Akzo prepares to float Acordis: Tencel remains depressed (1999)

An improvement in the performance of its industrial and textile fibres operations plus the contribution from Courtaulds helped Akzo's Acordis fibres business boost operating profits by 52% to Dfl 141m. Acordis, which is being prepared for demerger, increased sales by 21% to Dfl 4.3bn of which Courtaulds accounted for Dfl 1bn. Excluding the Courtaulds related sales, however, revenues declined 6% due to divestments. Volumes and average selling prices were flat on 1997.

The group plans to float Acordis in the second half of the year, but was unable to give more precise information about the timing. If the business is floated at the bottom of the fibre market's cycle, shareholders will be pleased but it will be a poor transaction for Akzo, said van Lede. But if it is sold at the top of the cycle, shareholders will be critical, he said. "Whatever we do the timing will never be right."

Akzo explained that high capacity utilisation, cost reduction and improved productivity boosted industrial fibres earnings. A turnaround in the viscose filament business and an improvement in non-wovens boosted textile fibres. However, the Asian crisis hit results from Aramid Products and the cost of introducing new products meant that Membrana's results were down on 1997.

The Tencel fibre business remained depressed because of overcapacity. 

By: Neil Sinclair 22 February 1999 12:15  [Source: ICIS news]

Akzo moves US 'Tencel' to UK; 96 jobs cut (1999)

LONDON (CNI)--Dutch group Akzo Nobel announced Tuesday its fibres subsidiary Acordis is moving production of Tencel to the UK from the US with the loss of 96 jobs.

The move comes in response to the Asian economic crises reducing demand and the company trying to boost profitability.

All production of Tencel is being re-located at Acordis' new plant in Grimsby, England. The original US production facility in Mobile, Alabama is to be mothballed. US production of Tencel is to be suspended shortly but the plant is to be maintained in operational condition.

The change in production location to the more efficient plant will also see 62 job losses among support staff, mostly in the UK, said the company.

Folkert Blaisse, chief executive officer of Acordis, said: "Our proposals are designed to restore Tencel's profitability while retaining the flexibility to increase production as demand rises."

Acordis said there is to be a full consultation with employees affected by the strategic plan and with their representatives. It is also to provide counselling support and facilities to seek new employment.

By: Patrick Reynolds 26 January 1999 18:41 [Source: ICIS news]

Tencel Web Production Concept (1988)

At a time when the Tencel concept was being scaled up to produce basic  staple fibre, future machines which would be capable of extracting higher value from the technology were also being considered.  This 1988 diagram illustrates a possible layout for a machine capable of producing crimped staple fibre, tow and a range of bonded webs and nonwoven fabrics.

The proposal was first made for a viscose fibre in 1977 and involved a machine which would spun-lay tow onto a conveyor for washing, bonding and drying, the resulting dried and bonded web having 3 possible finishing processes.  Fully bonded heavyweight webs could be sold into the absorbent viscose needelfelt market, a category which included both external and internal feminine hygiene - major viscose staple outlets.  Bonded lightweights would become lint-free wipes. Temporarily bonded webs of discrete sinusoilally laid filaments could be pulled back into tow form after drying to give a highly crimped bulky tow which could packed and sold as a high quality tow or be cut to staple.

This "spun-laid" concept appeared to be easier using Tencel technology, where the vertically downward spinning system using large rectangular jets could be arranged to produce a ~3metre wide web on a conveyor-belt for washing.  By 1988 the hydroentanglement bonding system and high capacity through air dryers could provide the web options.  

Geoffrey Owen's Tencel lyocell history extracts (part 4)

Geoffrey Owen of the Department of Management, London School of Economics presented a paper at SPRU in October this year entitled "Innovation in the man-made fibres industry: corporate strategy and national institutions." It is based on unpublished material made available to the author by Akzo Nobel, Lenzing and Courtaulds (amongst others) and is available in full here on the web as a PDF file. It contains excellent sections on Tencel lyocell development history, the fourth extract of which is reproduced below:

When the plant came on stream in 1992, much of the initial demand came, not from the US, but from Japan. The Japanese textile industry, looking for profitable niches in the market to offset the loss of commodity business to imports, found that the fibrillating characteristics of Tencel could be used to produce high-quality fabrics, principally denim, with an unusual peach-like texture, and customer reaction was enthusiastic. With the aid of an Osaka-based consulting firm, Courtaulds organised a club of spinning, weaving and finishing companies, chosen on the basis of their technical and commercial competence and their willingness to invest in the machinery needed to process Tencel efficiently.

Although Tencel was sold in Japan as a premium fibre, its success there suggested that the textile qualities of the new fibre would be more important than had been predicted when the Mobile plant was approved The McKinsey study had forecast that the main demand would be industrial, with apparel acting to some extent as a filler. The change of emphasis was expected to work to Courtaulds’ advantage, since the apparel market offered higher margins and should be quicker to develop than the industrial market; extensive testing would be necessary before Tencel could be used, for example, in medical applications.

Looking further ahead, senior executives in Courtaulds believed that, as the

Geoffrey Owen's Tencel lyocell history extracts (part 3)

Geoffrey Owen of the Department of Management, London School of Economics presented a paper at SPRU in October this year entitled "Innovation in the man-made fibres industry: corporate strategy and national institutions." It is based on unpublished material made available to the author by Akzo Nobel, Lenzing and Courtaulds (amongst others) and is available in full here on the web as a PDF file. It contains excellent sections on Tencel lyocell development history, the third extract of which is reproduced below:

The first Tencel plant

Meanwhile, Courtaulds had been pushing ahead fast. The pilot plant in Grimsby had worked well, and there was no doubt in the minds of Tencel’s supporters that the next step was to build a full-scale plant, either at Grimsby, next to the existing acrylic fibre plant, or at Mobile, Alabama, which was the site of a Courtaulds rayon factory. The case for going ahead was that Courtaulds had a technical lead in a product that not only had distinctive properties as a fibre but was also the only man-made fibre that could be produced from renewable resources by an environmentally friendly process.

When members of the Group Executive considered the proposal in April, 1990, they had before them a study from McKinsey, the management consultants, which supported the project. According to McKinsey, there would be sufficient demand, initially in industrial rather than textile markets, to absorb the output of the first plant at an acceptable price. Tencel’s high wet strength and absorbency would make it very suitable for wipes and other disposable products. One member of the Executive was doubtful, on the grounds that Tencel was a high-risk project with an uncertain payback. He acknowledged that Tencel was a potentially attractive fibre with some advantages over viscose, but it was not as novel or distinctive as polyester and nylon had been when they were introduced and sales projections were bound to be speculative. Spending on Tencel would absorb cash at a time when Courtaulds was trying to expand in non-fibre industries. In his view alternative strategies for Tencel should be considered, including partnership or licensing.

Despite these objections the majority of the committee took the view that Tencel was too good an opportunity to forgo. Apart from the merits of the new fibre, the project had the attraction of being based on in-house research and linked to Courtaulds’ long-established expertise in cellulosic fibres; it should be less risky, and less difficult to manage, than an acquisition. The initial plan was for the plant to be built at Grimsby, and the company hoped to get a government grant to support this investment. When the application was turned down, attention switched to Mobile. The state of Alabama was keen to attract the project and willing to offer financial support. The proposal was approved by the Board and the ground breaking ceremony at Mobile took place in September 1990. Production was scheduled to start in the summer of 1992, with an initial capacity from two production lines of 18,000 tonnes a year.

(More to come)