An Overview of the North American Adhesive and Sealant Industry
Content
1. Adhesive and sealant market overview
2. General trends impacting industry
3. H.B. Fuller view on trends
Harmonized market definitions
(ASC-CATIA-FEICA)
Detailed definitions can be found at
www.ascouncil.org, under Industry Intelligence – Resources section
2013 market size for adhesives & sealants
$42.5 billion (sales demand) global CAGR 3.2%
$11.8b
$8.7b
$1.6b2012-2015CAGR 4.3%
2012-2015CAGR 5%
$13.8b
$4.5b*
ROW = 2.1b
2012-2015CAGR 2.3%
2012-2015CAGR 3%
2012-2015CAGR 4.4%
2012-2015*CAGR 3%
Source: 2013 ASC/DPNA North America Market Report
Note 2: * = Calculated Average Growth Rates in % (CAGR) are based uponlbs. of material sold (Demand) – not revenue
Adhesives market segment definitions
1. Paper, Board, Related Products
• Converting/packaging
• Dry and wet lamination
• High-gloss laminating for graphic arts
• Bookbinding, graphic arts industry
• Nonwoven fabrics
• Pressure sensitive products
2. Transportation
• Passenger cars/light trucks
• Repair, maintenance (aftermarket)
• Trucks, buses
• Bicycles, motorcycles and RVs
• Aircraft/aerospace
• Railway
• Shipbuilding and offshore
3. Footwear and Leather
• Footwear
• Leather goods
4. Consumer/Do-It-Yourself (Retail)
5. Building/Construction/Civil Engineering
• On-site applications
• Civil engineering
• Factory assembled parts
• Prefabricated houses
• Thermal insulation materials, curtain
wall panels, etc.
6. Woodworking and Joinery
• Cabinet making
• Furniture manufacture
• Window frames, door manufacture
• Upholstery
7. Assembly Operations
• Sandwich panels
• Appliances and electrical/electronic
• HVAC
• Fabric/apparel
• Medical applications
• Sports equipment and toys
• Abrasives, filters
Source: ASC Market Report
6
North America
(Percent Share of Adhesive and Sealant Demand)
Value: $11.86 Billion
Formulated Product Demand: 7.9 Billion Lbs. 3.6 Million MT
2012-2015 AGR: 2.3%
Source: ASC/DPNA International Inc.
7
North America market statistics 2013 estimated
Source: ASC/DPNA International Inc.
8
North America adhesive market: 2013 est.
Value: $10.13 Billion
Formulated Product Demand: 7.20 Billion Lbs. 3.3 Million MT
2012-2015 AGR: 2.2%
Source: ASC/DPNA International Inc.
Paper, etc., 58.8%
Transportation 5.3%
Footwear 0.5%
Consumer 2.8%
Bldg. & Const. 14.1%
Woodworking 8.3%
Assembly 10.2%
9
North America outlook: 2014 adhesive market growth
forecast estimates
Paper, Board and Related Products 2.0%
Consumer/DIY 3.0%
Woodworking/Joinery 2.7%
Assembly 1.8%
Footwear and Leather 2.2%
Building and Construction 2.4%
Transportation 3.1 %
(Annual growth in pounds of consumption)
Source: ASC/DPNA International Inc.
10
Sealants market segment definitions
1. Transportation
• Passenger cars/light trucks
• Trucks, buses, trailers
• Repair and maintenance (Aftermarket)
• Commercial, recreational watercraft
• Aircraft/aerospace
• Railway
• Ships
2. Consumer/Do-It-Yourself (Retail)
• Household
3. Construction
• Construction/renovation
• OEM, maintenance
• Insulating glass/glazing
• Civil engineering, infrastructure
4. Assembly Operations
• Appliances
• Electronic equipment
• Metal cabinets and housing
Source: ASC/DPNA International Inc.
11
North America sealant market: 2013 est.
Value: $1.734 Billion
Formulated Product Demand: 716 Million Lbs. 325 K MT
2012-2015 AGR: 2.3%
Source: ASC/DPNA International Inc.
12
North America outlook: 2014 sealant market growth
forecasts
Assembly/Other 2.7%
Consumer/DIY 1.4%
Transportation 2.4%
Building & Construction 1.8%
(Annual growth in pounds of consumption)
Source: ASC/DPNA International Inc.
13
Trends the Adhesives and Sealants Council (ASC) is
monitoring
• Growth of mergers and acquisitions
• Transparency in chemical formulations
• U.S. shale oil and gas production
14
Trends ASC is monitoring
Mergers and acquisitions continue to drive value within
North America – and the world
Forbo and Tonsan
ADCO, APS and Clifton
ISP and Hercules
$5.5 billion in cash
15
Trends ASC is monitoring
Expecting more transparency in chemical disclosure
• NGO and regulatory agencies are increasingly adopting hazard-
based tools and requiring companies to disclose chemical make-
up/footprint
• ASC collaborating with industry to ensure risk models are
included for more accuracy
16
U.S. oil and gas production provides raw material
capacity
Fracking oil rich shale deposits + natural gas availability is providing
United States with strong capacity for major raw material feedstocks
17
After 30 years of production decline, the U.S. is
producing crude at 20-year highs
18
Fracking is allowing for growth
Source: North Dakota Department of Mineral Resources
19
And it’s not just oil…
Rising Shale Gas Production:
Marcellus: 11.5 BCFD
Barnett: 4.4 BCFD
Eagle Ford: 3.9 BCFD
Fayetteville: 2.9 BCFD
Woodford: 1.6 BCFD
Bakken: 0.6 BCFD
Rese of US: 3.6 BCFD
Peaked:
Haynesville
Peaked November 2011
Antrim
Declining Since 2000
20
Ethylene impacts key raw material supply
Heavy feeds
100/160
Eth
yle
ne
By-p
rod
ucts
Steam
Cracking
Process
Ethylene
Butadiene
Isoprene
Resin Oils
Aromatics
Gas
Feed (Light)
Liquid
Feed(Heavy)
Light feeds
100/25
Eth
yle
ne
By-p
rod
ucts
Critical to
Adhesive
Polymers
By-products
propylene
crude C4s
pygas
Polypropylene(film grade)
Economic
Driver
21
Benefits to U.S. adhesive and sealant formulators
• Raw materials sourced from light feeds more supply stable
• Formulations based on light feed expected to provide most price stability
• Solid competitive framework for industry
H.B. Fuller View on Trends in Key Growth Markets
The markets H.B. Fuller serves
Packaging AutomotiveBuilding and
ConstructionHygiene
General
Assembly
Paper
ConvertingConsumer
Products
Woodworking Emulsion
Polymers
Electronic
and Assembly
Materials
Targeted growth in key markets
HygieneBaby diapers, Feminine products, Adult incontinence
PackagingConsumer Packaging, Labeling, Flexible Packaging, Packaging Integrity
Durable AssemblyAutomotive, Water Filters, Panel Assembly, Electronic & Assembly Materials, Engineered Textiles, Insulating Glass
Construction ProductsResidential, Remodel, Commercial and Industrial Construction, including Ceramic Tile and Flooring Installation
Global visionStronger teamworkBetter accountability
Hygiene industry market trends
Healthy
Comfortable
Safe
Convenient
Premiumisation
• Low odor
• Breathable
• Natural materials (pure cotton or cotton containing top sheets)
• Soft hand feel
• Moisture management
• Thinner is better
• Leak-proof
• Stretchable waistband or ears for baby diapers
• Wetness indicator becoming the norm
• Consumers demanding higher quality
• Looking for value-added features
• Easy to wear and change
• Online shopping more and more popular
Packaging industry market trends
• Packaging integrity through supply chain
• Wider operating temperature window
• Adhesion to a variety of substrates
• Hassle-free adhesives for ease of use
• Food safety
• Use of bio-degradable and recyclable materials
• Reduce dependency on volatile natural raw materials
• Improved mileage
• Down-time reduction
• Lower total cost in use
Durable
Adaptive
Efficient
Economic
Sustainable
• Reduce non-value added manual labor
• Faster line speeds
• Clean machining
Durable assembly market trends
• Consistent performance
• Proactive problem solving - FMEA
• Leaner
• Faster
• Thinner
• Implementation of industry standards
• Bluesign / Ecopassport for textile
• NSF for drinking water elements
• UL for air filtration
• VOC reduction
• Commitment to environmentally-friendly solutions from manufacturer to consumer
• Sustainable materials
Reliable
Innovative
Standardized
Sustainable
Electronics industry market trends
• Smaller, thinner devices
• Lighter weight devices
• Wearable, portable devices
• Flexible, touchable and reliable devices
• Functionality in watch, shirts and shoes
• Fashion forward, trendy
• Challenging substrates
• Appearance
• Ability to function in today’s active lifestyle
• Durable and long lasting
• More functionality while devices get smaller
• High performance under extreme conditions
28
Compact
Wearable
Fashion
Multifunctional
Reliable
China manufacturing trends
• Labor costs increasing in mainland China
• Shift from low cost to high quality mentality
• VOC reduction
• Industry standards developing
• Greener solutions desired
• Employee safety a priority
• Business ethics becoming more important
• Conversion from solvent-based technology to environmentally-friendly solutions
• Manufacturing excellence
• Process improvement to drive efficiencies
• Shift from price per unit to total cost of ownership focus
• Moving from coastal provinces to lower cost inland provinces is encouraged by Chinese government policies
• Some labor intensive manufacturing moving to lower cost countries such as textile and footwear industries
Automation
Green
Safe
Cost Effective
Relocation
Thank You!