Faced with a still sluggish economy, declining automotive production and rising raw material prices, the adhesives and sealants industry is braced for another tough year.
"The uncertain economy is affecting the adhesives and sealant market, as it is affecting all others," said Dave Burger, adhesives business director, 3M Industrial adhesives and tapes division.
Due to the economic slowdown, many manufacturers have had to cut back on production. The automotive industry has been affected significantly and adhesives and sealants companies are feeling the punches.
|Among the latest additions to DAP's construction adhesives range are a number of low-VOC and solvent-free products.|
"The automotive industry has been hit the most," agreed David Bongiorni, market development manager, Devcon. The company has been able to weather the decline as it isn't a major player in that sector. "In general, our OEM business has been stable. Large accounts that use adhesives have come back to the previous numbers and see growing demands for products which spur additional adhesives sales."
Many adhesives and sealants companies have noted that while demand for these products remains stable in North America, there has been significant growth, most notably in the Asia-Pacific region.
"Demand is stable, but not robust, with the only significant growth in the Asia-Pacific region," said Suzanne Rowland, VP, business director, adhesives and sealants, Rohm and Haas Company.
Mr. Burger also said the biggest signs of potential growth are in Asia, as well as Eastern Europe, Latin America and in some targeted segments in the U.S.
The rising cost of raw materials remains a key issue with adhesive and sealant makers.
"We're seeing an upward trend in material prices that's going to force pricing up, because we won't be able to absorb the double digit price increases we're seeing," said Mr. Burger. "We're also seeing a wide variation and volatility in oil pricing. We're trying to balance the fluctuations in oil prices internally."
"Raw material costs have increased significantly and price increases are being implemented rapidly," said Ms. Rowland. "Consequently, these increases must be passed through the value chain all the way to the consumer. Exceptional resource management is a business imperative in this economic environment."
A number of companies have announced price increases to offset rising raw material prices. "Business conditions have deteriorated since raw material costs started rising," said Ms. Rowland. Rohm and Haas has announced price hikes in all market areas around the world as raw material cost increases are "of a magnitude that no one in the value chain can absorb them all," she said.
According to Ms. Rowland, raw material costs are not the only challenge for companies with a large presence in the U.S. "The rising cost of insurance after the 2001 terrorism attacks, higher health care spending for employees and pension funding are causing dramatic impacts," she added. "Generally, this combination of higher expenses has not yet been felt by the consumer, who sees nearly non-existent inflation at the store. The company's response to these business conditions must be tenacity," she added.
|Purfect Glaze, a new back-bedding system from National Starch and Chemical Co., allows window manufacturers to bond glass to vinyl and wood sashes for greater performance, speedup production and lower labor requirements. According to the company, these benefits can result in overall processing savings up to 30%.|
The adhesives and sealants industry must also contend with constantly changing environmental regulations.
"It seems the regulations change monthly," said Mr. Bongiorni. "Products that were not regulated are regulated; our specific packaging must change to meet reduction in plastics. This is affecting all adhesive companies. When we formulate new products we have to take in environmental issues first, as the shipping and labeling could prohibit the sales for the product."
3M has been working to address environmental concerns through research in water-based technology. "We've been actively pursuing solvent-free technologies since the mid-1970s and have developed numerous solvent-free adhesives, such as water-based hot melts and PSAs," said Mr. Burger.
New products from manufacturers are focused on compliance, but also performance.
DAP has released a number of new low-VOC and solvent-free products to its construction adhesives range. DAP Beats the Nail construction adhesive is now available in a solvent-free formulation, which complies with all current VOC regulations, including the California South Coast Air Quality Management District and provides the same performance as the solvent-based Beats the Nail construction adhesive. It is easy to apply and provides a permanent water- and heat-resistant bond between a wide variety of construction materials including drywall, panel and foam, wood and ceramic. The new solvent-free VOC formulation features low odor and water clean-up.
DAP 4000 subfloor and deck construction adhesive, a new addition to the DAP cartridge construction adhesive line, features a new solvent-free advanced polymer technology formulation that complies with all current VOC regulations. It is ideal for bonding a wide variety of construction materials, such as wood, metal and concrete. DAP 4000 is capable of wet weather application and permanently bonds wet and frozen lumber.
H.B. Fuller Company has launched Hydroflex waterborne film laminating adhesives, which now include a new dry bonding acrylic with crosslinker. According to the company, this two-part technology offers the performance of a polyurethane, with the economics of an acrylic system, as well offering better resistance to heat, humidity and chemicals than typical acrylics.
Rohm and Haas Company reports that its low monomer adhesives have been well received by the market. "We have developed new formulations that expand the applications range and performance on more challenging structures, while maintaining an excellent profile on the coater," said Ms. Rowland. "We have seen a lot of excitement all over the world for our new product line in water-based laminating adhesives for general and medium-performance packaging applications. Our cold seal business has grown beyond our acquisition of Technical Coatings. The flexible packaging market is an area where our total packaging solutions business strategy allows us to offer a broad range of products to meet the converters needs."
Devcon has developed the SC 2000 series, one-part epoxy adhesives that require no mixing. "The adhesive comes in different viscosities and enables the end-user to dispense the adhesive on a part quickly and cleanly with no mixing or fancy equipment and cure the product in seconds," said Mr. Bongiorni. He said this technology is a first in the industry: a product with an unlimited open time and cure speed controlled by a heat source. "The properties of these epoxies are better than two part systems," he added.
3M continues to develop new adhesives and tapes for applications involving low surface energy materials. The company has also focused efforts on structural adhesives and tape products, such as 3M Scotch-Weld structural plastic adhesives and its next-generation 3M VHB acrylic foam tapes, according to Mr. Burger. "We've got some exciting new 3M Dual Lock reclosable fasteners that will continue to replace mechanical fasteners in a growing number of customer's designs. We're also very excited about a unique chemistry we're using to develop screen-printable adhesives."
National Starch and Chemical Company has developed Purfect Glaze, a new back-bedding system that enables window manufacturers to bond glass to vinyl and wood sashes. The system includes hot melt application equipment, a specialty sealant and turnkey services for integration with current processes. Based on polyurethane technology, Purfect Glaze sealants have passed American Architectural Manufacturers Association (AAMA) verification for backbedding and have been subjected to a number of other tests including UV exposure, accelerated weathering, performance under wide temperatures and humidity and air-water structural. Purfect Glaze adhesives have high handling strength within two minutes of application, high cured strength and fast cure, according to the company.
A number of adhesives and sealants companies have been making new investments into their operations through acquisitions, plant expansions, new R&D centers and new joint ventures.
After posting three percent growth last year, Rohm and Haas has been laying the foundation for organic growth through a series of new investments, new plants, acquisitions and a new technical center. It opened a new technical center in Elgin, IL for developing adhesive products in conjunction with customers and a new, $20 million plant for manufacturing emulsion polymers and adhesives is scheduled to open this summer in Taloja, India.
Last year Rohm and Haas completed two bolt-on acquisitions�the Technical Coatings cold seal business from Benjamin Moore and the Megum rubber-to-metal bonding product line Chemetall. "Both these acquisitions have been integrated and have been successful," said Ms. Rowland, who said this year Rohm and Haas' focus will be paying down debt rather than large-scale acquisitions. "Adhesives and sealants will continue to look for bolt-on acquisitions to enhance the portfolio as appropriate," she said.
3M also made two strategically important acquisitions in 2002-Emtech, Inc. and Duramix urethane adhesives from Polymer Engineering Corporation. The first builds on 3M's strong presence in the labeling industry and the latter added a strong brand in the automotive industry.
Like Rohm and Haas, 3M isn't totally ruling out future acquisitions.
"While 3M's primary growth driver is going to continue to be internal, or organic development of new technologies and products, we are also actively pursuing mergers and acquisitions that will complement what we do best," said Mr. Burger.
H.B. Fuller and Darex, a division of W.R. Grace, a supplier of sealants and coatings for cans and closures to the packaged food and beverage industry, have formed a joint marketing and distribution alliance. Under the terms of the agreement, H.B. Fuller will sell Darex's Daran PVdC (polyvinylidene chloride) latex for flexible packaging in conjunction with its Hydroflex line of waterborne adhesives for drybond and wetbond laminations.
3M is also continuing with some consolidation of manufacturing facilities in the U.S. and Europe and looking to new markets and new business structures to increase its presence in the market.
"We're also investing in areas like China, Mexico and Canada to put manufacturing operations where the customers and growth markets are," said Mr. Burger. "We've also combined all of our industrial adhesives and tapes businesses into a single, market focused business unit intent on aggressively holding and increasing our market share in targeted segments such as electronics and transportation."