US composites industry beats expectations

US composites industry beats expectations In the face of the global slow down, fears

held by many

agenda.

T

beating

financial

expectations

crisis the US composites to document

in the industry

Composites Institute (CI) estimates that US composite ship-

of the world’s

and optimism largest

sumer spending; interest rates; employment; and the overall economic confidence of the consumer.

ments in 1998 rose 5.5% over 1997 to 1.6 million tonnes. This is the seventh

consecutive

year that

shipments

have

increased since the downturn in 1991, representing a growth of 53% over this period. These figures were released at ICE ‘99, the CI’s last conference following the decision to merge the interests of the CI and the Composite Fabricators Association (CFA) through the operations of the CFA (Reinforced Plastics, July/August 1999). “The composites industry continues to ship products at a very robust pace,” reports Catherine A. Randazzo, executive director of the CI. “1998 was another year of very solid growth of 5.5% over the previous year, which exceeded our earlier expectations of 2.1%. Composite shipments are growing at a rate that continues to outpace US gross domestic product (GDP), and even the global financial crisis didn’t slow down the composites industry,” continues Randazzo. The CI estimates that composite shipments will continue to grow throughout 1999 reaching levels of 1.7 million tonnes by the end of the year - an increase of 4.3% over 1998. Many of the factors that affect the economy also impact the general composites industry. These include: automotive and truck sales; the sale of new and existing homes; the rate of con-

22

RElNFDRCEDplastics

September

1999

has refused

year of record

have now subsided

Jane Gilby looks at the status

he Society of the Plastics Industry’s

another

industry

shipments.

to The

is on the

composites

market.

Transportation The largest consumer of composites continues to be the transportation sector. Shipments totalled some 517 608 tonnes

Markets Randazzo notes that material substitution is maintaining

last year, a 4% increase over 1997. Automotive manufacturers sold 15.6 million

a strong position in

cars and light trucks in the USA last year,

influencing the industry’s steady growth. With more and more end-users exploiting the benefits of composites, which include high strength, design flexibility, corrosion resistance, low weight, dimensional flexibility, parts consolidation and low tooling cost, it is not surprising that the majority of composites end-use markets grew in 1998.

up from the 14.9 million units sold in 1997. Sport utilities, mini-vans and pick-up trucks continue to increase their market share at the expense of cars. During the first quarter of this year, automotive sales reached levels of 16.6 million units, well above 1998’s first quarter level of 14.9 million vehicles. If this growth rate is maintained throughout the rest of 1999, the automotive industry could be on target to beat its all-time sales record of 16 million units, set in 1986. A variety of composite materials and manufacturing processes are now used to produce components for the transportation sector. Sheet moulding compound (SMC) is one of the most established materials, and Ford is now the biggest user of SMC in vehicles. The Automotive Composites Alliance (ACA) predicts a 27% increase in the US use of reinforced thermoset composites for exterior, +~.rctural and under-thebonnet applil s between 1999 and 2003. The use ~1 SMC, bulk moulding compound (BMC), reinforced resin injection moulding (RRIM) and resin transfer moulding (RTM) are growing in automotive applications. SMC, in particular, is poised for dramatic growth says the

Material

substitution

maintaining position industry’s

is

a strong

in influencing steady

the

growth.

Shipments were particularly buoyant in the appliance and business equipment, construction, consumer and corrosion sectors and the industry witnessed growth in the strong transportation and electrical/electronic markets. “With strong growth of sport utility vehicles and light trucks, a surging bull market, low interest rates, and growing penetration of civil infrastructure applications, the composites industry is in a period of continuing strong growth,” continues Randazzo.

0034-3617/99/$ - see front Elsevier Science Ltd. All

matter 0 1999 rights reserved.

US composites

ACA. Speciality vehicles,

with produc-

Other 3.3%

tion runs under 100 000 units, are prime targets for SMC use because the investment cost is less than for steel. Some recent applications include an SMC decklid for the Ford Mustang, RRIM wings

1

industry

beats expectations

Aircraft 9.6%

on the Chevrolet Silverado and

Ford F350, a cowl panel on the Toyota Sienna and Lincoln Town Car and an SMC hood and radiator support on the Dodge Viper, with future applications including boxes for small pick-up trucks. Reinforced thermoplastics, nylons

reinforced

with

rtaition

especially

glass

fibre,

continue to be in demand from automotive original equipment manufacturers (OEMs) for parts used in under-the-bonnet and power train applications previously made using metals. New ways to process and produce larger subassemblies as one integrated part continue to emerge. One example involves moulding a single unit containing the air cleaner, air intake manifold and carburettor and/or fuel injection system. This is known as an integrated throttle body and is said to reduce cost, increase product reliability and allow parts consolidation. Reinforced thermoplastic transportation applications are growing at a faster rate than those made with reinforced thermosets and may continue to do so in the next several years. Randazzo is confident that in the future we will see long fibre thermoplastic automotive applications like bumper beams and integrated front ends. Rail freight cars are another application where the reduced weight of composites provide a competitive advantage over alternative materials and will support the increasing use of composites in the next few years. Transportation currently represents 33% of total shipments in the US composites industry, and the Cl estimates that in 1999 transportation composite shipments will increase 5.1% over 1998.

Construction In 1998 composite shipments in the construction market surged 7.2% to 340 196 tonnes. Strong consumer

4

US composites shipments in 1998

Corrosion resistant 11.8%

by market

share.

demand coupled with favourable interest rates propelled the sales of existing homes to 4.78 million units, up 2% over 1997 for another new record. For the fifth consecutive year new housing starts totalled 1.6 million units in 1998 and with continuing demand for new homes and US mortgage interest rates around 7% it appears that residential construction will enjoy another solid year of growth in 1999. Traditional composite applications benefit from the growth in the residential market, and with larger homes there comes more components like a patio, garage, all-weather doors and windows. Shipments of bathroom components and fixtures have been especially strong in both residential and multiple-unit housing markets. Composite bathtubs continue to gain market share at the expense of enamelled steel and now represent 60% of the market. Panel shipments for construction applications have also been very strong. Construction and civil engineering applications represent the largest

(Source:

SPI Composites

Institute.)

untapped opportunity for composites, and this has been the area the CI’s Market Development Alliance (MDA) has been concentrating on. The hottest new applications include lightweight, high strength, all-composite vehicular highway bridges and bridge decks, repair and strengthening of concrete structures, and the upgrading of seismic capacity for structures in areas that are threatened by earthquakes.

Corrosion

resistant

applications

The corrosion resistant benefits of composites continue to be an important competitive advantage over traditional materials. Shipments last year reached 192 279 tonnes as companies raced to comply with the Environmental Protection Agency’s (EPA) regulations regarding underground storage tanks. There is still residual demand for these tanks and business is likely to remain brisk during the first two quarters of 1999. However, applications for the semiconductor business were down,

Se sptember

1999

RElNFDRCEDplastics

23

US composites

cant variables

industry

beats expectations

like high consumer

dence levels, historically

confi-

low unemploy-

ment rates, a raging market in stocks and low inflation rates led to a growth 7.3% for the market in 1998 rising 102

195 tonnes.

Both

thermoset

of to and

thermoplastic applications are expanding in this segment. Shipments of sporting

goods

and

recreation

such as skis, snowboards,

equipment archery

and bikes were positive

furniture popular

and seating products remain as do composite applications

designed for lawn Growth is expected

while

oil field and energy

1900- 1998. (Source: SF1 Composites hsitute.)

sector appli-

cations were stagnant. Applications in sewer rehabilitation were up, and the market for gratings remained steady. A factor that is on course to increase the use of composites is US federal regulations that will require pulp and paper plants to replace their use of chlorine with chlorine dioxide and hydrogen peroxide within the next two years, resulting in an upsurge of composite applications into this important market. Partly as a result of this shipments in 1999 are expected to increase 2.6% to 197 359 tonnes.

Marine Last year this market rebounded on previous figures with growth of 3.1% on shipments of 165 108 tonnes in the previous year. Growth in this relatively mature and cyclical market got big bounces from the introduction of personal watercraft in 1991 and jet boats in 1995. Sales of both products have slowed over the last two years as demand and demographic drivers have been satisfied. However, there was growth in the sailboat, outboard boat, runabout and cruiser categories. Shipments in the marine sector are expected to continue to grow at a modest pace in line with the economy. The CI estimates that shipments will rise 3.7% in 1999 to 171 232 tonnes.

Electrical

I

and electronic

wood, steel or concrete. There were also very strong shipments of polymer concrete utility boxes. Other electrical products include cable trays, crossarms, insulators, threaded plug fuse bodies, hot line tools, electrical J-boxes, and circuit breakers. Demand for consumer electronics, which use a variety of composite applications, was strong. The rapid rate of product obsolescence in the electronics business is also stimulating demand for both reinforced thermoset and thermoplastic applications. Approximately 30% of reinforced thermoplastics are used in the electrical/electronics markets, particularly in housings and connectors. Shipments in 1999 are expected to reach 170 824 tonnes, an increase of 4.5% over 1998.

Consumer

products

With the personal income of Americans continuing to rise personal spending is moving in parallel with rising income levels. This factor coupled with signifi-

rising to

106 685 tonnes.

Appliances/business

The electrical/electronics markets, while not as robust as 1997, saw growth of 3.5% in shipments over 1998 to 163 430 tonnes. Innovative developments include products like the Powertrusion 2000 utility a lightweight, non-conductive pole, transmission and distribution pole that is said to stronger and more durable than

while

and garden use. to be moderate in

1999, at 4.4%, with shipments Total US composites shipments

com-

ponents,

equipment

This market follows the construction market and overall economy and grew 6.9% in 1998 over 1997 to 89 675 tonnes. This sector includes air conditioners, freezers, vacuum cleaners, as well as small appliances such as sewing machines and irons. The appliance market tracks the residential construction and housing markets, both of which have been performing at impressive levels. Total shipments are expected to reach 93 803 tonnes in 1999 for an increase of 4.6% over 1998 figures.

Aircraft/aerospace This sector peaked in 1989 with shipments of 18 597 tonnes and according to the CI current world events are driving discussions in Congress about increasing national defence spending. Such projected increases will have a positive effect in this sector, which is driven by both defence spending and commercial aircraft production. While the biggest US producer of aircraft, Boeing, delivered a full complement of aircraft in 1998, total US composite shipments fell to 10 296 tonnes, a decline of 5%. But the outlook for the current year is bullish with estimated shipments of 10 795 tonnes for growth of 5%. There are numerous indications that the US will also witness growth in defence spending for missiles, aircraft

September

1999

RE/NFOR~Dplustics

25

US composites

and other weapons, to meet the needs of

As

for

the US government to police crisis areas

Corning

like lran and Korea and to meet its NATO obligations in the Balkans.

Composite

Other This category consists of applications such as medical and dental equipment, a variety of speciality products such as blades for wind energy production and prosthetic devices. This category grew 6% to 53 070 tonnes in 1998, a figure that the CI anticipates will grow to 53 070 tonnes, up 4.5%, in 1999.

Perspectives To date this year the US composites industry looks good to PPG Industries’ Rich Alexander. He says that demand exceeded expectations last year and as for the recession many believed would happen lo-12 months ago: “It has not happened and is not going to.” Alexander believes that market growth for 1999 will be around 3.5% with many end user industry perspectives looking positive as we head into the millennium. PPG’s thermoplastics business is ‘good’ says Alexander and pultruded applications are growing. So what does Alexander envisage for PPG’s glass fibre interests over the coming months? “Further and growing investment in technology - both products and processes - in order to maintain an overall low cost position,” says Alexander.

PPG’s (OC),

competitor Heinz

Otto,

Owens OC’s

industry

ships like those

beats expectations

it already

has with

DSM, Takeda and Owens Corning. Larry Baker, vice president and gener-

Systems Business president,

says that glass fibre pricing in the USA stabilized in 1998, contributing to a major thrust in restructuring for the company and the loss of around 1000 employees across the US and in Europe. Otto says that growth within the US market was around 354% in 1998 a figure he expects to rise in 1999 with most end user industries looking good and a growing confidence in the North American economy. Resin producers are also bullish about the prospects of the US composites industry. AOC’s vice president of marketing, Jack Roesle, thought that the industry would start slowing down in 1999 but acknowledges that this has yet to happen. In line with CI figures the transportation and construction markets are those where AOC is seeing the most activity. The growth of the industry has been underlined by AOC’s addition of an extra 45 300 tonnes per year of unsaturated polyester resin capacity at its Collierville, Tennessee, manufacturing facility, which brings capacity at the site to 109 000 tonnes per year. 1998 also saw the acquisition of distributor Hawk in the UK, becoming AOC Hawk, continuing a theme of consolidation within composites distribution. Overall AOC’s future is in the direction of establishing further relation-

al manager of Ashland Specialty Chemical Co’s Composites Polymers Division, is also happy with the way the industry has turned out this year. “So far most of 1999 has been a repeat of 1998 for the industry,” says Baker. “It has been an excellent year for the industry all round.” With the company serving some 20 different end user markets, it will of course experience change in some and not others. In those markets unique to the US Baker says the underground fuel storage tank market, which has recently experienced regulation changes, had a major impact on the market last year, but as tanks were replaced in accordance with new guidelines the business of course fell away at the beginning of this year. As for Ashland’s plans for the coming months as it enters fiscal 2000, it seems that the company is most likely to concentrate on defining its position within Europe, building on its acquisition of the BSL polyester business last year. However, for growth on US soil, things look quiet. “US business continues to run on automatic pilot, but things could change,” says Baker. For an industry that has become used to highs and lows on a regular basis, to hear that what was good in 1998 is being repeated in 1999 and predicted to continue into the millennium can only be good news. n

September

1999

REINFORCEDplastics

L/