Mr. Bruno Ameline, President, and Ms. Evelyne Cholet, Secretary General of the French Textile Machinery Manufacturers’ Association (UCMTF), are cautiously optimistic about French textile machinery industry prospects. In a e-mail interview to The Textile Magazine, they deal with a range of topics on the global textile as well as machinery industries in the pre- and post-recession period as well as the emerging challenges and opportunities.
Excerts:
Textile Magazine: Have textile machinery manufacturers been hard hit by the financial and economic crisis?
Bruno Ameline: The industrial equipment sector is extremely cyclical and our companies have to adapt themselves to major investment phases like in 2006 and 2007 and to brutal stops. But no one could have expected such a sudden crash that began in the summer of 2008. In 2009 our companies saw their turnover go down by 30 per cent on an average, and 50 per cent in some cases.
Textile fiber consumption grows at an average rate of 3.4 per cent per annum. Therefore, production facilities have to be expanded and modernized. In 2008, it decreased by more than 6 per cent which is without precedence in recent history. The economic downturn was coupled with a financial crunch for investment projects and difficulties in obtaining credit insurance in some export countries. Therefore, the optimism of our customers gave way to anxiety, and investment projects were cancelled or postponed. This has been true all over the world. Even Asian countries on which textile machinery is highly dependent have seen their export markets collapse and have strongly reduced their own investments.
TM: Is the worst over and are the machinery manufacturers on the road to recovery?
Bruno Ameline: I think so. Asian countries like China and India have already recovered, and the US seems to emerge from the slump as Europe, even if it is a bit slower here. As the textile manufacturers operate closer to full capacity, they become progressively more confident about their future, and as financing improves, investments start picking up again. Another very important incentive to invest is the development of new products which need new production technologies.
Clearly, we see improving prospects since the end of 2009. Spare parts business is getting back to usual levels, which means utilization of the existing production facilities has improved, orders for new machines as well as for new projects are under discussion. I expect at least a 10 per cent rebound in the first semester of 2010 compared with the very low figures of 2009, and a more robust rebound at the end of 2010 and in 2011.
This general forecast needs to be detailed and contrasted:
– by region: the crisis was rather short in China and other Asian countries which started to recover as early as spring 2009. The US is expected to recover soon, and Europe will follow suit.
– by application sectors: technical textiles, particularly the ones associated with infrastructure projects, the protection of the environment or energy savings, will do better than textiles for apparels and the home market.
TM: Are the French textile machinery manufacturers well positioned to take advantage of the recovery?
Evelyne Cholet: Yes, our 35 member-companies export most of their production for a “normal” annual total of more than Euros 1 billion (close to $1.4 billion). They are specialty manufacturers, SMEs, but world leaders or among the world leaders on niche markets and specific applications. These markets are complex and limited in size. They do not attract the new and large machinery manufacturers from such countries as China or India.
France is particularly strong in weaving preparation and nonwovens and has very vigorous manufacturers in specialized spinning, dyeing and finishing machinery. We have very close relationships with our customers, which are particularly important for the technical textile applications which require real partnerships to design the specific technologies to produce new marketable end products.
In China, for example, in September 2008, the Government announced a series of measures to encourage investment and consumption. One of the projects concerns doubling the investment in rail networks. It will need millions of square metres of geotextiles which increasingly evolve in the direction of nonwovens solutions. French machinery manufacturers are well positioned for such investments.
Bruno Ameline: Generally speaking, our companies are well positioned for the future because even if, during the crisis, we have carefully managed our cash reserves, we have continued to invest in R and D in close relationship or partnership with our clients all over the world. We also have worked very closely with machinery manufacturers offering complementary technologies to offer our customers a “single point of purchase”. More and more, our clients want to get a complete solution, shop for complete lines or even complete plants. We have understood this trend for several years and adapted our offer.
TM: Are energy savings and more generally durable development important in your customers’ decision making process?
The French machinery manufacturers have found very different ways to offer energy saving machines: fine-tuning the machine to fit exactly the energy profile of the production process, finding new low energy processes for individual machines and optimizing the energy consumption of a whole production line.
These approaches are not exclusive but can be combined. In many cases, energy saving is in the 30-40 per cent range, the same or even more for water consumption in dyeing and finishing.
A very interesting example in durable development is the collaboration of a recycling machine manufacturer, a distributor of jeans and a charity organization. The distributor of jeans offers a discount on new jeans when customers bring back their “old” ones. These are then collected by the “Emmaüs” charity organization, fiberized and turned into a natural fiber building insulation product with very attractive characteristics. Besides bringing revenues to a charity organization, this allows to reduce consumption of raw materials and of heating or cooling energy for buildings.
TM: Do you feel competition from Asian machinery manufacturers will intensify?
Evelyne Cholet: The Chinese machinery manufacturers have already an important share on their national market and they are very active, exporting mainly in Asia.
For high volume commodity products, Chinese and other Asian manufacturers offer low-cost machines with short payback. We cannot compete on these markets but stick to our strategy of specialized manufacturers aiming at niche markets with a tailor-made approach to address in-depth customer needs.
TM: Is the exchange value of the yuan an important factor?
Bruno Ameline: Probably not so much. The possible variation of the yuan compared with the Euro is probably in the 10-30 per cent range, whereas the production cost difference is of bigger magnitude.
We can partly take advantage of the low costs in Asia in establishing sourcing solutions for some parts of our machines, or this will be a major issue in the next years, establishing licensing agreements with Asian partners. This is a difficult, time-consuming approach, but I think it has to be explored, particularly for our smaller companies.
TM: Two ITMAs will take place within one year, in Shanghai and Barcelona. How do you see the future of these shows?
Bruno Ameline: The original thinking when establishing ITMA Asia was to focus ITMA Europe on innovation and technology, and ITMA Asia as a genuine commercial show, a place for Asian customers to easily meet machine manufacturers. The context has changed: innovation is no longer planned according to ITMA schedule, and Asian customers want to see the latest innovations as much as Western customers do. Therefore, my personal expectation is that ITMAs in Europe and in Asia will more and more look alike, with as much innovation and “making business” contents. Both will attract regional customers as they want to limit travelling.
For both ITMAs the choice of adequate venues is very important. UCMTF, being part of CEMATEX, the owner of both ITMAs has a particular responsibility in these choices.
TM: Can you tell us which will be UCMTF’s main projects in 2010?
Evelyne Cholet: UCMTF continues to provide logistical support to its members, in order to help them exhibit at selected shows and to enhance their marketing and sales efforts through seminars. In particular, we organize French pavilions in these exhibitions and seminars in countries of particular interest to us. Now we will support French exhibitors at ITMA Asia and we will organize three seminars, in India, Syria and Turkey.
UCMTF promotes our sector in order to attract young engineering and managerial talents. We focus our efforts on the best universities and organize every two years a forum to which we invite textile students from all over France. The last one took place in Mulhouse with more than 200 attendees. UCMTF also sponsors the very appealing challenge organized by ITECH University.
UCMTF program also focuses on sharing information and implementing services among our members, making our network of small and middle-size enterprises very effective and proactive.
Last but not the least, UCMTF, through face-to-face meetings, interviews, press releases and our website www.ucmtf.com keeps informing the international trade press about our initiatives.