used in the hospitality sector, healthcare and a range of other commercial applications. And there’s also EnviroCel Residential, which is used on residential broadloom and carpet tile. In the last year, EnviroCel has been growing faster, driven by robust activity in the hospitality market as well as growing residential sales.
Many of UTT’s initiatives over the last couple of years have revolved around recycling PET in focused programs, like its Yellowstone program, which captures drink bottles from the park and turns them into polyester carpet, some of which has even been installed in locations within Yellowstone itself.
However, the firm has actually been in the PET recycling business since 1999, and it estimates that it has recycled 500 million plastic bottles over the years,. Toward the end of last year UTT created a new entity called TriPolymer that is focused on collecting and processing polyurethane, whether it’s attached to carpet or synthetic turf. The firm has developed a process that takes the entire product and turns it into pellet form. One use so far is as infill in synthetic turf fields.
Another big player in the polyurethane backing market is Dow Chemical Company, which has a strong market position with its Enhancer and Enforcer products. Its products are used with broadloom, carpet tile and synthetic turf.
This year, carpet backing sales are up, with residential business outpacing commercial, and the synthetic turf business is robust. Dow has been focusing on improving both the performance and sustainability of its products. The firm has already incorporated post-consumer and post-industrial material for a 50% total recycled content.
However, the big news is that Dow is working on a technology that vastly reduces the footprint for making polyurethane backings, using much less energy, reducing capital investment and equipment costs, and increasing productivity. The new technology should be launched by the end of this year.
Copyright 2014 Floor Focus