The Rupp Report: ITMA Asia + CITME 2012: It All Starts With Yarn Forming

After last week’s interview with various executives in the weaving machinery sector, the Rupp
Report is taking a look at the beginning of the textile production chain: the yarn-forming sector —
or, in other words, spinning.

New All-Time High For Spindle Shipments

Spindle shipments enjoyed a new record in 2011: According to the most recent shipments
statistics from the Switzerland-based International Textile Manufacturers Federation (ITMF), after
dropping in 2008 and 2009, worldwide shipments of new short-staple spindles recovered by 75 percent
in 2010. In 2011, they rose further by 15 percent reaching an all-time high of 14.33 million. Asia
was the destination for 94 percent of the total, with China 62 percent of global shipments; and
India, 17 percent. Open-end rotor investments jumped in 2011 by 27 percent to a record high of
572,250. Asia again led, taking 81percent of global shipments, with China taking 68 percent of the
total; and India, 6.6 percent
(See ”
Rupp Report: Positive News Ahead For ITMA Asia + CITME 2012
,”, May 22, 2012).

ITMA Asia + CITME — A Success

The Rupp Report talked to Edda Walraf, head of technology & marketing for
Switzerland-based Rieter Machine Works Ltd. and André Wissenberg, vice president of marketing &
corporate communications for now-Shanghai-based Oerlikon Textile.

Walraf said, “From our point of view, ITMA Asia was a success.”

Wissenberg added: “ITMA Asia was an excellent show for us. What we expected from the visitors
side was that there should have been more people from outside China. And, more people on the last
two days. But finally, the quality of the discussions was good.”

Both mentioned that most of the visitors came from China, “almost 90 percent,” according to
Walraf. However, there were also people from Southeast Asia, Pakistan and the Middle East; and a
few from other regions. And the expectations were fulfilled. “Yes, with respect to the number and
quality of visitors. Yes, with regard to the countries from which the visitor would come after ITMA
Barcelona and ITM in Turkey some months ago and India ITME in some months to come,” Walraf added.
Also the quality of the visitors was judged to be rather good.

But, was there any difference between this ITMA Asia and the last one? “Yes,” said
Wissenberg. “Less people, more quality. That’s the trend, which we have also seen at ITMA Barcelona

Positive Feedback On New Products

Both companies presented new products for the first time at ITMA Asia + CITME and had very
positive feedback. “The main spotlight of Oerlikon Barmag was on Wings for FDY [fully drawn yarn],
with the first production systems being commissioned in the first quarter of 2012. The market and
the customers are open for this new modular concept,” Wissenberg said. Oerlikon Schlafhorst
presented its new ZinserImpact 71 compact spinning machine in combination with the Autoconer X5.
“With the new ZinserImpact 71, the integrated Impact FX compact technology is now available as an
entry-level model in a new class of machine,” he claimed.

“Rieter introduced its new comber E 80,” Walraf said. “This machine has a further increased
productivity and can further increase the yarn quality and/or save material. The new unique round
comb is an innovation, and we are certain that our Chinese customers in particular will appreciate
the new yarn quality standards that can be reached. The visitors were interested in understanding
the new solution and the accompanying benefits for their products and economy.”

She continued: “Big interest was in our air-jet spinning machine that we showed for the first
time in China. Customers are interested in understanding the machine concept, the yarn quality, the
application range and the performance. Rieter is the only supplier that can supply and therefore
consult about all four spinning technologies. But also, our new R 60 rotor-spinning machine enjoyed
appreciation. The new box achieves better spin stability and therefore better quality at higher
speed – a development that supports economy for our customers.” According to Walraf, reasons for
this success are that “there is a labor shortage in China. Solutions with a higher degree of
automation are in the focus of investment. J 20 and R 60 are fully automated systems with low power
consumption per kilogram of yarn.”

“The new ZinserImpact71 and the Wings for FDY are the right answers to the requests that our
customers address to us,” Wissenberg mentioned. Both Rieter and Oerlikon Textile signed contracts
at ITMA Asia 2012.

Asia The Most Important Market Region

Is the European market still important for Oerlikon Textile and Rieter? “Yes, if we look at
the nonwovens markets,” Wissenberg said. . “This is also true for BCF [bulk continuous filament]
yarns. Turkey is coming back, so the BCF market is very important with further growth opportunities
and potential.”

“Absolutely,” Walraf commented. “There are still important customers in Europe – in
particular, when you count Turkey as being in Europe. And we all know that Europeans learned hard
lessons of survival in a competitive environment.”

Regarding growth opportunities, the Asian market is more important for both companies: China
and India especially are still two of the most important Asian markets. China, Turkey, India,
Brazil are the sources of the largest volume of orders. South Korea, Indonesia, the United States,
Pakistan and Bangladesh are also important markets. However, China is still the most important
country at the moment. The question, “How important is the Chinese market for your products on a
scale of one to 10?” was answered this way by Wissenberg: “Seven for staple fibers, 10 for chemical
fibers and four for nonwovens. China is still a huge market, but it also depends on China’s future
development and its five-year plan and other incentives as well as increasing wealth and
consumption in the domestic market.”

Walraf added: “It is important because China offers growth opportunities. With the increasing
need in automation and low power consumption, Rieter is well-positioned and can offer fine
solutions. And this trend is not yet broken.”

The Future

What do the two companies expect from 2013? Here are the answers, ladies first: “Depending on
the overall economic development, Rieter assumes that some of the postponed projects for extension
and replacement will be realized,” Walraf said. “For example, India’s TUF (Technology Upgradation
Fund) with focus on technical improvement downstream will create needs for better yarns and finally
generate spinning investment. There are also projects to improve the power supply, which will
certainly help our customers. Many of them have projects; therefore, only more security about a
stable future is needed to trigger investment.”

Wissenberg added: “Trends like automation and energy saving will go on. Oerlikon Textile has
the right products for these trends.”

And how do the two companies see the coming years? André Wissenberg is convinced that “Asia
will still be dominant.”

Walraf said: “Rieter believes in Asia. This is the reason why we invested in new factories
and better market access in India and China. Volatility of raw material prices and increasing
demand in sustainability will continue to be important. Fast reaction times to market needs and new
technologies will be the key issues to stay competitive in the future. We must provide valuable
solutions, which offer a fast return on investment, ensure technological leadership from fiber to
yarn, support customers with a high level of services from making investment decisions to running
entire installations.”

July 18, 2012