ROLE OF NONWOVENS IN AUTOMOTIVEINTERIOR SURFACE AND CONSTRUCTION

APPLICATIONSPREPARED FOR:AUTO INTERIORS 2003DETROIT, MI

MAY 15, 2003papers/ai03

ROBERT ELLER ASSOCIATES, INC.CONSULTANTS TO THE PLASTICS AND RUBBER

INDUSTRIES

PRESENTED BY :ROBERT ELLER

ManagementDECISIONSANALYSIS

MARKET

ECONOMIC

TECHNICAL

4000 Embassy Parkw ay - Suite 230 - Akron, Ohio 44333-8328 USAPhone: 330-670-9566 / Fax: 330-670-9844

Email: bobeller@prodigy.net - Home Page: w w w .robertellerassoc.com

HIGHLIGHTS• THE AUTO INTERIORS MARKET• DRIVING FORCES FOR SUBSTITUTION• MATERIALS/PROCESS TECHNOLOGY

SHIFTS IMPLICATIONS• INTERMATERIALS COMPETITION• EUROPE/NAFTA DIFFERENCES• HEADLINER• FLOOR/ACOUSTICS MODULES• DOOR TRIM• VALUE-ADDED OPPORTUNITIES FOR

NONWOVENS

AUTOMOTIVE TEXTILES . . .AN ECUMENICAL PERSPECTIVE

COATED FABRICS

REGENERATEDFIBER BATTING

(SHODDY)

NONWOVENSFACINGS

FOAMS(COMPETE/COMPLEMENT)

NEW LIGHTWEIGHTACOUSTIC FIBERS

WOVEN/KNITTEXTILES

ARTIFICIALLEATHER

LEATHER

AUTOTEXTILESMARKET

SOURCE: ROBERT ELLER ASSOCIATES, INC., 2003ecu persp 03.vsd

ManagementDECISIONSANALYSIS

MARKET

ECONOMIC

TECHNICAL

Robert Eller Associates, Inc.

Automotive Interior Soft Trim:Skins, Foams, Coated Fabrics, Textiles, and Acoustic Barriers

Prospectus for a Global Multiclient Industry Analysis

MODULEFABRICATION

ANDINTEGRATION

TECHNOLOGIES

REQUIREMENTS

OCCUPANT SAFETYACOUSTIC REQUIREMENTSWEIGHTELV LEGISLATIONESTHETICSTELEMATICS INTEGRATIONSENSORYSMELL

INTERIOR MODULES- COCKPIT- HEADLINER- DOOR- FLOOR/ACOUSTICS- TRUNK LINER- SEATING- PILLAR COVERS

CONSTRAINTS

MANUFACTURING ECONOMICS

SKINS

FOAMS

SUBSTRATES

COATED FABRICS

TEXTILES (WOVEN, NON-WOVEN)

CARPET

ACOUSTIC BARRIERS

QUALITY

CRAFTSMANSHIP

PRODUCT POSITIONING

SUPPLY CHAIN MANAGEMENT

slide-covautointsofttrim701 02.vsd

MULTICLIENT PROSPECTUS:NONWOVENS IN AUTOMOTIVE TRIM

• TECHNOLOGY,ECONOMICS FOR ADVANCED NONWOVENS

• ANALYSIS/QUANTIFICATION OF CURRENT/FUTURE POTENTIAL

• MODULE FABRICATION TECHNOLOGY IMPLICATIONS• EMPHASIS ON NEW NONWOVENS TECHNOLOGY• ALL INTERIOR MODULES• INDUSTRY STRUCTURE IMPLICATIONS• EUROPE/NAFTA• TO BE OFFERED JOINTLY BY ROBERT ELLER

ASSOCIATES, INC. AND JOHN R. STARR,INC.• PROSPECTUS AVAILABLE

SOME OPERATING HYPOTHESES

• NEW NWs TECHNOLOGY NEW TRIM MARKETS • NW VALUE-ADD OPP’YS : UNDEREXPLOITED• BOTH MATERIAL/PROCESS COST SAVING POSSIBILITIES • MODIFICATION POSSIBLE IN FACE FABRIC AND LAYER

CONSTRUCTIONS• ACOUSTICS PROPERTIES CAN BE TAILORED• CURRENT PENETRATION IS PRIMARILY IN HEADLINER,

FLOOR SYSTEMS, PACKAGE TRAYS• ONLY 17% OF POTENTIAL IS REALIZED TO DATE• NO: SEATING(LIMITED), DOOR TRIM, PILLAR TRIM,

AIRBAG• NWs WILL PARTICIPATE IN NON-STRUCTURAL

COMPOSITES• NWs AND FOAMS COMPETE AND COMPLEMENT

NEW TECHNOLOGY NONWOVENS’ SUPERIOR ATTRIBUTES

• IMPROVED PERFORMANCE:SOFTNESS,TACTILE, CONFORMABILITY/DRAPE DURABILITY

• BREATHABILITY/CONTROLLED POROSITY• ACOUSTIC/THERMAL INSULATION, FILTRATION• UV RESISTANCE• PRINTING,EMBOSSING, DYEABILITY• NON-FRAYING(VS. TEXTILES)• MICRODENIER• FILTRATION

SOME NW TARGET MARKETS(NAFTA)

START MEDALLIONSFOAM LAMINATION OPP’Y

32DOOR TRIM

15% FOR FACE FABRIC35HEADLINER

13% SHARE41TRUNK LINER

LT WT FIBER OPP’Y55FLOOR /ACOUSTICS

STARTING EUROPE(SIDES)90SEATING

COMPETE WITH PU FOAMS23DASH MAT

NOTE/PENETRATIONAREA(MM SM)

MODULE

SOURCE: ROBERT ELLER ASSOCIATES, INC., SOFT TRIM MUTLICLIENT STUDY

SOURCE: ROBERT ELLER ASSOCIATES, INC.,JOHN R. STARR INC.

AUTOMOTIVE FABRICS MARKET VALUE (NAFTA/EUROPE), 2002

0.0

0.5

1.0

1.5

2.0

2.5

INT. TRIM ACOUST. BKNG / REINF.

NOTE: INCLUDES TEXTILE, NONWOVEN, WOVEN, COATED FAB., REGEN. FIBER BATTING

$ (B

ILLI

ON)

SOURCE: ROBERT ELLER ASSOCIATES, INC.,JOHN R. STARR INC.

AUTOMOTIVE FABRICS MARKET SIZE (NAFTA/EUROPE), 2002

0

50

100

150

200

250

300

350

INT. TRIM ACOUST. BKNG / REINF.NOTE: INCLUDES TEXTILE, NONWOVEN, WOVEN, COATED FAB., REGEN. FIBER

BATTING

DEM

AND (K

t)

OVERSUPPLYSLUGGISH VEHICLE DEMAND

OEM PROFIT DECLINE

TIER 1 PRICE PRESSUREAUTOMOTIVE SOLUTIONS- DECONTENT- GEOGRAPHIC SHIFT- ASSEMBLY EFFICIENCY- PLATFORMCONSOLIDATION

COST REDUCTION

OUTSOURCE NEWPROCESSES

MATERIALSUBSTITUTION

SUPPLY CHAINCONSOLIDATION

CRAFTSMANSHIPW/COST SAVINGS

PRESSURETIER 2 SUPPLIERS

VALUECHAINSHIFTS

NEWTEXTILE

TECH.

SOURCE: ROBERT ELLER ASSOCIATES, INC., 2003oem supp dyn 03.vsd

OEM/SUPPLIER DYNAMICS

NONWOVEN PATH-TO-MARKET OPPORTUNITY FORADDING VALUE RESIN

NONWOVENPRODUCTION

NONWOVEN

FOAMLAMINATION

NW/FOAMLAMINATE

MODULEASSEMBLY

ASSEMBLEDMODULE

OEM

PREFORM

MODULEASSEMBLY

PUFOAMRESIN

PREFORMEDSUBSTRATE SUBSTRATE

RESIN

MODULEASSEMBLY

PU RESIN?SKIVED PU SHEETPO FOAM SHEET?

NOTE: = VALUE ADD OPPORTUNITIES FOR NONWOVENS

SOURCE: ROBERT ELLER ASSOCIATES, INC., 2003 nw op val ad 03.vsd

AUTOMOTIVE TRIM TARGETS FOR NONWOVENS

DOOR:ACOUSTICS/WATER SHIELD,DOOR TRIM SURFACEMEDALLION

SOURCE: ROBERT ELLER ASSOCIATES, INC., 2003foam tgts 02.vsd

HEADLINER

PILLARTRIM

PACKAGE TRAYAIRBAGS/AIRBAG DOOR

FLOORSYSTEMS:(ACOUSTICS,SURFACELOAD FLOOR)

SEATBACK

TRUNKFLOOR

SEATING

DASHMAT

A U T O M O T I V E F O A M F A M I L I E S A N D E X A M P L EA P P L I C A T I O N S

A U T O M O T I V EF O A M S

P O U R E D( B A C K F O A M )

S H E E T B L O C K P R O F I L E

E P D M T P VP U P U P V C P OS H E E TF O A M

O T H E R( R U B B E R )

S H E E T I N T E G R A LS K I N( U E V )

X L P O N O N -X L P O

G A S K E T S

S T E A MC H E S T

M O L D E D

E P P E P P O

S T R A N DF O A M

P U

B O D YS E A L S

I N T E R I O RE N E R G Y

A B S O R B E R S

S K I N SG A S K E T SI N S T .P A N E L ,

S E A T ,A C O U S T I CB A R R I E R S

T E X T I L EL A M I N -

A T E S

B U M P E RS Y S T E M S ,

L O A DF L O O R

S O U R C E : R O B E R T E L L E R A S S O C I A T E S , I N C . , 2 0 0 3f o a m f a m i l i e s 0 2 . v s d

R I G I D S E M I - S T R U C T U R A L F O A M S A N D W I C HS T R U C T U R E

B A R E :

M A Y B E C O L L A P S E D T O F O R M I N T E G R A L H I N G E

R I G I D F I B E R M A T S K I N

B E A D F O A M

C A R P E T / N O N - W O V E N / W O V E N T E X T I L E L A M I N A T E :C A R P E T O R W O V E N O R N O N - W O V E NB A C K I N GR I G I D F I B E R M A T S K I N

B E A D F O A M

R I G I D S K I N O R N O N - W O V E N B A C K I N G

S O U R C E : R O B E R T E L L E R A S S O C I A T E S , I N C . , 2 0 0 3r s f o a m s a n d w ic h 0 2 . v s d

DRIVING FORCES FOR NONWOVEN GROWTH

-REDUCED COATINGS-MATERIAL SHIFT-BINDERS ?

-NO-SMELL INTERIOR-REDUCED V.O.C./FOG

INTERIOR EMISSIONS

-AZDEL SUPERLITE-BEAD FOAMS-NONWOVENS

SEMI-STRUCTURAL SANDWICHES

FLOOR SPACE MANAGEMENT

-MONOMATERIAL SANDWICHES-RECYCLATE CONTENT, NFCs

-ELV LEGISLATIONEND OF LIFE

-IMPROVED ESTHETICS- CRAFTMANSHIP

-NON-CARPET FLOOR-INVISIBLE AIRBAG DOORS

UTILITY FUNCTION/LOOK

-ENERGY ABSORBING FOAMS GROWTH-AIRBAG SOLUTIONS

HEAD/SIDE IMPACT REGULATIONS

OCCUPANT SAFETY

-ELIM. HOT POUR PU FOAM SEATING-ENHANCED MICRODENIER POSITION

-REDUCED NOISE-EARLYACOUST INVOLV.-TAILORED ACOUSTICS

ACOUSTIC PERFORMANCE

ON-BOARD ACOUSTIC BARRIERS-"POPULATED" PANELS-ON-BOARD ACOUSTICS

MODULARIZATION-PARTS CONSOLIDATION-SANDWICH CONSOL.

PROCESS COST REDUCTION

MATERIALS/PROCESS IMPLICATIONS AND EXAMPLES

ACTUAL OR POTENTIAL CHANGE

DRIVING FORCE

EUROPE/NAFTA DIFFERENCES

HIGHER IN EUROPEWT. SAVE VALUE

HIGHER IN EUROPEFAVORS MONOMATERIALS

POLYOLEFIN PRESSURESHIGHER IN EUROPEWEIGHT SAVE PREMUIMSAME?COST SAVE PRESSURES

SAMEACOUSTIC PERFORMANCE PRESSURES

HIGHLY PENETRATED-EUROPE

FLOOR/SURFACE

HIGHLY PENETRATED -EUROPE

HEADLINER FACE FABRICNON WOVEN STATUSPARAMETER

HEADLINER

• FACE FABRICS: NAFTA HAS LOWEST NW PENETRATION(15% 20% IN 2004,FORD,GM)

• TRICOT WILL DECLINE• LOW VALUE MODULE• PROFIT IS IN THE OVERHEAD SYSTEMS• COST REDUCTION MAJOR DRIVER• PP NONWOVEN OPPORTUNITY?• HYDROENTANGLED NWs SHARE GAIN• SUBSTRATES PP FOAMS, AZDEL SUPERLITE®• GLASS/PU LOSING MARKET SHARE• EUROPEAN PENETRATION NW GROWTH• ACOUSTICS ARE CRITICAL• ROLE FOR MICRODENIER NWs

NON WOVEN HEADLINER SHARES

0

1020

30

4050

60

70

8090

100

EUROPE NAFTA KOREA JAPANSOURCE: FREUDENBERG VITECH

MA

RK

ET

SHA

RE

,%

OTHER

NONWOVEN

TRICOT

FLOOR/ACOUSTICS

• 3-5 LAYERS• INCREASED FUNCTION(E.G. LOAD FLOORS)• SPUNBOND PET HAS 43% SHARE IN NAFTA BACKING• IMPROVED ACOUSTICS REQUIRED• HEAVY LAYER ELIMINATION NEW CONSTRUCTIONS• HIGH NW PENETRATION IN EUROPE• LT. WT. FIBER WILL CHANGE CONSTRUCTION• FIBER/FOAM COMPETITION IN UNDERLAY• ABILITY TO VARY IN XY AND Z-PLANES IS NONWOVEN

ADVANTAGE• MONOMATERIALS CONSTRUCTION OPPORTUNITY

SOURCE: ROBERT ELLER ASSOCIATES, INC.;

SOFT TRIM MULTICLIENT STUDY

COMPARISON OF REGIONAL TRENDS IN AUTOMOTIVE CARPET (2002)

0

20

40

60

80

100

120

EUROPE JAPAN NAFTA

PER

CEN

TNEEDLE TUFTED

INCUMBENTS/CHALLENGERS IN AUTO ACOUSTICS

FLOOR, DOORTAILORED FIBERSXREGEN. FIBERS

FLOOR PANELSEPP BEAD FOAMSXPU FOAM (POURED)

FLOOR, DASH, OH SYSTEM

POLYOLEFIN SHEET FOAMS

XPU FOAM (SKIVED)

FLOOR-BETTER MASTIC-ELIMINATE?

XMASTIC

DASH, FIREWALL, FLOOR, FENDER LINERS

-METALLOCENES-ELIMINATE →LT. WT. FIBERS

XHEAVY LAYER

HOOD, OH SYSTEM

-PLASTICS/CELL.-NONWOVENS

XGLASS FIBER

INSULATE

DAMP

EXAMPLE LOCATION

CHALLENGERBARRIER TYPE

INCUMBENT

ACOUSTIC BARRIER MATERIALS IN AUTOMOTIVE FLOORING

NATURAL FIBERS

LT. WT FIBERSPET/PP FIBERS

PO FOAMS

AZDEL SUPERLITE

55OTHER

TUNED ACOUSTICS ACCELERATE PENETRATION

5075PU FOAM

SHODDY USE WILL DECLINE5020REGENERATED CELLULOSE FIBERS (SHODDY)

NAFTAEUR

NOTECURRENT SHARE %

MATERIALS

DOOR TRIM

• VERY LOW PENETRATION RATE• TARGETS ARE:

-MEDALLIONS(PO FOAM LAMINATION OPP’Y)-ACOUSTIC PADS/WATER SHIELDS-FACE FABRICS

• CRAFTSMANSHIP OPPORTUNITY• 3D FORMING IS CHALLENGE• IN MOLD FORMING OPPORTUNITY• INTEGRATION WITH LOW PRESSURE

MOLDING• TEXTILE USUALLY MATCHES SEAT

NONWOVEN COMPETITIVE INTERFACES

NW STARTING (EUROPE)PO FOAM LAM. OPP’YPP IS MAJOR SUBSTRATE

WOVENS, KNITSCOATED FABRIC,

DOOR MEDALLION

NW STARTING(EUROPE)TPO COATED FABRIC START(EUROPE)

PVC COATED FABRICWOVENS, KNITS

SEATING SIDEPANELS

15%(NAFTA) INCREASINGTRICOTHEADLINER FACE FABRIC

LT. WT FIBER/FOAM COMPETITION

SHODDY, PU FOAMUNDERLAY

SPUNBOND PET HAS 43%(NAFTA)

BACKING

HI NW PENET. (EUROPE)TUFTED NYLON(NAFTA)

CARPETFLOOR:

NOTEINCUMBENTMODULE

VALUE-ADDED DECORATION WITHNONWOVENS

TPEVENEER: COLORED TPE

NONWOVEN SUBSTRATE

IN-MOLD DECORATION (IMD):BACK-PRINTED LAMINATES CLEAR SURFACE FILM

BACK PRINTED(PATTERN OR COLOR)NONWOVEN SUBSTRATE

IN-MOLD DECORATION (IMD):CO-EX FILM/SHEET

CLEAR SURFACE FILMCO-EX COLOR LAYERSUPPORT/SUBSTRATE LAYER

SOURCE: ROBERT ELLER ASSOCIATES, INC., 2003vadecoalt02.vsd

WHAT WILL DRIVE NONWOVEN GROWTH?

• CONTINUED SEVERE PRICE PRESSURE• MATERIAL COST SAVE• PROCESS COST SAVE• PERFORMANCE IMPROVEMENT

-UV RESISTANCE-VOC/FOG REDUCTION-OCCUPANT SAFETY-ACOUSTICS-FILTRATION

• MONOMATERIAL CONSTRUCTION• PO SHEET FOAM/TEXTILE LAMINATION• SURFACE ESTHETICS IMPROVEMENT• VALUE ADD OPPORTUNITIES

VALUE ADDED OPPORTUNITIES FOR AUTOMOTIVE NONWOVENS

• IMPROVED SURFACE ESTHETICS• AVOID PREFORMS• IN-MOLD FABRICATION• CRAFTSMANSHIP WITH COST SAVINGS• DIRECT PU FOAM LAMINATION• POLYOLEFIN FOAM LAMINATION• IMPROVED/TAILORED ACOUSTICS• IMPROVED PP NONWOVENS• TARGET ALL-PP CONSTRUCTIONS• X,Y AND Z-AXIS MODIFICATION

SUMMARY• MATERIAL/PROCESS DRIVERS FAVOR NONWOVENS:

-ACOUSTIC REQUIREMENTS, WT. SAVINGS-PROCESS COST REDUCTION-MATERIALS COST REDUCTION

• NONWOVENS AND FOAMS WILL COMPETE• CONTINUED SEVERE PRICE PRESSURES LIKELY • RECYCLING - NOT U.S. DRIVER, SIGNIFICANT EUROPE

DRIVER• EUROPE- EARLY TECHNOLOGY LEADER• EURO/NAFTA USE PATTERN WILL CONVERGE• SYSTEMS/PROCESS TECHNOLOGIES – ADD VALUE• HEADLINER, FLOOR-MAJOR EARLY TARGETS• SEAT, DOOR TRIM, PACKAGE TRAY,PILLAR TRIM-NEXT

TARGETS• BARE ROLL GOODS VS SYSTEM SUPPLIER ROLE?• POTENTIAL UNDER-EXPLOITED

ABOUT ROBERT ELLER ASSOCIATES, INC.

• TECHNICAL, MARKET AND ECONOMIC ANALYSIS IN SUPPORT OF MANAGEMENT DECISION

• AUTOMOTIVE – SPECIALTY• OFFICES IN US AND EUROPE• RECENTLY COMPLETED SOFT TRIM MULTICLIENT

STUDY

ABOUT JOHN R. STARR, INC.

• MANAGEMENT AND TECHNICAL CONSULTING FIRM SPECIALIZING IN NONWOVEN PRODUCTS FIELD, WORLWIDE FOR 30 YEARS.

• AUTOMOTIVE NONWOVEN AN IMPORTANT PART OF THE PRACTICE.

• PARTICULAR FOCUS ON LEADING EDGE NONWOVEN TECHNOLOGIES WITH POTENTIAL TO DISPLACE OTHER NONWOVENS, WOVENS, KNITS AND OTHER MATERIALS