The Backing Business - From January 2012
By Darius Helm
For years the cost of the two biggest ingredients in backings, polypropylene and latex, were rock steady, but now prices are both rising and fluctuating. Most of the activity in the backing business over the last year has derived from these price pressures, squeezing margins from one side while sluggish demand squeezes from the other. In this environment, some importers have made a dent in the market.
Challenging market conditions have slowed the pace of innovation in this category, with only one major development this year (Propex’s Isis). A decade ago, technological innovations transformed the backing industry, lifting into prominence what until that time had been widely regarded as a basic, utilitarian commodity product. Backing producers improved their products in several key areas, like tuft bind, pattern alignment and retention, and environmental footprint. In fact, the greening of the flooring industry began with carpet backings.
In 2005, in the wake of these developments, the two biggest carpet firms, Shaw and Mohawk, acquired SI Flooring and Wayn-Tex, respectively. At the time, Propex accounted for nearly half of the total backings sold to U.S. mills, while SI made up another 36% and Wayn-Tex had a 7% share of the market.
The vertical integration at the mills left a void, with Propex now controlling the bulk of the independent woven backing business, opening the door for competition from importers. The rising cost of energy and raw materials has opened the door even wider, and over the last few years a handful of importers have seen growth in their U.S. businesses.
The Carpet & Rug Institute (CRI) comes out with a monthly primary backing report that many in the industry use to track total carpet volume. Back before the vertical integration by the mills, the report was a fairly accurate indicator of carpet volume. However, the importers do not share their numbers with CRI, so today’s reports are probably at least 10% below actual carpet volume.
The total U.S. carpet market is about 60% residential and 40% commercial, and the residential side is predominantly woven polypropylene primary and secondary backings with a latex binder to hold the product together—woven carpet backing forms the foundation for all broadloom carpet and every square yard of carpet contains two square yards of woven backing. A small part of the secondary backing market is made up of attached polyurethane cushion.
In the commercial market, woven polypropylene backings still dominate the broadloom side of the business, though specialty backings have a much stronger position than on the residential side. When it comes to carpet tile backings, however, the primary is generally a nonwoven polyester fabric, and rather than a woven polypropylene secondary, PVC, polyolefin or polyurethane chemistries are employed. With carpet tile steadily taking share from broadloom, nonwovens account for an increasing share of the primary backing business, closing in on 20% according to some estimates.
These days, backing innovation is stronger in carpet tile than broadloom, and the bulk of that innovation is focused on sustainable chemistries rather than improvements in performance and design capability. The developments of the last decade have just about maximized the capabilities of backings and it’s unlikely that we’ll ever see that pace of development again. That’s particularly true on the broadloom side, where many see the backing business as fully mature.
The problem with a mature industry is that it risks becoming commoditized, and the picture that we’re seeing now, with narrowing margins and share going to low cost producers, suggests that this is where the woven side of the business is headed.
While Propex is the biggest independent producer of woven polypropylene backings, both in the U.S. and globally, Mattex is gaining ground, with its third facility scheduled to start operating at the end of this year. Another firm based in the Middle East, Etex, is also gaining share in the U.S. market, along with Don & Low, a Scottish firm that launched its weaving business in 1792. Also in the mix is Dalton’s Carpet & Rug Backing and Supplies (CRB), with domestic production and a focus on service and inventory.
Most of these players have only appeared in the U.S. market in the last few years. Don & Low arrived in 2001, and it’s been gaining ground since the SI Flooring and Wayn-Tex acquisitions; both Mattex and Etex appeared on the scene in the last six or seven years; and CRB distributed backings until it acquired Nexcel Synthetics in 2007.
RAW MATERIAL COSTS
Polypropylene is a byproduct of fossil fuels, like petroleum or natural gas. It’s the lightest of the widely used industrial plastics, and it features frictional characteristics that are ideal for holding fiber tufts in place. Until a few years ago, polypropylene was fairly inexpensive because the market was flooded with it, but U.S. capacity has been declining while overseas capacity has increased. At the same time, demand has also increased. Polypropylene prices have nearly quadrupled in the last decade, and most experts anticipate prices will continue to rise.
In the U.S., natural gas from the Gulf of Mexico is the main feedstock for domestic polypropylene production. However, the polypropylene byproduct yield is smaller with natural gas than it is with petroleum, so as the U.S. energy industry steadily shifts its focus to natural gas, domestic polypropylene production may well decline.
The situation is similar for styrene butadiene latex. Both styrene and butadiene are derived from fossil fuels, though through different processes. The problem is with butadiene, which has been running up in price since 2010—though it has moderated in the last few months.
Both butadiene and polypropylene are produced through steam cracking hydrocarbons, and both are produced in higher amounts when derived from petroleum as opposed to natural gas. As demand fell during the global recession, many cracking operations shut down. Now, with growing global demand, there’s not enough cracking capacity.
In the case of SB latex, one good thing that comes out of raw material price increases is a shift in focus to alternative chemistries. Latex is a challenge when it comes to environmental sustainability, because, unlike most of the other polymers used in carpeting, it’s not a thermoplastic, so it can’t be remelted and reused in the same function, and it’s not biodegradable like natural rubber. That means that as a reclaimed material it’s almost worthless, and it either gets downcycled, often as a filler for virgin SB latex applications, or it goes to landfills.
THE MILL PRODUCERS
The three biggest carpet mills—Shaw, Mohawk and Beaulieu—all produce their own backings, and together they account for more than 75% of carpet consumption. The biggest U.S. backing producer is Shaw Industries, which makes its own woven polypropylene backings for both residential and commercial broadloom, along with its EcoWorx polyolefin backings for both commercial broadloom and tile, and some specialty backings. Shaw also produces a composite secondary backing for its upper-end residential carpet called SoftBac.
However, the big news at Shaw this year is the introduction of LokDots, a new system for installing carpet tile that is designed to work with EcoWorx tiles. LokDots are beads of pressure sensitive adhesive that are applied at intervals to the back of carpet tile using a hand-held device that looks like a cross between a packing tape dispenser and a retailer’s pricing gun. LokDots will adhere to just about any clean subfloor, including raised access flooring, and use 97% less adhesive than traditional systems—four rolls of LokDots, weighing just over a pound, have the same installation capacity as a 35 pound bucket of wet adhesive.
The new system not only offers huge environmental benefits, but it also makes installation and removal much easier. The system also allows for installation in occupied spaces. LokDots are a perfect fit for Shaw’s cradle to cradle sustainability philosophy, as they are a non-water based thermoplastic that can be reclaimed and recycled.
According to the firm, LokDots are a problem solver for installing in high moisture environments, where traditional adhesives tend to reliquify. LokDots can be installed at moisture levels up to ten pounds and 95% relative humidity, and in applications with alkalinity up to 12 pH.
With Shaw’s new LokDots and InterfaceFlor’s TacTiles, the two biggest carpet tile producers—both of whom are leaders in the greening of the carpet industry—now offer alternatives to traditional liquid adhesive installation.
TacTiles, introduced by InterfaceFlor about five years ago, are small square panes of PET with adhesive on one side, and the installation system attaches carpet tiles to each other for a dimensionally stable floating floor that performs as well as carpet tile installations adhered to the floor. TacTiles has been widely adopted an an installation technique, and now accounts for around half of all new InterfaceFlor installations.
InterfaceFlor’s standard backing is GlasBac, a PVC hardback system with up to 68% post-industrial content by total product weight. GlasBac RE, a product of the firm’s Cool Blue recycling technology, now accounts for about 15% of total InterfaceFlor tile and is 100% recycled, with high levels of both post-consumer and post-industrial content.
Bentley Prince Street, based in City of Industry, California, is currently beta testing a modified version of TacTiles to go on its NexStep cushion back tiles. NexStep accounts for the bulk of BPS’ carpet tile backings. The firm also has a polyethylene hardback called SelectRC. SelectRC features about 25% post-consumer content for an average weight product, using reclaimed calcium carbonate.
About a year ago, Beaulieu reengineered its Nexterra carpet tile backing, reducing the total weight by 23% to create a tile that is more flexible and easier to install. It also takes 16% less energy to produce and generates 21% less waste.
Nexterra is already a very green product, with post-consumer content up to 85% (from recycled glass and PET drink bottles) and it comes with an NSF-140 Platinum certification. The addition of a bio-based agent makes it easier for installers to cut the tile without the blades getting gummed up with PET.
Milliken makes printed and solution dyed carpet, and offers both broadloom and carpet tile. The firm uses a range of backings, including standard woven polypropylene and latex systems for its broadloom products (Milliken Hospitality and Constantine). For its tile products, Milliken uses Dow Enhancer cushioned backings, ComfortPlus and Underscore, from Textile Rubber. The urethane backings offer recycled content of 25% to 50% of the total weight of the product.
THE INDEPENDENT PRODUCERS
With the big three mills accounting for more than three quarters of all U.S. carpet backing production, the other 20% or so is where the independent backing manufacturers compete, including the woven polypropylene, urethane and nonwoven polyester producers.
The biggest of all is Propex, which has been the global leader for decades, under a few different incarnations (BP, Amoco, Patchogue). Propex specializes in woven polypropylene primary and secondary backings, making both standard and specialized backings in six facilities in three continents: Ringgold and Hazlehurst, Georgia; Germany; Hungary; Mexico; and Brazil. The bulk of its U.S. products are made domestically, and its two most prominent brands are ActionBac on the residential side and PolyBac on the commercial side.
At last summer’s NeoCon World Trade Fair, Propex unveiled its biggest development in years, a woven primary carpet tile backing called Isis. What’s notable about Isis, aside from being the first woven primary designed specifically for carpet tile, is that it’s made from polyester, not polypropylene. With a melting point of 320ºF, polypropylene’s thermal characteristics make it difficult to create a dimensionally stable product. Propex figured out how to create the appropriate tape weave from PET polyester, which has a melting point of about 500ºF, to create a backing that, according to the firm, is dimensionally stable, performs as well as PolyBac GL in commercial high end carpet, and has better stitch lock than nonwovens. Propex also reports that Isis generally runs through tufting machines faster than nonwovens, so it increases throughput. Another huge benefit of Isis is that it enables the creation of carpet tile with lower face weights.
It took three years to develop Isis at the firm’s facility in Gronau, Germany. The backing has 85% recycled content, all post-consumer. According to Propex, the improved stitch lock enables carpet tile manufacturers to produce more complex patterns, opening up new avenues of design. Mills currently running Isis products include Mannington, J+J and Masland.
The introduction of Isis is significant for several reasons. One is what it means for Propex. If Isis really takes off, it will make Propex a player in a growing market (carpet tile), instead of relying on its share of a shrinking market (broadloom). And it may prompt other producers to focus on development of carpet tile backings. Another is that Isis is a value-added product, offering faster throughput and greater design capabilities, and it’s priced higher than traditional nonwovens. As such, it distinguishes itself from commodity backings, shifting the emphasis from price to performance.
While Propex is the biggest player in the U.S. carpet backing market, the fastest growing player in Mattex, a Dubai-based producer of woven polypropylene primary and secondary backings—meaning that it competes head to head with Propex. Mattex believes that, while Propex is still the bigger player in secondary backings, its share leadership in primary backings is being threatened.
The firm, which has been in the backing business for about seven years, has one facility in Jeddah, Saudi Arabia and a second one in Dubai. And by the end of this year, a third facility in Jubail, Saudi Arabia will significantly boost capacity and pave the way for Mattex to compete more effectively for share of the secondary backing market. Right now the firm doesn’t make that much secondary backing, and it only started selling secondaries in the U.S. market last year.
Mattex also makes a woven heat-stabilized backing that is used as a primary backing by some carpet tile producers. That product was introduced last March. The U.S. is Mattex’s biggest market, followed by the Middle East, with Europe not far behind. The firm also has offices in China, where it anticipates significant growth in the coming years.
Carpet & Rug Backing and Supplies (CRB) has also been outperforming the market with its secondary and primary woven backings. The firm makes its product in Birmingham, Alabama and distributes out of its Dalton warehouse. CRB can’t compete on price with the low cost importers, so it tries to focus on value and service. For instance, in 2011 the firm managed to get orders out the door within four hours of receiving them more than 98% of the time—it’s hard for importers to compete with that.
The firm is also focused on the greening of its business, with the bulk of its investments last year in sustainable programs. Right now the firm has no waste in primary and secondary backings that is not reused somewhere else, and there’s post-industrial content in all its backings.
Etex America, which represents North America for Saudi Arabia’s Etex with warehouses in Dalton, has been selling woven primary and secondary backings since 2005. Etex itself started out about a decade ago selling backings to the Saudi Carpet Factory.
Etex targets both the residential and commercial markets, and is also looking at the artificial turf market. The U.S. is its biggest market, followed by the Middle East and Europe. Sales at Etex America have been up over the last few years.
At 220, Don & Low is by far the oldest player in the backing business. It started off weaving materials like jute, and of course it had to wait a good 150 years before carpet was invented so that it could make backings for it. The firm, headquartered in Dundee, Scotland, makes both woven and nonwoven products for carpet backing, but it only sells its woven goods in the U.S.
The firm has been in the U.S. market since 2001. Its products are warehoused and distributed out of Dalton by Norville Industries. According to Norville, both primary and secondary backing revenues are up—the firm has been in a growth mode since the vertical integration of the mills.
One of the greenest and most innovative backing producers in the market is Universal Textile Technologies (UTT), which makes Biocel and Envirocel backings, traditionally for the commercial market but more recently for the residential market as well. The urethane backings feature green ingredients like soy polyols, coal fly ash and recycled PET—recycled and bio-based content combine for at least 65% of the product by weight, going up to 90%. Two months ago, the firm announced that NSF International had verified that its products meet “the requirements and criteria that a backing supplier needs to be NSF-140 compliant ready.”
Over the last year, the firm has been developing relationships with national parks, starting with Yellowstone, to reclaim PET drink bottles from the parklands and convert them into nonwoven fleece for its backing systems. So far, the program has been expanded to Grand Teton National Park. The firm is looking at the Grand Canyon as its next target.
Another major development at UTT is that the firm now has its own reactor for producing bio-based polyols, giving the firm total quality control and pricing stability. The firm is now doing research and development to see what other products it can produce using the polyols, including adhesives.
Last year, UTT took its Envirocel product into the residential market through Cherokee’s Southwind Carpet Mills, which channels its products through over 5,500 dealers. This year, the firm is hopeful that its Envirocel residential products will go international.
UTT has also come out with a QR code and app that gives customers easier access to product material and technical information like diagrams, brochures and LEED information.
Colbond makes spunbonded nonwoven PET primary backings, largely for carpet tiles, as well as walk-off mats and molded automotive carpet. The firm uses a polyester core surrounded by a nylon sheath in its fiber construction. Post-consumer content of the PET portion is available in ranges from 25% to 100%.
At last year’s Domotex, Colbond came out with Colback Green, with a post-consumer PET core and a nylon sheath from Aquafil that is 100% recycled (both post-consumer and post-industrial). The firm intends to introduce Colback Green to the U.S. market this year.
Colbond, which is headquartered in the Netherlands, makes its products for the North American market in Asheville, North Carolina. That facility is currently being expanded. The first phase, a debottlenecking, will be completed this quarter and should yield a 5% increase in capacity. A bigger project, involving new equipment that is scheduled for completion in about a year, will increase capacity by another 30%. The firm also has facilities in the Netherlands and Germany, and a joint venture in China.
Dow Chemical Company makes urethane technologies for backing systems under the Enhancer and Enforcer brands. Some mill clients have coating technology to apply the backings in-house, while others use Textile Rubber, a commissioned finisher.
Enhancer is a cushioned system that can either be unattached or attached to the carpet. Enforcer, which is an attached system, is not cushioned, making it more dimensionally stable. Enforcer Sport and Enhancer Sport are designed for the artificial turf market. Dow’s polyurethanes are available with a range of green attributes like post-industrial or post-consumer content and bio-based content, but it tends to cost more.
The firm is working on its next generation of turf backings with enhanced tuft lock, higher production speeds and lower operating temperatures, and that should come out in the next quarter.
Textile Rubber & Chemical Company makes a range of products for the carpet market, including latex, polyurethane and polyolefin chemistries. The Polyurethane Group Division makes chemically blown attached cushions—KangaHyde, KangaTrac, Epic and KangaBack—for both the residential and commercial markets. Currently, the commercial market is outperforming the residential market. The biggest growth areas for the Kanga products are the carpet tile and artificial turf markets.
The Polymer Technology Group Division recently installed a completely computerized compounding and batching system to increase the consistency of its latex based systems. The technology will help customers maximize the efficiency of the latex coating process.
The firm’s greenest products come from the ThermoTex Division, which makes the Phoenix series of 100% recyclable polyolefin backing systems for broadloom and modular tile, both hardback and cushion. The precoat, capcoat and laminate systems all feature post-consumer content.
Styron, which was spun off from Dow Chemical two years ago, is the leading latex producer for the U.S. carpet market. Its main U.S. latex facility is in Dalton, and it also makes latex in Midland, Michigan. The firm’s Lomax technology, which produces latex using methane pumped from the Dalton landfill, has to date offset over 129 million pounds of carbon dioxide. Mill partners include J+J/Invision, Mohawk Residential, Bigelow and Atlas.
The most recent development is Enversa Cushion Technology, which was first unveiled in 2010. Enversa is a carboxylated latex process that avoids a range of chemicals, including heavy metals, traditionally associated with latex vulcanization. It’s priced comparably to traditional latex.
Enversa was first rolled out in Europe, where it has been adopted by manufacturers in Russia, the Netherlands, Belgium and the U.K. Dow is currently in discussions with a major U.S. carpet mill on exclusivity in the U.S. market.
Another major latex producer is Omnova. Its bread-and-butter product is GenCal 7555, a 53% solids latex that has been on the residential market for about three years. NovaGreen 7510, which has been out two years, is 56% solids—the higher the percentage, the less energy is needed to drive off water during the curing process, thus lowering the environmental footprint of the product.
Omnova is also working on a hybrid product that will be something like 80% latex and 20% alternative chemistries that will include environmentally friendly material like bio-based content. The product, which will be introduced in the next few months, is priced like traditional latex and features the same, or better, performance characteristics.
The underlayment business has been fairly quiet over the last year, with limited introduction. Many of the big underlayment producers have made great strides in recent years, improving both the performance and sustainability of their products.
MP Global makes a range of underlayments with very high recycled content. For instance, its biggest seller, QuietWalk, features 95% post-industrial content (certified by Scientific Certification Systems), and its FiberBacker is 100% recycled.
Tile installers will probably find the firm’s new TileQu!ck to be a problem-solver for wall tile and backsplash installations. The adhesive film, which features 80% post-industrial recycled content, enables immediate installation and grouting.
Another major underlayment producer is QEP, which offers products for tile, laminate and hardwood flooring. The firm’s newest product is Quiet Cushion, launched in 2010, with one of the highest sound dampening ratings in the industry. The firm’s greenest product is Super Felt, with 80% recycled content from reclaimed fiber.
The firm has been focusing on growing the distribution of its product line-up, and it has been expanding with contractor-size rolls, including 360 square foot rolls of Super Felt.
Healthier Choice’s core product is mechanically frothed polyurethane foam carpet cushion. The visco-elastic memory foam was originally developed in the 1970s, and it’s turned out so well that the firm has not yet been able to improve on it. The product, which is a higher end upgrade, goes largely to the residential market.
The firm sells its cushion product to Home Depot under the Healthier Choice brand name, and it also sells through distribution to flooring retailers—right now, big box business is bigger than independent retailer business. The polyurethane cushion features 50% renewable content from soy polyols and calcium carbonate, and it’s recyclable.
Copyright 2012 Floor Focus