Trends and ideas, Solutions!, Online Exclusives, February 2003

TRENDS AND IDEAS

U.S., Chile industry groups applaud trade agreement. W. Henson Moore, President and CEO of the American Forest & Paper Association (AF&PA) and Jose Ignacio Letamendi Arregui, Presidente, Corporacion Chilena de la Mader (CCM) jointly announced their organization’s pleasure with Free Trade Area (FTA) negotiations between the U.S. and Chile, which are now complete following two years of negotiations. The organizations’ joint announcement emphasized their pleasure with ‘immediate zero tariffs’ on all paper and wood products, which will be implemented upon ratification by Chile and United State’s governments. The elimination of Chile’s 7% tariff (6% in 2003) on U.S. paper and wood products means the restoration of a level playing field with U.S. competitors from countries with whom Chile already has, or anticipates having, preferential trade arrangement, including Canadian and Mercosur suppliers (primarily Brazil and Argentina).

N.A. market for nonwoven filter media anticipated to reach US$ 725 million by 2007. The market for nonwoven filter media, including filtration materials manufactured by airlaid, wetlaid, spunbonded, meltblown, or film extrusion processes, ranges over commercial applications in diverse sections of the economy. Such applications span conventional applications like water filtration, HVAC and food processing industry, and relatively new and mission critical applications like HEPA and ULPA filtration, clean room and biotechnology processing applications. Growth in this industry, however, is a complex issue. It depends on the ability of the North American economy to recover after a recent slowdown, continued threats of terrorism and their impact on markets, along with the ability of manufacturers to leverage their capital asset base, continued technological innovation, as well as environmental and regulatory pressure.

According to a soon-to-be-released updated report from Business Communications Company, Inc. (www.bccresearch.com) “RGB-271 Growing Markets for Nonwoven Filter Media,” currently the North American market value of the five types of nonwoven filter media is nearly US$563 million. The market is expected to grow at an average annual growth rate (AAGR) of 5.2%, resulting in a US$725 million market by 2007.

The textile technology based airlaid manufacturing process is probably the simplest nonwoven filter media manufacturing process. The market size for airlaid filter media is estimated to be US$42 million in 2002. Though it is a relatively mature filter media production technology, it is expected to grow at an AAGR of 5.5% during the forecast period to US$55 million. The top three leading applications for airlaid filter media include HVAC, manufacturing and transportation.

Liquid filtration applications consume the majority of the wetlaid filter media manufactured in the North America in 2002. The market size for wetlaid filter media has been estimated at US$125 million in 2002. These markets will grow at an AAGR of 3.4% through the forecast period to reach US$148 million by 2007. In several commercial applications extruded filter media such as spunbonded or meltblown materials are replacing wetlaid media. Therefore the anticipated growth of wetlaid media will be relatively lower than the overall nonwoven filter media markets.

In 2002, the sales of spunbonded filter media will be US$183 million and account for over one third of overall nonwoven filter media markets. It is forecasted that the markets for spunbonded media will grow to US$237 million by 2007. The growth of spunbonded filter media markets will mirror that of overall nonwoven filter media markets.

Meltblown filter media has the second highest market share of the overall nonwoven filter media markets. The market for meltblown filter media is estimated to be US$154 million and projected to grow to US$206 million by 2007. It represents an AAGR of nearly 6%. The majority of meltblown filter media is used in the HVAC applications followed by manufacturing and transportation industry segments.

The primary uses of apertured films in the nonwoven filter media markets are for membrane support and as a casting host. The market size for extruded apertured films in North America is expected to be US$59 million in 2002. The primary consumers of the apertured films will include water filtration and healthcare application industries. The market size for apertured films is projected to grow at an average annual rate of 6% to US$79 million during the forecast period.

More information is available by contacting Business Communications Co. at 25 Van Zant Street, Norwalk, CT 06855, Telephone: (203) 853-4266; ext. 309, Email: publisher@bccresearch.com as the source and publisher.

North American Market Growth for Nonwoven Filter Media by Type,
through 2007
(US$ Millions)

North American Market Growth for Nonwoven Filter Media by Type,
through 2007
(US$ Millions)

RGB-271 Growing Markets for Nonwoven Filter Media

Exhibit features handmade paper art. The Robert C. Williams American Museum of Papermaking, Atlanta, Georgia, USA announces the second national juried collegiate handmade paper art show. Hemp, abaca, cotton, papyrus, flax, kozo and linen are only a few of the materials used to create the original and fascinating paper artwork on display at the museum now through March 1, 2003. Thirty-eight works by students representing fifteen schools were chosen for inclusion in the second national juried show. More than 200 pieces were reviewed by jurors. The show is the second of three annual exhibitions designed to encourage art students to explore the medium of papermaking. The Atlanta museum is the first stop for the exhibit’s national tour, which will then proceed to the University of Alabama, Tuscaloosa, Alabama; Nicholls State University, Thibodaux, Louisiana; Minneapolis College of Art and Design, Minneapolis, Minnesota; and the University of the Arts, Philadelphia, Pennsylvania.

US competitive plastic and paper packaging to reach 21 billion pounds in 2006. Plastic is expected to make continued inroads at the expense of paper and paperboard in the competitive packaging markets, according to a report recently released by the Freedonia Group, Inc., Cleveland, Ohio, USA. Total demand for paper and plastic in these markets is expected to increase 1.6% annually, to 21 billion pounds in 2006. Due to plastic inroads, paper consumption in these 17 markets will shoe now gains in the next five years. Only in shipping sacks and carry-out/prepared foods markets will paper hold its own. Plastic packaging made rapid inroads in food markets such as meat/poultry/seafood, produce and dairy products during the 1970s and 80s. These and other trends are presented in “Paper Versus Plastics in Packaging,” a new study from Freedonia.

Other expectations based upon the Freedonia Group report include:

• Plastic packaging demand will increase at a rate of 3.3% annually, to 10.8 billion pounds, based on a variety of opportunities in pouches, film, rigid containers like trays and shipping drums.
• Plastic shipping drum demand will be driven by the cost effectiveness of re-useable plastic drums over their fiber counterparts.
• Opportunities are anticipated for plastic rigid containers, for dry food products such as ready-to-eat cereals, pasta, rice and others.
• The candy industry will increasingly use plastic stand-up pouches at the expense of folding paperboard cartons, and is also increasing the use of metalized and other higher barrier films.
• Trends toward smaller package sizes, combined with the health benefits of nutritionally enriched beverages will drive plastic bottle demand in juice and fruit drink containers.
• Rapid growth is expected for beverage pouches because of the ease or carrying and use.
• Despite high saturation, rapid growth is also expected for snack food packaging, and retail bags and sacks.

COMPETITIVE PAPER AND PLASTIC PACKAGING DEMAND
(million pounds)

*only includes 17 competitive market covered in study
© Freedonia Group, Inc.

“Paper Versus Plastics on Packaging” is available by contacting The Freedonia Group,
Cleveland, Ohio, USA at (440) 684-9600 or through www.freedoniagroup.com.

Strong growth forecast for digital printing in packaging applications. Stora Enso, Helsinki, Finland predicts digital printing will take a strong position in packaging markets and become a mainstream process. Strong growth in demand for the last six months for board products that are suitable for digital processes supports the company’s forecast. Pira International, which follows developments in the packaging industry, also believes that digital printing will account for 20% of all printing by 2010.

Smaller printers have been leading this digital revolution which can meet the growth in demand for personalized printed packages,” says Yrjö Aho, Stora Enso Consumer Boards Marketing Director. “Small printers have been at the front lines since they can offer brand owners very comprehensive services. They’ve realized the possibilities that digital printing can bring and they are conducting business directly with big brands.”

Aho says that the smaller printer’s success is not only due to digital printing, but also to the in introduction of customer relationship management systems (CRMS), which promote marketing activities.

Digital Packaging SA, France, is one success story in the emerging market. The company specializes in pre-production packaging, preparing test series for big brands like Nestlé (Herta), Kraft Foods, L’Oréal, Danone and Merck-Lipha. The company’s greatest strength is the ability to personalize brand products and support CRM concepts. According to Digital Packaging SA’s Managing Director Gilles Pingeot, this is an area that has started to show aggressive growth. “The more individualized information the brand owner has about markets and customers, the better the company can focus its marketing resources. We have already been involved in a number of promotional projects whereby customers have received their own personalized packages. This has lead to a major increase in response percentages. Likewise, personalized packages are being developed for competitions and events; on the whole, marketing is focused on selected target groups.”

Digital Packaging SA uses Indigo’s Omnius printing machines, which have the ability to print six colors, including 78% of Pantone colors, and spot color, too. For their packaging, the company uses Stora Enso’s Ensocoat and Ensogloss grades, and Performa CTMP board. Stora Enso’s board grades have been tested and recommended by leading digital printing machine manufacturers.

Competitive Media Index numbers still strong. The most recent Competitive Media Index (CMI) from the Newspaper Association of America (NAA), Vienna, Virginia, USA shows newspaper readership numbers are holding steady from spring, and readership has gained nearly a full percentage point since the fall 2001 CMI report. The CMI is an NAA analysis of market data from Scarborough Research for the period ending March 2002.

More than half of the adults in the top 50 markets read a newspaper every weekday; in the fall 2002 CMI report 55.4% reported reading, compared to 55.5% in the spring 2002 CMI. This figure is up from 54.3% a year ago. When looking at readership over the course of five weekdays, nearly three-quarters of adults in these markets looked at the paper.

Regarding Sunday newspapers, the fall 2002 CMI found 63.6% of adults in the top 50 markets are reading a newspaper, very similar to previous numbers: 63.7% for fall 2001 CMI; and 63.9% for spring 2002 CMI.

Industry efforts at increasing readership continued in January, when NAA hosted its first Readership Conference focused on strategies for building readership of newspapers.

Market for air pollution monitoring and testing revenues of US$ 1.6 billion predicted for 2006.
The world market for monitoring and testing of air pollutants will exceed US$1.6 billion per year by 2006 up from US$1.2 billion in 2002. This is one of the predictions in the continually updated online report Air Pollution Monitoring and Sampling World Markets. The forecasted revenues include continuous monitoring systems, intermittent stack testing services, and the hardware needed to perform these tests. The forecast also includes supplies such as protocol gases and filter paper. Applications range from the yearly test of a bakery to determine ethanol emissions at a cost of US$5,000 to the ownership, and operation of a multi-pollutant continuous monitoring system in a large waste to energy plant where the acquisition cost of the system is US$900,000 not including any service or supplies.

Sales of new continuous emission monitoring systems will be US$200 million per year in 2006. Service and repair of existing systems plus operational costs of existing systems will exceed US$400 million per year. Another category, including predictive emissions monitors and surrogate monitoring devices, will constitute another US$100 million to US$500 million per year. The larger number includes simple systems where temperature, oxygen content, or even motor amperage is recorded in lieu of continuous emissions monitors.

The market for stack testing services including periodic determination of emissions, validation of continuous emission monitor accuracy, and air pollution control equipment efficiency measurement is slated to rise to US$900 million in 2006. This market is highly fragmented with many small firms serving only one or two U.S. states or a portion of one offshore country. However, there is some consolidation. GE Power Systems has acquired Mostardi Platt and EER and has combined their stack testing capability with the CEM system capabilities of KVB Enertec and the instrument and service offerings of other GE companies.

Another area is ambient monitoring system hardware and testing. This includes networks reporting local ozone and other pollutant levels as well as perimeter monitoring of industrial facilities. Revenues in this sector will exceed US$400 million in 2006 up from US$300 million in 2002.

Asia will be the fast growing region as it struggles to solve severe air pollution problems. Eastern European countries represent another growth sector. The U.S. market for measurement of some pollutants will actually fall. On the other hand, the need to measure additional pollutants will offset the losses. CEMs will be required to measure mercury emissions for coal-fired boilers and waste incinerators. The lower cost and lower accuracy opacity monitors will be replaced with the more accurate mass emissions monitors. Continuous measurement of odors at municipal wastewater treatment plants will also generate additional revenues.

The adoption of emissions trading is positive in terms of additional revenues and profits. Whereas SO2 will trade for only US$400-700 per ton, mercury is likely to trade at more than US$1 million per ton. Therefore a redundant mercury monitor costing US$100,000 is a bargain if it prevents the loss of 0.2 tons of credits over its lifetime.

For more information on Air Pollution Monitoring and Sampling World Markets
click on http://www.mcilvainecompany.com/air.html#NO31 or contact: McIlvaine Company, 2970 Maria Avenue, Northbrook, IL 60062, Tel: 847 272 0010 Fax: 847 272 9673
E-mail: editor@mcilvainecompany.com