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Show w mm WWi -..-r n . -M mimm n M-,,n-- n rri -i r OPTIMISM PREVAILS FOR FIHEK MAKERS The surge to high levels in April of shipments of man-made synthetic fibers was not unexpected. Forward buying by textile manufacturers in anticipation of price increases scheduled to go into effect thereafter, as well as strong exports, buoyed the man-made fiber market. In May, however, shipments registered a decline. Nevertheless, while the textile companies are wary about the outlook for the remainder of 1981, the producers of the various synthetics are still optimistic op-timistic concerning their fortunes. With price increases in place and supply and demand in better balance, the industry is welcoming the turnaround tur-naround which began in the fourth quarter of 1980. As a precautionary measure, makers are maintaining production at restrained levels-keeping levels-keeping supplies in the United States tight. The surviving firms have rid themselves of losing product lines, closed down plants that were unprofitable, un-profitable, and worked off excess capacity. The leading companies in the field are investing heavily in new plant and equipment to improve types of higher-margined higher-margined fibers and, in addition, are strengthening their research and development facilities in order to bring forth innovative applications for their already established products. In the opinion of the Research Department of Babson's Reports, the fiber industry-after seven years of recession-is at last favorably positioned to participate in the healthier business conditions unfolding at this time. The years immediately ahead will present not only a challenge for the fiver manufacturers but also an opportunity to give fresh momentum to their renewed growth. NEW GROUP OF SPECIALTY FIBERS Producers of man-made fivers are now looking for their newer high-performance high-performance products to beef up profit margins in the 1980s. These non-cellulosics non-cellulosics (made from synthetic polymer chemicals derived from petrochemicals) are extruded into fibrous form and are meshed with glass, metals, or rubber. They consist of carbon fibers, high-strength spurn bonded fibers, and graphite fiber composites. GROWTH COMPARED While specialty fibers currently constitute only a small percentage of the total industry output, their growth rates are expected to be double or triple those of the old commodity-type fibers. Geared to faster-paced industrial markets, they will without doubt produce far greater returns on sales than the basic synthetic man-made fibers used in apparel, auto upholstery and home furnishings. Industrial uses for these specialty fibers include aerospace, composites, offshore drilling rigs, automobile drive shafts and leaf springs, sports equipment, equip-ment, bullet-proof vests, as a substitute for steel in tire belts, construction (bridges, highways, and railroad tracks,) and flame-resistant items. At present, producers are hoping to see about a 4 percent-5 percent growth in demand for the older-type fibers in contrast to 1980's 7 percent drop. Kevlar, a newer industrial fiber from Du Pont, is expected to produce a 20 percent annual growth rate. RECOMMENDATION The Research Department of Babson's Bab-son's Reports is of the opinion that long-term long-term investment commitments can now be advantageously made in strong, well-established producers of synthetic fibers, with special emphasis on those companies heavily involved with the new specialty-type fibers. At this time, Babson's is recommending recom-mending purchase of the conservative-grade conservative-grade common stock of Du Pont (NYSE), the number one company in the industry; as well as the average-grade average-grade common of Hercultes (NYSE),-the (NYSE),-the largest manufacturer of graphite fibers. Hold positions are advised on our other supervised companies: Allied Corporation, American Cyanamid, Celanese, Eastman Kodak, and Monsanto, which are also among the leading factors. i - Make your own herb vinegar vin-egar by adding outdated or weak-flavored herbs to ordinary cider vinegar. . |