Oerlikon Group has a big stake in the Indian market. Apart from organising a customer meet every year, the Group has been making initiatives to open up avenues for further growth. The Year 2017 began with the opening of an ambitious new service station in Vadodara, Gujarat by none other than Georg Stausberg, Chief Executive Officer of the Oerlikon Manmade Fibres segment. The location is part of the Global Service Network, providing 24x7 hotline support to customers worldwide.
Georg Stausberg, in an exclusive interview, shared his views and opinions with the Editor, Samuel Joseph, of the Indian Textile Journal.
The Manmade Fibres segment seems to have experienced a setback in 2016. What are the reasons for this?
The year 2016 was a difficult year for the manmade fibre industry. Overcapacities in China and the Chinese Government’s 13th Five-Year Plan resulted in an extreme market slowdown. Investments have been postponed and orders put on ice. For us as a manmade fibre systems manufacturer, this has been a critical development as China is the most important market in terms of pure sale volumes for both us and our competitors. Other strong markets, such as India, Turkey, Europe and the US, have not been able to fully compensate for this decline.
How do you view the prospects for the Oerlikon Manmade Fibres segment in the current year and what are your reasons?
We have noticed that—despite all previous predictions from well-known market research institutes—the market is recovering again. One reason for this is the considerable increase in investment in the Indian market and the strong staple fibre business.
Here, we have also benefited from our takeover of the Trützschler staple fibre technology. Furthermore, the current Chinese Five-Year Plan is focusing above all on investing in modern, sustainable technologies – despite also concentrating on reducing overcapacities.
To this end, we are confident that the current market upturn is sustainable.
How has the manmade fibres segment in India fared over the last two years?
India is developing; PCI has confirmed rising per-head consumption within the country. However, we still see considerable growth potential there: currently, the per-head consumption of fibres is approximately 5 kg in India. The global average is around 12 kg and approximately 16 kg of fibres are consumed per head in China. So, there is still room for expansion.
Add to this the fact that—as a result of progressing industrialisation—natural fibres will be gradually replaced by manmade fibres. Currently, consumption of the two is pretty much equal in India. However, the situation is very different if we look at China, where manmade fibres make up more than 80 per cent of total fibre consumption. And this too is a positive trend for manmade fibre manufacturers and, of course, for us.
As a result of the slowdown in the Chinese market, the Indian share of our sales increased from 2 per cent in 2015 to 13 per cent in 2016. Despite the reemergence of China, we are anticipating a sales ratio of 25 per cent for India in 2017. With regards to market share, Oerlikon Manmade fibres has maintained its strong position of around 55 per cent of the Indian market. To this end, India is becoming increasingly important for our business.
What segments look promising in India? What Oerlikon systems and equipment have seen rising interest from Indian customers?
The Indian market is very active with regards to POY and FDY and this is where we continue to see the greatest potential. In terms of texturing, the rising demands regarding yarn quality is becoming noticeable downstream. Many further-processors have invested in modern machines for the downstream processes, which means that the requirements for DTY are very high. Furthermore, some manufacturers are attempting to gain access to the quality-oriented export market. Consequently, we have registered great interest in our eFK – a texturing machine for high-end yarns.
The demand for staple fibre systems has grown globally and increased to a disproportionate extent in India last year, and we expect this trend to continue. In addition, the global backwards integration trend is also noticeable in India. And this is benefiting our polycondensation systems business. For yarn manufacturers, both the price stability of the raw materials for producing fibres and filaments and, above all, the direct influence on yarn quality are beneficial.
Last, but not least, there is movement within the industrial yarn sector. The domestic demand for industrial filament yarns is currently not being covered locally; here, a larger proportion of yarns are imported. Industrial yarn production is a high-margin business: to this end, expanding capacities with a view to the Indian market becoming self-sufficient and India exporting yarn throughout the world makes perfect sense. However, fundamental modernisation of machines and equipment to the latest standards is required to be able to assume a leading global role within the sector in the future. This explains the stronger demand for industrial yarn systems in India at present.
In what other countries is Oerlikon doing well, and in what new markets has it made breakthroughs?
This is very dependent on the yarn process. Traditionally, the US and Turkey have been the strong players within the BCF yarn manufacturing and filament sector. But staple fibre production is no longer focused just on China and Southeast Asia, something that is underlined by strong demand for systems in India, Turkey, Russia, Belarus and also Europe.
And the Middle East is also increasingly becoming an interesting market. Here, there is a trend towards establishing manufacturing businesses aimed at reducing the region’s dependence on oil against the backdrop of falling crude prices. Following years of economic sanctions, Iran has huge pent-up demand and we are also looking at an extremely exciting project landscape here. (Wollen wir das Irangeschäft explizit erwähnen? Ist immer noch sehr brisant je nachdem wer das liest. Würde ich rauslassen)
How do you see the future of the manmade fibres industry in India, and what is on your wish list for the industry and the government so as to provide the manmade fibres segment with a boost?
With India’s further development into an industrialised country, the demand for textiles will continue to grow: the demands of the population will increase, the need for industrial textiles – for example, for infrastructure measures and the automobile industry – will also rise. Add to these the foreseeable replacement of cotton with manmade fibres. So, we see huge potential for Indian manmade fibre producers. However, many entrepreneurs will have to catch up in terms of their technology if they want to become international players.
What I would like the Indian Government to do? Fundamentally, a stable investment climate and attractive interest rates are important prerequisites for the textiles industry to invest in new systems and equipment. These also include the corresponding support for the swift implementation of planned projects. I expect a considerable upturn in the market as soon as the harmonisation of the Goods and Services Tax (GST) has been implemented.
Here, the current ‘Make in India’ initiative and the Indian Government’s present 12th national Five-Year Plan are focusing on the right topics. Our solutions for high-end, efficient and simultaneously environmentally-friendly and inexpensive yarn production provide high-value support here.