The adhesives and sealants market continues to be negatively impacted by a number of factors including the troubled automobile industry, while consumer adhesives and sealants are fairing slightly better. While volume levels were down in North America, Asia-Pacific represents the best opportunity for growth.
According to a study by the consulting firm Kusumgar, Nerlfi & Growney (KN&G), the global consumption of formulated adhesives was 16.6 billion pounds in 2009 worth $20.6 billion. Volume was down five percent compared to 2008 while value was off six percent. Volume in North America declined ten percent from 2008 while Europe experienced an eight percent fall. Poundage was up slightly in the Asia-Pacific region as growth in China and India offset the declines in most other countries. South American consumption was down three percent in 2009.
“In North America the recession caused adhesives and sealants volume to decline about ten percent in 2009 compared to 2008,” said Mike Growney of KN&G. “Most of the fall-off occurred in the first half of 2009. The end use with the largest decline in 2009 was automotive OEM. Other end uses with large declines include construction and woodworking. Aerospace, disposable products and consumer adhesives and sealants end uses came out the best in 2009. Pressure sensitive products is the largest adhesive application and results varied. Industrial pressure sensitive products declined modestly while consumer applications were off only slightly.”
Indications are that the market for adhesives and sealants is slowly rebounding. “This year the market has rebounded somewhat with end uses that were off the most up the most,” said Growney. “However, it will take several more years before they gain the levels seen before the recession.”
Residential construction continues to be extremely slow compared to prior years. “Commercial construction in the privately funded sector has all but disappeared,” said Michael J. Soeder, vice president, marketing, NA, Tremco Inc., Commercial Sealants & Waterproofing. “The result effect is less opportunities for all facets dependent on these market segments. The focus has shifted to restoration and retrofit of structures. As a result, hybrid technologies in sealants offering enhanced performance, paintability, adhesion to a wide variety of substrates and extended warranties over traditional urethanes are getting increased attention.”
Use of adhesives and sealants in construction markets represent approximately 25 percent of adhesive demand globally, according to William Magee, global director, strategy and marketing at H.B. Fuller. “The recession dramatically affected demand in these markets particularly in mature economies,” he said. “Use in electronics markets was also affected but this market represents less than ten percent of global adhesive demand. Use in automotive markets was also affected of course. Packaging related markets, on the other hand, tend to be more recession resistant along with tapes/labels and other consumer related markets.”
The consumer sector has also offered opportunities for growth. “The greatest opportunity for growth in the residential arena has been offered by weatherization in existing homes,” said Soeder. “If the “Cash for Caulkers” initiative had materialized, this would have been even more significant. With tax credits on windows, though, this has created a need for the sealants used in their installation and a bump in sales that might not have been seen otherwise. Commercial segments impacting consumers the most and with the most activity and funding are those that are federally funded, healthcare and the institutional segments.”
The adhesives and sealants industry also continues to be challenged by rising raw material prices. Tremco has initiatives to deal with energy issues both internally and externally. “Internally, we have begun the process of reducing our energy requirements by 50 percent over the next ten years through process improvements and building upgrades,” said Soeder. “Externally, we have been continuing our efforts on the development of comprehensive, compatible building enclosure solutions that control air and moisture infiltration, and utilization of best practices in the design and construction of weathertight buildings, to reduce energy consumption and prolong building life.”
Incorporating many of these solutions and practices, Tremco has completely restored its corporate headquarters to demonstrate their effectiveness and enhance its energy efficiency, indoor air quality and occupant comfort while reducing operating costs. This includes energy-efficient windows and engineered transition assemblies to provide a secure tie-in from the window assemblies to the wall assemblies as well as wind turbines and vegetative roofs.
Another important issue facing adhesives and sealants manufacturers is environmental regulations. “Regulations are ever changing for adhesives,” said Magee. “Regulations such as REACH present challenges and add cost for all chemicals producers, and the impacts for adhesive manufacturers are no different. In our view, other regulatory changes present challenges for H.B. Fuller and the industry to innovate and develop solutions which address these changes. There are many adhesive technology options which can address VOC related and other changes. It’s a matter of using these tools to meet the needs of the particular industry performance required.”
This shift to low-VOC technologies has had a major impact and may offer new opportunities. “These alternatives are gaining acceptance in other parts of the country and are pushing higher VOC products into decline that much faster,” said Soeder. “Green building initiatives like LEED and the federal green purchasing mandates, which cross all geographic areas, are creating even greater demand. The real question now is what pending regulations such as California’s Green Chemistry Rule and the pending EPA Chemical Action Plans are going to do to the industry. These have the potential to completely change the base technologies used in the industry. That is a big wild card and we just don’t have a total understanding of what the impact will be.”
Tremco has focused substantial effort on the development of a green concrete technology platform. “With fast track construction creating continuing demands for the reduction in construction cycles and improved productivity, we have developed waterproofing membranes, which can be applied to green concrete instead of having to wait weeks and our Vulkem 45SSL Expansion Joint Sealant, which allows next-day application to joints in concrete slab pours while ensuring adhesion and eliminating ‘green cracking’ as the concrete cures,” said Soeder. “Development is continuing and we will have some exciting and innovative new products to announce in the near future.”
H.B. Fuller has launched Flextra, which offers water-based, solvent-based and solvent free options for flexible packaging. The company has also launched Clean Melt low application temperature Case and Carton adhesive and an innovative new packaging adhesive for the agricultural market.
Adhesives and sealants manufacturers H.B. Fuller and RPM have made a number of acquisitions. Recently, H.B. Fuller has completed acquisitions in three strategic areas. “Our acquisition of Egimelt in Egypt strategically positioned us to grow in that region of the world with key customer partners,” said Magee. “We acquired Nordic Adhesives which added to our flexible packaging technology portfolio and gave us a foothold in this market in Europe. Most recently, we acquired Revertex Finewaters in Malaysia, again positioning ourselves to grow in this part of the world.”
RPM’s Building Solutions Group has acquired Park Dis Ticaret A.S., a leading supplier of sealants, tapes and membranes to the construction markets in Turkey. Based in Istanbul, Park has annual sales of approximately $10 million. Founded in 1994 by Adnan Akkin, Park distributes high-performance sealants, weatherseals, structural silicones, one-side and double-side adhesive tapes, and adhesives to customers in Turkey, Russia and the Middle East. “This acquisition will provide Tremco illbruck and the RPM Building Solutions Group (BSG), a strong base from which to grow our international presence,” said Frank C. Sullivan, RPM chairman and CEO. “As part of the RPM BSG, Park will also be able to expand its product offerings into new categories, such as firestopping. We look forward to having Adnan Akin and his management team join RPM.”
Adhesives and Sealants Market Update
The adhesives and sealants market has rebounded somewhat this year, but all indications are that it will take several more years before it gains the levels seen before the recession.
By Kerry Pianoforte