A panel discussion at the recent Sleep Expo event in Dubai, got to the heart of some of the key issues facing the flexible foam industry in the GCC and East Africa. Simon Robinson reports.
The price of raw materials, the difficulty in finding good staff, and making a profit in challenging markets are issues that polyurethane professionals around the world are familiar with. But wherever you are in the world, people will pay for a good night’s sleep.
As Habin Waldu, director operations at Rainbow Foam in Ethiopia explained, more people are starting to understand the connection between sleep and health. ‘They want us to create products that are cost-effective and give health benefits,’ she said. ‘The research in this area is reaching east African consumers. We have worked to try to give customers what they want, but it is a price-sensitive economy.’
The markets may be price sensitive, but there is demand for technologically advanced foams for mattresses, according to Rakesh Shah, CEO at Nairobi-based Vitafoam Kenya. ‘In east Africa, we have seen memory foam coming into the market, and right now we are seeing a lot of people asking for foam encased with copper or containing ions,’ he said.
Consumers want more from their mattress – they want a sleep experience
‘We all know that our bodies are made up of positive and negative ions. At Vitafoam we have introduced fabrics with scents such as lavender, and vitamins A, C and E for anti-ageing. These are the sort of trends we see coming into the market.’
Alaa Shraim, general manager at Dow, agreed. ‘Consumers want more from their mattress – they want a sleep experience,’ he said. ‘They take foam density, hardness and ergonomics as a standard. Now they are looking for the micro-environment like the temperature around the body and they want to know more about what’s in the mattress.’
Mattresses are more than just support,’ he added. ‘I believe that foam manufacturers who sell a mattress with the pillow as sleep system are going to succeed in the market far more than those who just sell a mattress based on specification. Selling a mattress on specifications can be confusing for consumers.’
One of the biggest problems facing flexible foam makers in East Africa can be access to raw materials and the price of materials. ‘Access to raw materials and ever-changing chemical prices are definitely are a challenge,’ said Rainbow’s Waldu. ‘Raw material prices affect our production costs and our ability to provide our customers with the best mattresses at a price they can afford.’
It is easy to control internal factors, but external factors are out of your control
People have little or no control over prices in other parts of the world, but Waldu’s company faces another level of complexity. ‘The problems are often external, and we can’t control them,’ she said. ‘This includes prices and, in our country, the availability of foreign currency. Limited access to foreign currency hinders our access to raw materials when we need them for production.’
Rainbow Foam’s approach is to combat these problems by pre-planning, forecasting, looking at demand and supply, and planning ahead. ‘It is easy to control internal factors, but external factors are out of your control,’ she said. ‘We look at our long term, not our short-term needs.’
In Kenya, we had six big foamers and about 10 box foamers before prices rose in 2017
Price volatility can have a big effect on the commercial success of some small foamers, according to Vita’s Shah. ‘In Kenya, we had six big foamers and about 10 box foamers before prices rose in 2017,’ he said. ‘After the price rises, the box foamers disappeared. This was good for us.’ But, he added, the market could not sustain the situation because the box foamers serve one part of the market, and larger foamers supply another
His company’s way of dealing with supply volatility is to ensure there is sufficient material in stock in your factory or on the high seas. ‘And make sure you are buying from good suppliers that will get you the material when you need it,’ he said.
As a raw material supplier, Dow tries to get the material where it is needed, Shraim said. He explained that Dow has invested a great deal in its Sadara joint venture. ‘We have invested a minimum of $1bn in TDI,’ he said. ‘These are very expensive assets. You have to run them to the max to have a viable investment.’
The company covers the global market. ‘After material is made, it can be shipped from anywhere in the world to anywhere else in the world,’ he said. ‘But we face supply chain challenges once we are making product – where to store and distribute it.
The supply situation is being made more difficult because of the trade tension between the US and China,’ he added. ‘This is reshaping the market, and playing with the very delicate balance between supply and demand. For us it is very important to be able to predict where demand will be. We need to know how many tonnes we should ship to the hubs in Africa or Jebel-Ali or to Europe or India.’
As a result, they have implemented an AI forecasting tool. ‘This will collect three years of past demand and customer account manager feedback,’ he said. ‘It will then try to predict demand in the next three to four months. This will help us distribute the product from our different locations. Having product in the wrong location can be a problem for us. We may have to sell it at a lower price because we can’t get it to where the market needs it more.’
Ever more sophisticated
Mahmoud Karime, sales manager at Hennecke, explained the traditional view of the flexible foam market in the GCC and East Africa. ‘The gulf market is very price sensitive; everyone is under price pressure and we always hear that price drives sales,’ he said ‘This is why we experience low density and a lot of calcium carbonate in the foam.’
‘The gulf market is very price sensitive; everyone is under price pressure
The spike in prices in 2017 led to a number of changes in the market for polyurethane foam in the region, claimed Vita’s Shah. ‘We have moved on to higher grade, high resilience foam, foam that is temperature regulating,’ he said. ‘Our grades start at 35kg/m3 density, and go to 45 or 50kg/m3.’
He added that the company’s products have become more sophisticated, and they collaborate with Spain’s Torres Espic. ‘We have introduced different mattresses with different layers with Torres our partners in Spain,’ he said. ‘This has helped us grow in the market.’
Brand recognition is also important. Waldu explained that Rainbow Foam has been in existence for 25 years. ‘We are a brand people trust,’ she said. ‘Customers want more from us. We educate people on the benefits of sleeping on a foam mattress without fillers. But there is limited disposable income in Ethiopia.’
There is a balance between educating people on the benefits of sleeping on foam and understanding the nature and needs of the community and balancing that with pricing. ‘People respond positively to this,’ he said. ‘They value [us] doing things in a quality way in a price-sensitive area. This shows in our sales and following. When people think of foam mattresses, they think of our business. Our long-term vision has paid off in a community where most people are thinking about their short-term needs.’
Dow’s Shraim said that when the price of TDI was high, customers moved more into sprung mattresses. ‘Now they realise you can have the beauty of both worlds,’ he said. ‘You can have a hybrid with different layers for foam and springs. The idea is to make more and more responsive mattresses. We also see phase change and gels becoming more popular for mattresses in the region.’
In Kenya, we had six big foamers and about 10 box foamers before prices rose in 201
He believes this is giving more hope to the industry. ‘Rather than going into more fillers, it gives more differentiation and value for the customer and driving the customer to invest the right amount of money in the sleep system,’ he said.
Henecke’s Karime agreed that the market for mattresses in the GCC is changing. ‘We see a growing trend of e-commerce, bed, mattress and furniture in a box to reduce costs,’ he said. ‘The logistics are simpler than traditional supply chains.’
When companies make foam flexible polyurethane foam products like mattresses, pillows and upholstery, they also make scrap. The Middle East is a big market for waste foam scrap for the large local rebonded foam markets.
‘Saudi Arabia and Oman are the biggest regional markets for shredded foam, and this is often imported from Europe,’ Shraim said. But, he warned, European circular economy legislation will demand complete recycling of material. ‘If a mattress is used, it cannot be shredded or sent to landfill,’ he said. ‘The legislation foresees a mattress being converted into a polyol and reused in the industry.’ This could have a big effect on the source of a key raw material for the type of stiff, high density cushioning that is popular in the GCC and nearby regions.
Waldu explained that they recycle almost all of their materials. ‘Production scrap is rebonded and sold into the market,’ he said. ‘We have educated the market about the health benefits of rebonded foam. As a company we have go-green initiatives, and are part of the country’s go-green initiatives. We are pro environmental regulations, and recycle back into foam.’
Shraim said that Dow has a project to extract polyol from the foam. ‘We are looking at ways of generating polyols from used mattresses,’ he explained. ‘Currently, we have polyols that can be used in rigid formulations, and we are trying to develop polyols from end-of-life mattresses that can be reused in mattresses.’
Progressive companies like Vita and Rainbow Foam have invested in automation to differentiate themselves from the local competition. Vita’s Shah believes that automation is very important. ‘We lose a lot of revenue in Africa by not having processes automated,’ he said. ‘Having set up a new factory with a Laader Berg machine, I’ve seen a huge improvement in our foam manufacturing process. It is automated from receiving the raw materials to the end of production. We have three people running the entire plant.’
Waldu spends a lot of time looking at efficiency. ‘Labour costs are low in Ethiopia, but it is hard to find good skilled people,’ she said. ‘You can’t always rely on people, so automation has helped us to become more efficient and raise our revenue.’
Shah explained that automation has had multiple benefits. ‘[It has] reduced time, manpower, and the blocks are numbered and labelled,’ he said. ‘Coming to the cutting side, since all the blocks are labelled and numbered, we know what is due to go into production, and when and we know how to cut it.’
Waldu said that a big benefit is the way it helps them to make more accurate predictions of supply and demand. ‘For the past couple of years, we have been relying on machinery and automation, rather than focusing on cheap labour,’ she said. ‘This has been driven by our consumers. They want their orders quickly and with good quality, so we had to balance technology and our labour force.’