Danish nonwovens manufacturer Fibertex is to set up manufacturing and distribution facilities in South Africa, aimed at giving it easy access to markets which have plans for huge future investments in, among other things, infrastructure.

From the start of this year, Fibertex will set up business with a factory in South Africa with a view to manufacturing and marketing needlepunch products, primarily geotextiles for road works, but also products for the growing South African automotive industry.

The basis of this initiative is that Fibertex sees a huge potential in the region. It says that in South Africa alone, plans are in place to invest more than DKK 500 billion (US$100 billion) in the country’s infrastructure over the next five years and neighbouring countries have similar plans in the pipeline.

“This is a significant expansion of the infrastructure in large parts of southern Africa which will even be further increased in the coming years. Large road and bridge construction projects etc. have been launched and more are under way. Geotextiles are essential elements to such projects and this is where we come in with our high-tech production at competitive prices”, says Jørgen Bech Madsen, CEO of Fibertex Industrial Nonwovens.

Mr Madsen expects that local production on a state-of-the-art facility and sale of geotextiles combined with low production costs and the extensive expertise of Fibertex Industrial Nonwovens in the area will make Fibertex in South Africa an attractive supplier and business partner.

Fibertex says that the automotive industry is also experiencing strong growth in southern Africa and this offers the company good opportunities to produce different products for the industry which only to a lesser extent are produced in Africa today.

For Fibertex, which is owned by the industrial conglomerate Schouw & Co., this is a strategic initiative. After the factory has been run in and the markets have been penetrated, Jørgen Bech Madsen sees a huge future potential in the South African campaign:

“We have competent employees with industry experience to run the factory so we will not be tying up key management resources in the project. The factory will have a high-tech, state-of-the-art and competitive production system and we will supply a total Fibertex concept, which means technology and know-how, both in relation to production and administration,” says Jørgen Bech Madsen. The factory will have a just over 40 employees.

The annual turnover of the South African company is expected to be approximately DKK 60-80 million with decent profits in the coming years. From a long-term strategic perspective, the project furthermore serves as a bridgehead, not only to southern Africa, but eventually also to other markets in the Southern Hemisphere such as Australasia, India, the Middle East and South America.

“As owners, we see a vast potential in this initiative which both internationalizes Fibertex and makes Fibertex Industrial Nonwovens a local and regional player able to compete with the other nonwovens manufacturers in this part of the world,” says Jens Bjerg Sørensen, President of Schouw & Co.

The South African company is jointly owned by Fibertex, the Danish Industrialisation Fund for Developing Countries (IFU) and the South African company Safyr, which is owned partly by local industry specialists and partly by Industrial Development Corporation (IDC), South Africa’s equivalent to the Danish State investment fund Vækstfonden. Fibertex will invest approximately DKK 25 million in the company, acquiring a 26% ownership share. IFU has previously participated in a similar Fibertex project in Malaysia, and Fibertex has the option of acquiring IFU’s 25.8% in future.