Concerns about what it is possible to discuss at industry meetings following recent antitrust investigations in the flexible foam sector led to a noticeable drop in attendance at the 10-11 June Europur meeting in Paris, as noted by Dr Axel Kamprath, secretary general of Europur.
Attendance at the event was down by some 40 people (to about 210), said Kamprath, with the Vita Group pic absent entirely, while other major foam groups--Carpenter and Recticel among them--sent only limited numbers (two and four representatives respectively).
"My view is that the need for associations will increase over next 10 years," commented Europur president Ward Dupont of Recticel.
Issues such as recycling, flammability, impurities in foam, "can only be resolved if we bundle resources and knowledge," in such a group, Dupont continued, noting what a shame it would also be to lose the good atmosphere and conviviality which characterise the meetings of Europur--the European Association of Flexible Polyurethane Foam Blocks Manufacturers.
Foam industry representatives are confused about what it is safe to discuss, in the context of a price-fixing investigation now being conducted by the European Commission among flexible foamers across Europe. A similar investigation is taking place in the US by the Department of Justice.
Bob Luedeka, executive director of the US Polyurethane Foam Association, had some words of reassurance. Commenting that the PFA has had the same antitrust issues as Europur, with a similar impact on the numbers registering, Luedeka said that while the PFA's autumn meeting in 2010 had seen "a noticeable lack of people attending," attendance at this year's spring meeting was "back to normal."
The repercussions of the EC investigation are such that, "People who have know each other for 20 years are afraid of shaking hands," commented Europur president Dupont, at a press conference after the 11 June session.
To combat some of the "discomfort," that has been engendered among flexible foamers about what can and can't be discussed at such events, Kamprath started the proceedings with a list prepared by Europur's legal advisers.
Europur cost chart on the cards
After pleas last year from Europur officials for stability in raw materials pricing, Dupont said the association has now decided to canvass members about producing its own cost chart for flexible foam, similar to that developed by its sister association, Euro-Moulders (the European Association of Manufacturers of Moulded PU Parts for the Automotive Industry).
The Euro-Moulders chart is compiled by a notary, using real invoices supplied by Euro-Moulders members. All names are removed and the notary posts the anonymous averaged data on the internet quarterly. Automotive customers of Euro-Moulders members can then see changes in prices paid by foamers for their raw materials.
For Euro-Moulders, Dr Bemd Welzel, managing director of German car seat foam suppler Fehrer AG, commented: "We know that there are several contracts using this index. Price changes made in the sector are based on this index."
Welzel added some history: "Before when we were trying to push for price rises we had to go with every single invoice from every single customer and this could be tricky. Now we just send the information to the notary, and see the result on the internet."
The Euro-Moulders representative added: "We always refer to this in discussions with customers."
Dupont said that while commercial companies do offer pricing data, it is retrospective. "The problem is that the time lag between when we incur a price increase and when that is shown in publications is too long. ... The only way to shorten it is to develop our own chart," he added.
"If we can develop our own and reassure the customers that it is independent that we are not influencing it," the association feels this may benefit flexible foamers in their negotiations with customers.
European foam prodction by country 2010 (total 627.8 kt)Germany 12.8%Italy 11.4%Poland 11.0%UK 9.5%France 7.5%Belgium 6.6%Spain 6.1%Netherlands 5.3%Others 29.8%Note: Table made from pie chart.
Good bedding volumes for PU
Looking at foam statistics for 2010, Dupont said in the bedding market PU foam continues to take a bigger share of the European mattress market. Foam uptake is "continuing and moving much further and faster than we ever imagined," said Dupont.
He also commented that this, "explains why our volumes are at a good level."
Dupont noted crude oil prices at the moment of around $115 a barrel, saying, "it would benefit all of us if the oil prices would stabilise at a reasonable level."
He also commented on the continuing economic issues in Greece and Ireland: "I don't believe it is over," and he also sees risks for a further bank crisis--"and if that is the case all would suffer."
European upholstered furniture prodn 2010 top 4 countries, M[euro]EU-17 New Non-members membersItaly 2219 Poland Turkey 532 2295Germany 1986 Romaine Russia 373 315UK 1505 Czech Ukraine 107 Rep 250France 711 Hungary Croatia 89 208
For polyether foam formulations, costs increased in 2010 over 2009 by 22.6 percent, and for ester formulations by 25.2 percent, Dupont said. (Europur's index for raw materials is an average for the current year against the average of the previous year).
That means the decreases of 2009 were neutralised in 2010, he noted, and he expects the 2011 index to be back to 140--the precrisis level.
For polyether-based foams, volumes produced, as reported to Europur fell by -0.2 percent. Here, Dupont stressed that some of these figures should be treated cautiously: "If a low number is given to us, then we show a reduction in the market--which does not necessarily reflect the true situation."
In 2010, production of upholstered furniture by value shrunk 1.0 percent, which Dupont said is "a strong improvement over the previous two years." Bedding volumes rose by 2.6 percent, he said, after three years of negative growth.
In more detail, foam production for the EU-17 in 2010 was reported as 485.7 kt, a rise of 4.7 percent over the previous year.
Table 1 Europur: 2008-2010 slabstock market indicators 2008 2009 2010 2011GDP-growth +0.9% -4.2% +1.0% +0.8%(EU-27)Raw materials (ICIS) ether +5.3% -29.3% +22.6% +7.5%price index (ICIS/TECNON) ester +3.9% -23.7% +25.2% +6.7%Slabstock (Europur) ether -6.6% +1.5% -0.2%market volume (Europur) ester . n.a volumeUpholstered CSIL -9.4% -10.0% -1.0% n.a.furnitureproduction(value)Bedding EBIA -8.5% -5.4% +2.6% n.a.market(volume)Total W-EU CSM -9.3% -17.0% +12.2% +3.9%vehicleassembly(volume)Total W-EU CSM +5.8% -29.8% +25.2% +6.1%vehicleassembly(volume)Table 2 2010 polyether foam production Europe - Europur memberskilotonnes 2005 2006 2007 2008 2009 2010EU15 + N + CH 468.0 476.1 505.5 479.4 463.7 485.7Change y/y +5.8% + 1.7% +6.2% -5.2% -3.3% +4.7%East EU-member states 132.4 141,7 164.7 146.5 165.6 142.1(+TU+RO+UKR+RUS) 6.7% +7,0% +16,2% -11.1% 13,0% -1402%Total 600.0 617.8 670.2 625.2 629.3 627.8Change y/y 5.9% +3.0% 8.5% -6.5% 1.5% 0.2%Table 3 Matters consumption (in manufacturers prices) Seven countriesEurope: 2009 (1st half) - 2010 (1st half) 1 st hafl 2009 1 st hafl 20010Mattresses Value % of Volume % of Value % of Volume M[euro] market 000 market M[euro] market 000 PCS PCSPU 331 45.6 3014 52.6 348 47.1 3283Springs 278 38.2 2062 35.9 282 38.2 2015Latex 100 13.7 517 9.0 90 12.2 440Other 18 2.5 145 2.5 18 2.5 149Total 727 100 5738 100 738 100 5887Mattresses % of marketPU 55.8Springs 34.2Latex 7.4Other 2.6Total 100
For East Europe--Turkey, Romania, the Ukraine, and Russia--a 4.2 percent decrease to 142.2 kt was "obviously not true," said Dupont, indicating that the Russian figures are incorrect.
By individual country, Poland's foam production decreased from 71.7 to 68.8 kt, Italy was about stable, Germany grew by 5kt to 80.6 kt, the UK by 2kt to 59.5 kt, and France by 3.5 kt to 47 kt.
This makes Germany the top foam maker at 12.8 percent of EU production (see chart), while Italy has 11.4 percent and Poland 11 percent, said Dupont. These three top production countries are close competitors, he added.
In upholstered furniture, Dupont said the CSIL-Milano data indicated an apparent explosion in consumption (+19.7 percent) and production (32 percent) among non EU members: Croatia, Serbia, Ukraine, Turkey, Russia, a fact which he said is, "not believable."
Furniture production for the EU 17 was down 2.7 percent, and for new EU members (Poland, Romania, Hungary, Czech Republic), increased by 6.9 percent.
While Dupont said he had strong doubts about the numbers he has for Russia, it is "important to realise that things are moving ahead in these regions."
Poland has overtaken Italy as the region's top furniture exporter, Dupont commented.
As already noted, PU has been doing well in bedding. By volume, which Dupont said is "much more important [than value] for us."
PU's share rose to 55.8 percent in H1 2010 against 52.6 percent in H1 2009. The data covers only seven countries, Dupont said.
In this period, spring bed volumes declined from 43.9 to 33.2 percent, while latex's share fell from 9 percent to 7.4 percent.
RELATED ARTICLE: FOAM EMISSION FOCUS
Both Europur and the PFA are interested in more data on the specific chemicals emitted from flexible foam. Europur has set up a working group on impurities, after finding "all kind of chemicals as VOCs [volatile organic compounds] emitted by our foams," within the Certipur testing.
And "the majority of the results are based on samples which have passed our test," Kamprath added. More than 100 different substances have been identified. "We have to look in detail" at this, at what comes out, in what concentration. Is there a toxic substance among it? How can we guarantee that this is no longer an element of our foams?" he said.
Kamprath stressed that, "We are responsible for our products and we have to take all measures possible to reduce any potential impact on the environment, on the health of consumers and workers."
The working group will carry out a detailed analysis, perform a risk assessment to end up with recommendations on how to cut emissions.
REALTED ARTICEL: Harmonised tests closer
An advance for Euro-Moulders is that its work on harmonisation of test standards in the European automotive foam sector has taken what might prove to be a huge step forward.
To put it simply, "A standardised test for humid ageing can be achieved," said Anthoine Fluhr, who heads the Euro-Moulders technical committee.
Euro-Moulders has tried to get European OEMs together to see if agreement could be reached on harmonising automotive foam specifications in Europe, but struggled to get commitment to such a project.
Euro-Moulders then proceeded alone with the research on harmonising humid ageing tests, and held a workshop on the results in Leipzig in late May. As Fluhr said, this conclusion is the outcome of several months of testing by an independent test laboratory.
Welzel said it was "really impressive" how the OEMs at the Leipzig workshop "realised that what had come out was valuable ... I think we opened Pandora's box a bit."
Renault, WV Group and Mercedes attended the workshop, representing perhaps 40 percent of the European OEMs. Those OEMs who were not present have "asked us to come to them to discuss it," Welzel said, and some have offered support.
He also noted that, perhaps surprisingly, this was "the first time that these OEM'S specialists had come together," so Euro-Moulders stimulated networking among these foam experts
Fluhr indicated the value of this outcome: now that Euro-Moulders has proved there is a successful way of harmonising one test, it is clear that "this may also be possible with other tests."
And Kamprath noted that the work will improve and widen the reputation of Euro-Moulders as an association that can actively cooperate with the automotive industry.
The next step is to "spread this knowledge to the other OEMS, and then to [apply it to] other tests," said Welzel.
A key point is that "we always used to go to the OEMs empty handed. Now we have some proof to offer," stressed Kamprath.
REALTED ARTICLE: US FOAM SECTOR SEES SOME RECOVERY.
In the US, the Polyurethane Foam Association is "encouraged by the decrease in the amount of goods coming in from China," while US flexible foam production has been steadily rising over the last 15 months (see white line on chart), said Bob Luedeka, executive director.
The red line on the chart is the value of imports from China of residential upholstered furniture and the green line is imported commercial furniture made in China.
Luedeka said the PFA, "chose China as the measuring stick because ... China is the largest source of imported products that contain polyurethane foam filling materials."
Luedeka listed reasons for the drop in Chinese imports. US furniture manufacturers were very significant customers for Chinese producers, but when the US economy started to decline, Chinese workers were reallocated and not available when demand rose again.
Also, "Some of the cost advantages," in raw materials in Asia have disappeared, Luedeka said, noting that retailers may also have become frustrated with the quality of some foam produced in China.
In terms of the antitrust situation, Luedeka said the US DOJ has collected evidence from various US foam makers and also served Luedeka with a federal subpoena to supply records, dating back to 1985. The association's attorney said there was nothing of concern in this data.
Luedeka also commented that, in connection to this case, US purchasers of foam are suing suppliers for alleged damage from price fixing.
A number of these cases, perhaps 40, are being consolidated under one judge, in north Ohio, and Luedeka said the PFA expects these case to be resolved and is "encouraged" by the way the court is handing the matter.
LIZ WHITE, UTI EDITOR
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