The Backing Business - January 2008

By Darius Helm

Over the last three years, the backings industry has been restructured, both by major acquisitions that vertically integrated Shaw and Mohawk, and by huge increases in energy and raw material costs. And now the slumping residential market is pressuring the bottom line. Yet the industry is as innovative and dynamic as ever.

The backings business was transformed in 2005 with Mohawk's acquisition of Wayn-Tex, a woven primary producer, and Shaw's acquisition of SI Flooring, a major manufacturer of primary and secondary backings. Since then, Mohawk has added secondary backing capacity with its acquisition of Propex's Roanoke, Alabama facility, Beaulieu has purchased scores of European looms for woven primary and secondary backings, and most recently, Nexcel Synthetics was purchased by Carpet and Rug Backings and Supplies (CRB), a longtime distributor of primary and secondary backings to the industry.

The way things stand now, both Shaw and Mohawk largely fulfill their backings needs in-house while most of the other major mills have substantial internal capacity, leaving the remaining independent backings producers to supply the smaller mills that can't afford the investment to vertically integrate.

The biggest independent producer is Propex, and its biggest competitor is probably Dubai-based Mattex, which over the last year has established U.S. operations. There are still several specialty backings producers, including United Textile Technologies, Textile Rubber & Chemical, Omnova, Colbond and Freudenberg, largely serving the commercial market and the fast growing carpet tile business.

The carpet market itself is far from stable. Not only is carpet continuing to lose marketshare to hard surfaces, but residential carpet business is off significantly and there's a good chance 2008 will be worse than 2007, though the rate of the fall will slow. Also, there are signs of a slowdown in the commercial market, in part because of the impact of subprime lender woes on the financial market.

In all, backings were down around 12% last year, though commercial business was up. Forecasts are for a similar picture this year, with growth in the commercial market, though at a slower pace, and a weak residential market.

Two of the biggest ingredients of carpet backings are polypropylene and latex. Most primary and secondary backings are made of polypropylene and the standard binder is latex. Prices for both raw materials have risen sharply over the last few years, with no end in sight. Over the last year, polypropylene resin prices have risen to over 70 cents a pound, putting huge pressure on primary and secondary backings producers, since the feedstock accounts for about half the cost of the backing.

The cost of petroleum-based products has been a major factor in the development of more sustainable carpet backings, and the greening of backings is moving at a faster pace than ever before. By pricing products with substantial recycled and bio-based content the same as petroleum-based products, firms like Universal Textile Technologies have helped send the message that going green is not a higher-cost, lower-profit venture. Last year's developments from UTT, Dow Chemical, Colbond and Textile Rubber & Chemical, along with developments from the big mills, not only included increased recycled and bio-based content, but also a host of innovations involving dematerialization.

Dematerialization, one of the most fundamental environmental concepts, is about using less material to achieve a given result or make a particular product. It's such a basic concept that it's often lost in the midst of the new environmental vocabulary. However, the routes that the different backings producers have taken to significantly dematerialize their products are anything but basic. Beyond the engineering of products to meet performance standards using less material, many of the developments have involved the use of replacement materials. Interface's TacTiles and Textile Rubber & Chemical's Free Lay are two examples. Then there's increasing the usability of a product, such as Colbond's F2F nonwoven primary, which has a dark face on one side and a light face on the other.

Backings producers have also been experimenting with offering alternatives to latex and PVC. There's a debate within the environmental movement about the dangers of PVC, and nearly four years ago Tandus came out with ethos, a non-PVC backing, to supply customers who didn't want to use vinyl. There are now a number of PVC replacement materials, both for carpet backing and resilient flooring, available in the U.S. market.

Latex has been an issue because it can't be effectively reclaimed, and is thus a liability, environmentally speaking. Dow Chemical has addressed this problem with the development of a thermoplastic replacement for latex binder that has the same viscosity and can be used on the same equipment. Thermoplastics are easier to recycle than latex.

Until last year, green attributes of carpet—like post-consumer content, bio-based polyols and recyclability—were mostly derived from the backing. But 2007 saw Interface, Shaw and Mohawk come out with programs for greener face fibers, with post consumer nylon 6,6 and nylon 6, as well as bio-based content in PTT fiber. These developments on the fiber side have sown the seeds for a more robust reclamation industry.

THE INDEPENDENT PRODUCERS
In 2007, Carpet and Rug Backings and Supplies (CRB), a longtime distributor of primary and secondary backings to the industry, acquired Nexcel Synthetics, an Alabama based producer of polypropylene primary and secondary backings. Shaw and Mohawk used to account for 85% of Nexcel's backings revenues, but following their acquisitions, Nexcel had to shift its focus to the smaller mills. The firm, bearish about its future in the carpet backing business, focused on its growing specialty-yarn business, supplying, among other things, the artificial turf market, and in February 2007 sold its carpet backing business to CRB.

CRB had been observing the vertical integration of backings producers into carpet mills and felt that it needed to secure a source for polypropylene backings, both for internal use and for its customer base. With a focus on applications for specialty and custom backings, CRB is now also vertically integrated, and is both manufacturing and distributing carpet backings.

This dearth of independent backings producers has helped open the door for Dubai based Mattex, a firm founded in 1995. The firm started manufacturing in Jeddah, Saudi Arabia and added a second plant, this one in Dubai, about three years ago. All told, Mattex has invested $100 million in the company in the last 13 years.

The firm has five warehouses, including two in the U.S. It sells to 37 countries and offers 280 SKUs of polypropylene primary and secondary backings in a range of colors, widths and weights. Its high performance backings include Equalmatt, with a guideline for keeping everything lined up on the tufting machine. Mattex estimates its global independent carpet backing marketshare at 15%.

Using a distributor, Mattex started penetrating the U.S. market in 2005 but quickly decided to go direct. The firm established its U.S. business at the beginning of last year and started selling from its Calhoun, Georgia warehouse in the second quarter. Mattex also leases a warehouse on the West Coast, near Los Angeles.

Mattex is the only foreign woven backing manufacturer in the U.S. selling direct. Because of the weak dollar, the firm has an advantage over other foreign producers, since it manufactures in oil-producing nations where oil is closely tied to the dollar. With polypropylene resin as its raw material and forecasts of a 300% increase in Middle Eastern polypropylene production by 2011, Mattex feels well positioned for a competitive advantage. The firm works with several U.S. mills. Its U.S. sales were up 60% last year, and growth would probably be even greater were it not for extended contracts between carpet mills and other backings suppliers.

Primary backings are a much bigger part of Mattex's business than secondary backings, and in the U.S. the residential market accounts for 60% of its sales. The balance is in the commercial and artificial turf markets, Though artificial turf is the bigger part, commercial business has been taking off and major gains are expected this year.

The biggest independent backings producer in the world is Propex, with global backings sales of close to $300 million, two-thirds in the U.S. The firm produces woven primary and secondary backings, as well as some nonwovens, for both the residential and commercial markets, mostly from its plant in Hazelhurst, Georgia.

Propex has been working on lighter weight, better engineered products offering both cost and green advantages, like last year's PolyBac Prime, a lower cost residential primary backing with reduced weight and higher performance. The firm is working on a new PolyBac, to be introduced in the second half of the year, and it will be its greenest product to date.

In addition to U.S. production, Propex produces backings in Germany, Hungary, Mexico and Brazil, supplying most of the foreign markets. About 40% of the firm's sales are in carpet backings. Other major products include geotextiles and erosion control products.

About a year ago, former Tandus CEO Mac Bridger joined Propex as executive vice president, responsible for international operations and worldwide sales and marketing. Bridger was CEO of Tandus, a $350 million company, for 13 years.

Some of the biggest developments of the year have come from Dow Chemical, which licenses its technology to the carpet backings industry through the Enhancer and Enforcer brands via commissioned finishers like Universal Textile Technologies and Textile Rubber & Chemical. Dow also produces a range of latex binders for both residential and commercial applications.

Most of Dow's developments have focused on sustainable technologies that reduce its environmental footprint, the most fundamental measure of sustainability. To that end, the firm has entered into a partnership with the Dalton landfill to replace most of its fossil fuel consumption at its latex production facility with methane piped from the landfill, two miles away. The renewable energy process, which Dow calls LoMax Technology, will generate 240 billion BTUs per year, reducing CO2 emissions by 27 million to 30 million pounds a year. In addition, it prevents the release of methane into the atmosphere. Per unit volume, methane is a much bigger contributor to greenhouse warming than carbon dioxide. Its impact is smaller only because less methane is released into the atmosphere than carbon dioxide.

By midyear, latex products manufactured using Lomax Technology will be available. Using latex generated from this technology will enable carpet mills to gain points toward the new NSF 140 sustainable carpet standard.

Dow Chemical has also developed a thermoplastic replacement for latex. Using Dow's BlueWave Technology, the new chemistry is designed to run on existing latex coating machines, so mills won't need new equipment. Latex has hindered environmental progress because it's thermoset, rather than thermoplastic, which basically means that it can't be remelted, unlike the other ingredients in carpet. Instead, it disintegrates. Dow's new polyolefin dispersions, which have the same viscosity as latex, offer enhanced performance with less material. In many cases the reduction in material offsets the increased cost, though it's likely to gain the most traction in the commercial and higher end residential markets.

On the polyurethane side, Dow has for some time offered its Enhancer and Enforcer system with soy polyols from outside suppliers. Now the firm's BioBalance program is also available using Dow's own Renuva soy polyols. In its initial formulation, bio-based content will account for 15% of the total weight of BioBalance, replacing 25% of the polyurethane with soy polyols. Issues of performance will determine how high the bio-based content can go, though it'll top out at about 60% of the total backing weight.

Colbond, which makes spunbonded nonwoven polyester primary backings, has come out with Colbond Face2Face (F2F), black on one side and light gray on the other. F2F addresses the issue of lower face weights revealing the primary backing. With different colors on each face, F2F reduces machine downtime, since the fabric is flipped rather than switched out, reduces inventory and generally increases efficiency and reduces energy and product waste.

Colbond has also come out with Colback SMR, with 25% post consumer recycled content, from plastic bottles. Next year, recycled content will go up to 50%, and by 2010, the entire product will be made from recycled plastic bottles.

Until three years ago, Colbond was producing a composite product called Stabilok in partnership with Wayn-Tex, with the nonwoven from Colbond and the woven primary from Wayn-Tex. The product, targeting high end patterned broadloom, is now being revived through a deal between Colbond and Mohawk, which acquired Wayn-Tex in 2005.

Omnova, one of the biggest latex producers, does at least 75% of its business in the residential market, but most of its growth has been on the commercial side. Margins are tighter than ever, with prices for styrene and butadiene, the two components of latex, continuing to climb.

Omnova has focused its efforts on sustainable developments, and promising research into greener products should yield results soon. In the meantime, the firm is addressing its overall environmental burden by reducing energy and water usage. The firm recently invested in efficient boilers and other equipment at its Calhoun, Georgia facility.

Universal Textile Technologies' claim to fame is its high performance BioCel backing with up to 80% bio-based and recycled content. Now it's taken that three-year-old concept and adapted it for the hospitality and high end residential markets. The new product, EnviroCel, features bio-based and recycled content of 55% to 85% of the total backing weight by replacing 90% of polyurethane content with soy-based polyols, using Celeram, which is recycled coal fly ash, as filler, and—for three out of the four EnviroCel products—using PET secondary backings made from recycled plastic bottles.

EnviroCel Laminate, EnviroCel Laminate Plus and EnviroCel Cushion also feature UTT's new Extruded Fiberization technology, which enables secondary backings to bond to polyurethane layers using only three to five ounces of chemistry. For instance, an EnviroCel Laminate backing typically weighs about 21 ounces, compared to 35 to 40 ounces for typical latex systems. The Extruded Fiberization system, which performs better than latex because it won't degrade when subjected to moisture, decreases shipping costs and makes the material easier to handle. And it adds dematerialization to the list of EnviroCel's green attributes. By the end of this year, the Extruded Fiberization layer, which weighs about three ounces per yard, will feature a green component.

Textile Rubber & Chemical (TRCC) has a number of divisions offering latex and polyurethane systems, recyclable thermoplastic coatings, and adhesives and additives. The firm's two year old ThermoTex division was established to develop and produce fully recyclable thermoplastic backing polymer systems, and growth in that division has been strong. ThermoTex has also started working with hot melt systems. Most of its backings are used in modular tile, as well as high-performance broadloom.

The firm offers a range of branded products, including Epic, KangaTrac, KangaBack, KangaHyde and KangaGold. The firm just had its SCS certification renewed for the minimum 30% post consumer recycled content of its Epic commercial urethane backing.

The biggest development at TRCC is probably Free Lay, a patented coating developed by Raiford McDonald a decade ago and steadily honed over the years. In 2005, McDonald retired as vice president and general manager of the Polyurethanes Division and focused his attention on developing Free Lay, which was introduced at Surfaces 2007.

Free Lay is an acrylic polymer coating applied to KangaTrac attached cushion backing that replaces the use of adhesives on the floor. Another acrylic polymer applied to the floor has an affinity for the polymer on the back of the carpet, and when the carpet is laid on the floor it forms a strong bond that prevents any lateral movement. Years later, that carpet can be pulled off the floor—it peels off with little effort, and though it makes a sound like tape coming off a roller, neither surface is tacky. Then a new carpet with a Free Lay coating can be installed using the existing floor treatment—as long as the floor is clean. In addition, a subfloor of polished concrete or anything equally glossy and polished doesn't even need the floor treatment.

Free Lay, which is already being used by commercial carpet manufacturer, Constantine, and soon, Bentley Prince Street, eliminates many installation problems. There's no wrinkling or bubbling—installations can always be corrected by lifting the carpet up and laying it back down—and carpet doesn't need to be power stretched. The polymer for the floor is minimal, about an ounce and a quarter per square yard, or 40 square yards to the gallon, and it dries in 45 minutes to a glassy sheen. And it has a huge advantage over other carpet installation systems, like double stick, direct glue down and others, when it comes to carpet removal and replacement.

Installing with Free Lay is less expensive than double stick, and when it comes to lifecycle costs, there's no comparison to any system on the market. On the green side, it uses a lot less material than traditional installation techniques and reclamation couldn't be more simple or energy and resource efficient.

THE MILL PRODUCERS
Most of Shaw Industries' backings capacity comes from its 2005 acquisition of SI Flooring's Chickamauga facility, and other than some specialty products, all of Shaw's backings needs are met by internal production. On the commercial side, Shaw's offering is dominated by EcoWorx, the firm's fully recyclable carpet tile and broadloom backing. All of Shaw's carpet tiles come standard with EcoWorx, except for cushioned tile using EcoLogix, a high recycled content product. Shaw's Main Street business is now using EcoWorx as well.

EcoWorx Commercial Broadloom was officially launched last August, and it's the firm's strongest, highest performance backing, with excellent tuft bind and a delamination strength of over 20 pounds. Shaw is quickly ramping up EcoWorx broadloom production, producing over 100,000 yards in November. The product is eventually expected to dominate the firm's high performance broadloom offering.

On the residential side, Shaw's polypropylene backings are made entirely from production out of the SI Flooring acquisition. The standard entry level product is ClassicBac, and the premium backing is SoftBac, which is celebrating its tenth anniversary this year. Another backing is PowerEdge, used on all berber and loop pile products, with a strong edge fabric to minimize edge ravel. Latex binders with calcium carbonate filler make up the bulk of the weight of the backings.

Mohawk Industries also meets the vast majority of its needs internally, due to its acquisitions of Wayn-Tex and Propex's secondary backing facility in Roanoke, Alabama. Encycle is the firm's latest development, a thermoplastic carpet tile backing designed to replace the firm's PVC backing. By the end of this year, almost all of Mohawk's modular tiles will have Encycle backing.

Encycle is fully recyclable and latex free. Once reclaimed, the carpet tiles are ground up and made into pellets that are converted into new backing. Lees' U2 thermoplastic backing uses similar processes. Mohawk's other backings are reclaimed through the firm's Greenworks Center in Chatsworth, Georgia, where they are mechanically recycled. The Greenworks Center is designed to handle every type of carpet and backing.

InterfaceFlor's focus is on its GlasBac RE recycled PVC backing through its Cool Blue process. The firm has also retooled its reclamation process into ReEntry 2.0, which operates almost as a separate business unit. The process includes the clean separation of face fiber, sending much cleaner vinyl backing material through the Cool Blue process. Last year the firm reclaimed more than 17 million pounds of used carpet, and Interface has the capacity to take in 30 million pounds and send out 20 million pounds of post consumer material for both fiber and backing.

InterfaceFlor's cushioned backing is NexStep and it features a patented product, Polycarbide, which is a bitumen based adhesive layer that is highly flexible for high bonding strength and durability, as well as reduced rolling resistance.

Tandus, which is strictly a commercial mill, offers a standard carpet tile backing called ER3. It's a fully recyclable structured PVC backing with a minimum 31% recycled content, with post consumer recycled content of 10%. Tandus also offers an alternative to PVC called ethos, using PVB reclaimed from automotive glass. Ethos is also fully recyclable. On the broadloom side, Tandus uses standard latex systems, but the firm is in the midst of developing green platforms for its broadloom offering.

Last summer, Tandus came out with a budget-priced carpet tile backing called Conserve that uses 25% less material. The fully recyclable vinyl backing offers both value and a green profile to customers.

Beaulieu makes primary and secondary polypropylene backings for internal consumption, but it also sources a lot from independent backings producers. Its high end residential carpet features LuxuryBac, a secondary backing made by Polymer Group, Inc. (PGI). PGI's spunlaced backing, made of polyester and polypropylene, is both soft and strong; it's the same material used in the Swiffer products.

Beaulieu's other secondary backings are made internally and it sources primary backing from firms like Propex.

On the commercial side, the firm's Nexterra modular backing contains recycled plastic bottles and post consumer glass, which account for 85% of the weight of the backing and up to 65% of the weight of the total carpet tile. Nexterra is standard on all Beaulieu carpet tile. Recycled material in broadloom backings yields a carpet with up to 15% total recycled content.

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