Features

The Adhesives & Sealants Market

By Kerry Pianoforte | October 30, 2008

How will decreased consumer spending and the onset of a housing crisis impact the adhesives and sealants market?

The adhesives and sealants market has not been immune to the challenging economic conditions over the past year. Limited supplies and rising raw material prices, coupled with a decrease in consumer spending indicates that the adhesives and sealants market is in for another tough year.

"It's been a challenging year in the market due to rising raw material costs, scarcity of key raw materials and compressed margins," said Rodney Hawkins, general manager, Momentive Performance Materials, an exclusive licensee of General Electric Sealants and Adhesives. "The residential construction market has mirrored the condition of the U.S. economy-with consumer spending down and the housing sector retreating. According to an article in the Wall Street Journal, housing starts are at a 17-year low. And, the inventory of houses is greater than it has ever been. However, commercial construction has been robust over the past several years. Despite the issues with raw materials, the market has continued to grow and in fact, we've seen an increase from last year."

According to Hawkins, the Chem Quest Group, a consulting firm for the coatings, adhesives and sealants industries, predicts sealants are forecast for 17% volume declines; with revenue growth of 14% compared to 2007. Adhesives are forecast for nine percent volume declines and revenue growth of 12% compared to 2007.

"The market was quite robust during the first half of the year in commercial construction," said Randy Korach, president of Tremco's global sealants division. "It is now beginning to cool though, as economic conditions worsen and credit tightens."

A sticky situation



Escalating raw material and fuel costs continue to impact the adhesives and sealants industries. "It will be a continued effort to reach greater levels of efficiency and to exhaust every appropriate avenue to reduce costs and identify solutions that mitigate these difficult economic times," said Hawkins.

"Raw material cost inflation, energy costs and transportation costs are creating significant financial challenges," said Korach. "We're combating them with price increases and cost containment measures. We are also embracing tools such as LEAN management techniques and Six Sigma to attack inefficiencies so that we can improve throughput while continually improving customer satisfaction. Despite these efforts, maintaining margins has been difficult."

3M has instituted a number of measures to increase efficiency and partially offset its large raw material cost increases. "In the end, we have also been forced to increase prices," said William Loomis, business manager with 3M energy and advanced materials division.

Next generation technology



Environmental regulations also play a huge role. "VOC regulation has impacted the solvent-based adhesives and sealants market the most," said Hawkins. "There are more moisture-cure products on consumer shelves today than there were several years ago due to the fact that retailers in VOC-regulated areas can't sell the solvent-based products to consumers. California is moving to restrict VOCs even further, so it will be interesting to see how the market will change in the future. Our consumer silicone and acrylic sealants and our water-based adhesives meet the VOC requirements in the U.S."

"Rather than fighting growing regulations domestically and abroad, such as REACH, SCAQMD and CARB, we pay close attention to the direction being taken and acceptance of such measures," said Korach. "We strive to not only respond to such regulations, but also to glean insights that allow us to develop a strategy for the future, which includes next generation technology. In this way, we are able to anticipate new regulatory requirements and be ready with appropriate and superior products and technology."

"Many companies are actively reformulating to meet these new requirements," said Loomis. "We have seen greatly increased interest in spherical fillers and in fluorosurfactants, both of which allow increases in solids and reductions in VOC."

Programs such as LEED, a third-party certification program and the nationally accepted benchmark for the design, construction and operation of high performance green buildings, have impacted the commercial construction market. "Several key stakeholders from architects, real estate professionals and facility managers, to sate and local governments across the country, are adopting LEED and requiring LEED-certified products," said Hawkins. "Several of our construction-grade sealants are LEED certified."

Tremco has developed "green" concrete technology for both sealants and weatherproofing membranes that allows construction schedules to be expedited dramatically while providing superior performance, according to Korach. "Our Vulkem 45SSL expansion joint sealant can be applied to fresh concrete that is only 24 hours old or to damp concrete following rainfall, providing exceptional adhesion and without concerns about 'green cracking,'" he added. "New hybrid sealant technology is enabling us to provide moisture-curing sealants with UV-resistance and weatherability superior to traditional polyurethane sealants and are non-staining, non-gassing and paintable while all at an attractive price."

3M has introduced a high strength glass bubble called iM30k, which combines the density reduction potential of a hollow particle with the ability to withstand very aggressive processing, normally associated with solid particles. 3M has also increased capacity and enhanced supply capabilities, particularly in Asia, by opening a new glass bubble factory in Korea.

GE Sealants has recently launched a number of new products. GE RapidStrength AC sealant is used for the construction of doors, windows, window wall applications and for the fabrication and shop glazing of curtainwall modules. This sealant is designed specifically for the user who wants an extremely quick cure in a high production volume environment.

GE Caulk Smoother is a new solution to the problem of messy caulk beads. According to the company, by spraying the product on the caulk bead, the user can achieve a smooth, clean caulk bead that is easy to work with and shape.

Henkel acquires National Starch adhesives business



Henkel has recently acquired from AkzoNobel the adhesives and electronic materials businesses previously owned by National Starch. In 2007, these two business segments generated sales of �1.83 billion. The purchase price was �3.7 billion. Following the integration, annual sales of Henkel's Adhesives Technologies business sector will increase to approximately �7.5 billion. Henkel expects synergies from the acquisition of �240-260 million per year.

By acquiring the Adhesives and Electronic Materials businesses of National Starch, Henkel substantially further strengthens its position in the global adhesives markets, particularly in the industrial segment. Within Henkel's Adhesives Technologies business sector, the acquisition will have a particular impact on the packaging and wood adhesives businesses, as well as on the electronics business.

Bayer MaterialScience opens adhesives lab



Bayer MaterialScience recently inaugurated its Coatings and Adhesives Lab in Thane, India. The objective of the lab is to strengthen the company's position in the high potential poly�urethanes coatings and adhesives market in India.

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