Manufacturers in the sanitary paper product industry convert paper stock, paper, and pulp into sanitary paper products such as diapers, tampons, paper towels, toilet paper, facial tissues, and paper tablecloths. Disposable diapers, tampons, and sanitary napkins represent over 60% of US industry revenue. The three major players in the sanitary paper product manufacturing industry are projected to hold 80% of US market share.

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The damage inflicted by the current recession on this industry is expected to be minimal for revenue and demand since the majority of the industry products are necessities; although demand for industrial and commercial tissue products is expected to decline since unemployment is rising and more people are out of work. Tight credit, lower product prices, and mediocre financial returns are expected to have a detrimental effect on industry profitability. Likewise, manufacturers are participating in restructuring activities such as downsizing or closing facilities and offshoring. Profitability is expected to increase in the future due to restructuring benefits coupled with potential lower pulp input prices.

The value of the US dollar relative to other foreign currencies can be beneficial to the US sanitary paper product manufacturing industry. A weak US dollar is beneficial to the industry since it can result in export growth, high output prices, and a decline in import competition. A strong US dollar can result in cheaper imports and more expensive exports.

Sales growth for the industry has been negative for the past few years due to factors such as imports and since the industry is in the economic life cycle’s declining phase. Thus, competition is strong among manufacturers as they attempt to preserve market share. Increasing import penetration has forced domestic manufacturers to reduce their prices, since the majority of imports are usually cheaper and increasing in quality. In developing countries, sanitary paper products are cheaper and production costs are lower and as a result US manufacturers are shifting operations offshore – contributing to the increase in import penetration and declining industry revenue. Likewise, below are the key success factors for sanitary paper product manufacturers:

Continuous technological innovation – will result in more efficient manufacturing and the ability to differentiate product lines based on texture, color, strength, absorbency, and softness. Products can also be differentiated by adopting anti-viral grade tissues and seals for diapers that prevent leakage during wear and disposal.

Strong brands and value propositions – can help manufacturers preserve or grow market share by increasing customer loyalty via aggressive marketing campaigns.

Superior raw inputs access – is required to enhance product quality and differentiate product lines relative to the competition products.

Environmental friendly perceptions – are required to offset environmental concerns due to factors which include over 16 billion diapers sent to US landfills each year. To help offset environmental concerns, several manufacturers are increasing their use of recycled fiber inputs and/or decreasing chemical usage during the bleaching process. Several are also donating to or associating with environmental friendly charitable causes.

Key markets access – creating or maintaining connections with major retail outlets or distribution networks, including export, can boost sales growth; especially in Asia. China is expected to bypass the US by 2011 as the world’s largest market for sanitary paper products.

Increased import penetration, the current economic crisis, and US dollar value fluctuations are current obstacles for sustainable revenue and profit growth. By successfully and consistently employing the sanitary paper product success factors, manufacturers will have a greater opportunity of overcoming their current challenges.