Kuraray to Cease Drylaid Nonwovens Production

Kuraray Co., Ltd. Announces Restructuring of Nonwovens Business: Focusing on Meltblown Nonwovens

Kuraray Co., Ltd., a leading Japanese producer of nonwovens, has announced a significant restructuring of its nonwovens business. The company will cease production of drylaid nonwovens and reduce its production capacity for meltblown nonwovens as part of a strategic realignment. This decision reflects the challenging business environment in the nonwovens industry, characterized by oversupply and declining domestic demand. By reallocating resources and focusing on its core strengths, Kuraray aims to enhance its competitiveness and build a more sustainable and profitable business portfolio.

Background: Kuraray’s Legacy in Nonwovens

Kuraray has been a key player in the nonwovens industry for decades. The company entered the drylaid nonwovens market in 1972 and began producing meltblown nonwovens in 1989. Over the years, Kuraray has built a reputation for high-quality nonwoven fabrics used in a wide range of applications, including hygiene products, medical supplies, and industrial materials. However, the company has faced increasing challenges in recent years due to market oversupply and shifting demand dynamics.

Challenges in the Nonwovens Industry

The nonwovens industry has experienced significant changes in recent years, driven by several factors:

1. Oversupply in Asia:
   The rapid expansion of nonwovens production capacity across Asia has led to an oversupply in the market. This has intensified competition and put pressure on prices, making it difficult for companies to maintain profitability.

2. Declining Domestic Demand:
   In Japan, domestic demand for nonwovens has been declining, particularly in traditional applications such as hygiene and industrial products. This has forced companies like Kuraray to reevaluate their business strategies and focus on higher-value segments.

3. Rising Raw Material and Energy Costs:
   Fluctuations in the prices of raw materials and energy have further exacerbated the challenges faced by nonwovens producers. These cost pressures have made it imperative for companies to optimize their operations and reduce production capacity in less profitable areas.

Restructuring Plan: Focusing on Meltblown Nonwovens

In response to these challenges, Kuraray has announced a comprehensive restructuring plan for its nonwovens business. Key elements of the plan include:

1. Ceasing Drylaid Nonwovens Production:
   Kuraray will discontinue production of drylaid nonwovens at its Kuraray Kuraflex plant in Okayama by December 2024. Sales of drylaid nonwovens will cease in March 2025. This decision reflects the company’s strategic shift away from a segment that has become less viable due to market conditions.

2. Consolidating Meltblown Production:
   The company has already shut down its meltblown nonwovens production in Okayama as of June 2024. Moving forward, meltblown production will be consolidated at Kuraray’s Saijo plant. This consolidation aims to improve operational efficiency and focus resources on the meltblown business, which offers higher growth potential.

3. Focusing on Core Businesses:
   Kuraray’s restructuring plan is part of its broader medium-term management strategy, PASSION 2026. The company aims to upgrade its business portfolio by reallocating resources to core businesses and identifying areas for downsizing or divestment. This focused approach will enable Kuraray to build a more sophisticated and sustainable business model.

Strategic Priorities: Balancing Economic and Social Value

Kuraray’s restructuring plan is not solely focused on financial performance. The company is committed to balancing economic value with social and environmental considerations. Key priorities include:

1. Sustainability:
   Kuraray is exploring ways to enhance the sustainability of its nonwovens business, including the development of eco-friendly materials and processes. This aligns with global trends toward sustainability and the growing demand for environmentally responsible products.

2. Innovation:
   The company will continue to invest in research and development to drive innovation in its nonwovens business. By focusing on high-value applications such as medical and technical nonwovens, Kuraray aims to differentiate itself in a competitive market.

3. Social Responsibility:
   Kuraray is committed to minimizing the impact of its restructuring on employees and local communities. The company will work closely with stakeholders to ensure a smooth transition and provide support to affected workers.

Implications for the Nonwovens Industry

Kuraray’s decision to restructure its nonwovens business reflects broader trends in the industry. As companies grapple with oversupply, declining demand, and rising costs, many are reevaluating their strategies and focusing on core strengths. Kuraray’s shift toward meltblown nonwovens highlights the growing importance of high-value segments in the nonwovens market.

Meltblown nonwovens, in particular, have gained prominence due to their use in critical applications such as filtration, medical masks, and hygiene products. By consolidating its meltblown production and focusing on innovation, Kuraray is well-positioned to capitalize on these opportunities and strengthen its market position.

Conclusion: Building a Sustainable Future

Kuraray’s restructuring of its nonwovens business marks a significant step in the company’s journey toward a more sustainable and profitable future. By ceasing production of drylaid nonwovens and consolidating its meltblown operations, Kuraray is aligning its business with market realities and focusing on areas of growth and innovation.

The company’s commitment to balancing economic, social, and environmental value underscores its dedication to long-term sustainability. As Kuraray implements its PASSION 2026 strategy, it will continue to adapt to changing market conditions and deliver value to its customers, employees, and stakeholders.

In a rapidly evolving nonwovens industry, Kuraray’s strategic realignment serves as a reminder of the importance of agility, innovation, and sustainability in building a resilient and successful business. By focusing on its core strengths and embracing new opportunities, Kuraray is paving the way for a brighter future in the nonwovens market.