EDANA Outlook Monte Carlo : 19th – 21st September 2001

This new addition to the Conference Circuit provided a late summer break in glorious Mediterranean weather for those who travelled despite the tragic events of the previous week. Understandably, US delegates were in short supply, and for the first time at a nonwoven conference, a live video link was set up to allow a “grounded” speaker to present her paper on the big screen. Another first for Edana: there were significantly fewer papers than normal, but the quality of both presentation and attendance was high and the extra time for questions was put to good use.

The line up for the opening session: Dr Raine Schoene, Prof. Klaus Kernig, Dr Rolf Altdorf (PGI: Moderator), and Jean-Francois Artigue.

Phase-out intensive farming

Prof. Claus Kernig presented a review of the political, economic and social trends that have created two very different worlds: the affluent “North” and the impoverished “South”. He went on to explain his thinking:
• The key equations of demographics are HIGH INCOME=FEW CHILDREN and LOW INCOME=MANY CHILDREN.
• The North's population is getting smaller, older and richer, while that of the South is getting larger, younger and poorer.
• So, by 2025, people in the wealthy North will account for only 12.5% of the world's population compared with 25% in 1975
• The problems started in the 18 th Century when excessive population growth in the North forced urbanisation, and also colonisation of the South (to maintain the North's economic and population growth).
• Attempts to correct the resulting relative impoverishment of the South with Northern “aid” in the form of medicines and chemicals made the situation worse by reducing the death-rate without affecting the birth-rate or improving the food producing capability of the South.
• Migration from South to North is now favoured as a quick route to better living standards for Southerners and serious social problems will result.

Prof. Kernig proposed direct involvement of the Southern rural population in world trade by:
• Allowing the “treasures of the south”; labour with agricultural skills and fertile land, to produce organic food for the North while making a reasonable profit.
• Phasing out intensive Northern agriculture, which is now unable to operate economically. The EU spends 52% of its budget to ensure that 2% of its population can have a reasonable standard of living while growing food. American subsidy levels were said to be higher still.

An incredulous questioner wondered at the strategic folly of becoming dependent on the South for daily sustenance. Prof. Kernig thought that interdependency was the key. As with any other real trading relationship, the South would come to need Northern money just as much as the North would need Southern food.

If only we knew what we know…

Dr Raine Schoene of Procter and Gamble wanted to increase the efficiency of research and development by reducing the estimated 30% of R&D budget spent on developing technology that had already been developed elsewhere.
• P&G employed 8000 people in an R&D department with a $1.7 billion annual budget.
• P&G was becoming more open and transparent to outsiders, but internal, inter-divisional barriers seemed to have strengthened.
• “Siloism” and “Not Invented Here” were continual problems especially in the research groups.
• Mergers had brought in different cultures but these seem to integrate least well in R&D.
• Researchers are judged on innovativeness and are thus driven to innovate rather than trying to discover external solutions to their problems.
• Research management should judge performance against how well existing knowledge is utilised, re-application of technology being valued above re-invention.
• Knowledge engineering – the efficient discovery and extraction of solutions by mining the research literature – would be a key discipline.
• Using an intranet, technology councils, and formal communities of practice with their own budgets (of which there were over 20 in P&G) would be encouraged.
• An external focus through suppliers, universities etc. would be developed.

P&G already have over 100 strategic alliances with suppliers so far, the key to their success being trust, and good lawyers to define the ownership of intellectual property fairly.

Worldwide Mass Marketing

Jean-François Artigue of the French Society of Analysis and Development questioned whether globalisation had really begun. Of the world's top retailers by turnover, the leader, Walmart was in 9 countries, Carrefour (No2) was in 25, Kroger (No3) was in only 1. Even within the six main EU countries only 3% of items sold were identical, and only 14% could be considered as approximately equivalent. Most standardisation occurred in batteries with 40% being equivalent between the countries: beauty care products being next with 22% equivalence. At the other end of the scale, kitchen paper (1% equivalent between the six countries) was the least “global”.

Mr Artigue cited the Walmart effect, internet marketing, and the adoption of the Euro as factors which would further reduce European retail prices and favour the development of more Own Brands. These currently held about 15%-20% of retail sales on average but were expected to reach 25% across the board in the near future. The UK had reached 40-45% Own Brands at retail, and other countries would be expected to level out at this percentage in 5-10 years.

Would “global” products be sold at the same price throughout the Eurozone? Coca-Cola, Gillette, L'Oreal, Playstation and Pampers were brands where this could be expected, but overall the retail trade would adapt pricing to local conditions.

A chart of the benefits of joining the Euro in 2002 showed Belgium and Italy as big gainers whilst the UK and Germany would suffer more disadvantages than benefits.

Finally, we were not to ignore the ecological and humanitarian concerns that were contrary to the main politics and economics of globalisation. “Fair-trade” products (e.g. Coffee Direct) were evidence of a desire to bring in an ethical dimension.

Patentology

Krzysztof Malowaniec, Head of the Patent Department at Paul Hartmann and Chairman of EDANA, reviewed the history of patents and their current status as a legal monopoly and a mine of information. Patent law was national and key differences existed:
• In France you only had to register a patent to get one: there was no examination (for inventiveness) and no opposition.
• In the UK there was a full examination of all applications, but no possibility of opposing the patent once granted. Germany was similar but for the fact that opposition was possible up to 3 months after the grant date.
• In the USA applications were published and subjected to a full examination before grant, and even granted patents could be re-examined. Here “first to invent” (rather than first to patent) took priority.

Surprisingly, an estimated 92% of all inventions were not patented and thus became “royalty-free prior art”, while a quarter of all patents were probably invalid.

An analysis of recent patenting activity in disposable absorbent hygiene products showed:
• In 1999 the leading company published 328 patents, of which 242 were for diapers, 72 for pads and 14 for training pants.
• The No2 published 186 patents, 155 of which were diaper related. (20 pads, 7 training pants, and 4 tampons)
• Over the 3 years (96/98) the leading company's patents named 1400 inventors, while the No2 had 842 inventors on the same basis. If you listed patents by inventor it was easy to find the most creative individuals in a company.
• One person in the leading company had 48 patents on absorbent hygienic disposables.

Petrochemical Trends

Marie-Pierre Chevallier, Totalfinaelf's VP of Corporate planning provided a fascinating insight into oil supply and demand trends and their impact on the polymers used in personal care products.
• Despite continuous rumours that the world is running out of oil, the oil industry has continuously re-estimated upwards world oil reserves, now standing at 40 years of consumption. Recently developed technologies are creating new reserve potential for the future.
• Geographically, Middle East countries dominate world total oil reserves.
• In spite of the increase in energy prices since the first half of 1999, oil and gas remain cheap energy and feedstock sources.
• Oil is an essential raw material for the chemical industry, from polymers to intermediates and specialties. In the US , the role of gas is notably more important, ethane being a major petrochemical feedstock.
• Polymers represent the unprecedented growth story of the last 40 years, growing from a few million tonnes per annum to close to 150 million metric tonnes per annum in 2000.
• The range of polymers used has widened and they now compete with almost all materials used in our day-to-day life.
• Polymers exhibit better economics and benefits all over the product life cycle.
• Petrochemical monomers and polymers still represent a cheap source of materials.

Future trends and R&D programmes are oriented towards :
• the use of cheaper, more abundant and more environmental friendly feedstocks
• more use of gas as a raw material for petrochemicals,
• the development of bio-polymers,
• closer integration of polymerisation with refining operations.
• the development of new products with better processability, intrinsic properties and economics, maybe utilising alloys, polymer blends and grafting.

Another Fibre from Corn?

Ellen Kullman of Dupont presented her paper over an ISDN line from Wilmington having been prevented from travelling in the aftermath of the WTC atrocity. Dupont sees biotechnology as the key to growth and is targeting 25% of revenues from businesses using only sustainable, renewable resources by 2010. The old polymer of 1,3 Propanediol (PDO) and terephthalic acid known as 3GT was now viable thanks to the new process to make low cost PDO developed by Shell/Degussa and acquired by Dupont in 1998. This had become the basis of the Sorona™ polymer, now in production at the rate of 12000tpy at the new Kinston N.C. continuous polymerisation plant. Dupont USA has no plans to make staple fibre from the polymer preferring to licence others to do it. Teijin, Saehan, Toray, Far Eastern and Dupont SA had taken up the option. However a slide did suggest they would make nonwovens, presumably spunbonds, themselves. The new fibre was said to be soft, elastic and easily dyeable. Fabrics (of unspecified construction) were lint-free, sterilisable, flame resistant to class 1 standard and had breathable-barrier properties. It would cost “about 50% more than PET or PE” and should be used in applications where its recoverable elasticity was a key advantage.

The relevance of all this to biotechnology and corn? PDO can be made by bacteria from glycerol, glycerol being a product of the action of yeast on glucose obtained from cornstarch. Dupont has now genetically modified a bacteria to carry out direct conversion of glucose to PDO. This patented organism and process would, by 2003, be making the PDO for Sorona™, presumably as economically as the Degussa process.

China : Is there a market?

Robert Rufli, President of BBA Nonwovens Asia-Pacific provided some statistics and observations related to nonwovens in China :
• As a proportion of Chinese skilled worker income, western-style disposable diapers and femcare appear 10 times as expensive as they do to an American.
• A months supply of western-style femcare requires 2% of a Chinese secretary's income and this market is growing well.
• For diapers, the figure is 11 to 23% and this is too high to allow regular use.
• About 12,000 tonnes per year of spunbond are produced at a quality suitable for high-quality disposables. (Only about 750 tonnes of this are required in locally-made diapers)
• Ditto 10,000 tonnes of carded, through air-bonded staple, but all this is used in locally-produced femcare.
• Ditto 18,000 tonnes of carded, calender-bonded staple of which about 7000 tonnes are surplus to local needs.
• Overall there is more than enough nonwoven produced in China to meet current internal market needs, so a lot is exported at very competitive prices.
• A list of 14 diaper producers and 14 femcare producers was said to be far from complete.
• The biggest Chinese nonwoven companies will be starting up plants in the West within 5-10 years.
• Since BBA announced the 2.7m, 16000 tpa M&J air-laid installation in China , a Chinese machine builder is offering similar lines and has made several installations.
• Spunbond and hydroentanglement lines have also been developed in China at much lower cost than Western machines. These are now available for export to USA and Europe .
• The problem of counterfeiting and patent infringement will diminish as China joins the World Trade Organisation.
• Information, “confidential or not” flows quickly and efficiently around China .

The Opportunities of Ageing

Sabine Martini of Smartini Consulting reviewed the published demographics of several western countries showing that the proportion of those aged 65+ would roughly double by 2050. The problems arising from this trend were regularly discussed, but the marketing opportunities were not:
• About a third of these “best-agers” were master consumers with high levels of disposable income, a love of spending and an inclination to try new things.
• They put quality and safety before price.
• However this growing demographic group appeared to be neglected in most advertising campaigns.
• 85% of the 60+ population read newspapers and 60-70% spend more than 3 hours a day watching TV. They are therefore more reachable than the younger audiences.

Inco-Pad Selection

Dr Konrad Giersdor of Stiffung Warentest Foundation (A consumer protection organisation in Germany , partially government-funded) estimated that there were 50 million incontinence suffers worldwide, 13 million in the USA , two thirds being women. Of the 65+ generation, 12% of women and 7% of men were sufferers.

Dr Giersdorf had organised an all-woman panel test of 23 commercial pads for light to medium incontinence from Germany and Austria . The 100 panelists were “calibrated” for amount of urine lost and all were allowed to use the products at home. The main conclusions:
• All pads performed as expected.
• Consumers could decide between products on price, the cheapest products being one-third the price of the most expensive.
• Instructions for use were inadequate.
• There was no standardisation of descriptions of the size of the products (one mans mini is another mans regular ).
• None of the products advised the user to seek medical advice in case their problem has a medical solution.

In the second half of this presentation Frank Courtray of Courtray Consulting described how his mannequin testing system for pads had been used to evaluate 19 of the panel-test products. Comparison with the panel results yielded 16 matches and 3 deviations, the deviations all having credible special explanations.

At Risk from the Precautionary Principle

Dr Roger Bate's paper was not presented, but from the CD ROM of the conference, his theme was as follows:
• Health scares such as alar, saccharine, breast implants, passive smoking, nuclear power, pesticide residues, mobile phones and GM crops are in some cases without foundation and in others blown up out of all proportion.
• The less developed countries are encouraged to react to these scares in the same way as the developed countries.

This inappropriate “exporting” of the precautionary principle has dire consequences exemplified by:
• Thousands of Peruvian deaths from cholera resulting from reduced use of chlorine in drinking water.
• Thousands of Indian jobs lost because the trade in recycling batteries was destroyed by concerns over cadmium, zinc and nickel handling.
• Modern nuclear reactors, which could transform the lives of millions of Africans, are ignored because of concerns over problems with old reactors.
• The banning of DDT use in agriculture by the EPA prevented its use in much lower and safer quantities to control the malaria mosquito in less developed countries.

Dr Bate, a Fellow of the Institute of Economic Affairs in London concluded that the precautionary principle must be interpreted locally, i.e. by the people who will be most affected by any action arising from it. Otherwise the principle will be responsible for more deaths than the malaria mosquito.

Coffee Break at the Meridian Beach Plaza .

Cocktails at the Hotel de Paris, but still working!