Post on 06-Oct-2020
M
MARKET
ECONOMI
TECHNICA ManagementDECISIONSANALYSIS
MIC
CAL
Robert Eller Associates LLCCONSULTANTS TO THE PLASTICS AND RUBBER INDUSTRIES
Automotive Supply Chain Shifts/TPE Opportunities
Prepared by:Robert Eller Associates LLCPhone: ++330-670-9566E-mail: bobeller@robertellerassoc.com
Prepared for:Polyolefins 2008Houston, TXFebruary 25 2008
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E mail: bobeller@robertellerassoc.comwww.robertellerassoc.com
February 25, 2008B/mydox/papers/Polyolefins 022508.ppt
PRESENTATION OUTLINE
• TPE global automotive industry and auto TPEs
A t ti l h i hift d TPE ff t• Automotive supply chain shifts and TPE effects
• TPE material/process technology couple
• Automotive TPE growth targets: - Body/glazing sealsBody/glazing seals- Role for 2-shot molding- The rubber attackThe rubber attack- Talc effects
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MANAGEMENTDECISIONSANALYSIS
Specialty Thermoplastic Elastomers . . . Markets,Economics, Technology, Intermaterials Competition
ENGINEERINGTPEs
METALLOCENEPLASTOMERS/ELASTOMERS
TPO SEBS
THERMOSETRUBBERS
PVCCOMPOUNDS
TPVs
SUPER-TPVs NANO-FILLERS
RUBBERS COMPOUNDS
A Europe/U.S./Japan Multiclient Industry Analysis
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Robert Eller Associates, Inc.CONSULTANTS TO THE PLASTICS AND RUBBER INDUSTRIES
MANAGEMENTANALYSIS
MARKET
ECONOMIC
TECHNICAL
DECISIONSANALYSIS
Specialty Thermoplastic Elastomers ... Markets, Economics,Intermaterials Competition, and Industry Structure in China
ENGINEERINGTPEs AND
SUPER-TPVs
METALLOCENEPLASTOMERS/ELASTOMERS
TPOs SEBS
THERMOSETRUBBERS
PVCCOMPOUNDS
TPUsTPVs
RUBBERS COMPOUNDS
A China Multiclient Industry Analysis2006
R b t Ell A i t I
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Robert Eller Associates, Inc.CONSULTANTS TO THE PLASTICS AND RUBBER INDUSTRIES
TPE FAMILIES . . .CHANGING STRUCTURE, INCREASED INTRA-TPE COMPETITIONC G G S UC U , C S CO O
TPE FAMILIESOBC AND METALLOCENE
PENETRATION
OLEFINIC( TPE )
STYRENIC(SBC ) SUPER-TPVs PVC
TPEOTHERE TPE
PENETRATION
(o-TPEs) (SBCs) SUPER TPVs TPEsE-TPEs
s-TPO o-TPV HYDROGENATED(SEBS SEPS
SBCTPVs
SILICONE OTHER
COPE
COPACOMMODITYTPO
SBS(SEBS, SEPS,
SEEPS)
ISOPRENE-BASEDMID-BLOCKS
TPVs ACRYLATESTPU
TPO
OTHERS
p-TPV(PARTIAL
CROSSLINKED)
f-TPV(FULLY
CROSSLINKED)
r-TPV(a)
5
SOURCE: ROBERT ELLER ASSOCIATES LLC, 2008r/mydox/papers/PO 08-TPEfams08.vsdlg/myfiles/Visio/PO 08-TPEfams08.vsd
NOTE: (a) RECYCLATE-BASED TPV
GLOBAL VEHICLE SALES OUTLOOK90
70
80 Annual Growth1990-2000 2.3%2000-2006 2.8%2006 2012 3 8%
50
60
70
M U
nits
2006-2012 3.8% 2012: 85
2007: 71
40
50
eh. S
ls.,
MM
2000:57
20
30Ve
57
0
10
1970 1975 1980 1985 1990 1995 2000 2005 2010 2012
6
1970 1975 1980 1985 1990 1995 2000 2005 2010 2012SOURCE: GENERAL MOTORS
r/mydox/papers/PO 08-Global Ind Vol.xls
EXT. FACTORS: REGIONAL AUTO MKT. GROWTH
VEHICLE SALES HISTORY BY REGION 2000-2007VEHICLE SALES HISTORY BY REGION, 2000 2007
70
806.9% -0.6%3% 1.9% 10.4% 21.3% 13.2% CAGR
50
60
Uni
ts
30
40
h. S
ls.,
MM
20002007
10
20
30
Veh
0
10
Global Tot. Tot. AP Tot. NA Tot. LA China India
7
Europe
SOURCE: ROBERT ELLER ASSOCIATES LLC, 2008 b/mydox/papers/PO 08-Global Ind Vol.xls
EXTERNAL FACTORS: FUEL EFFICIENCY
GAS PRICES vs. FUEL EFFICIENCY
$7
$6 14/ l
$5
$6 Taxes AddedCore Gasoline
$6.14/gal
$4
D/G
allo
n
$3.11/gal
$4.24/gal
$2
$3US
21 MPG
36 MPG
$0.40 tx
$2 71
$1.88 tx
$2 36
$4.11 tx
$2 03
31 MPG
$0
$1
$2.71 $2.36 $2.03
8
$0U.S. JAPAN EUROPE
SOURCE: AUTO NATIONr/mydox/papers/PO 08-FUEL.xls
EXTERNAL FACTORS: U.S. VEHICLE POSITIONN. AMERICAN VEHICLES HAVE GAINED WEIGHT, INCREASEDN. AMERICAN VEHICLES HAVE GAINED WEIGHT, INCREASED
HORSEPOWER, AND NOT IMPROVED FUEL EFFICIENCY (MPG)OVER THE LAST 20 YEARS
4,500 300
3,500
4,000
BS.
250
Y R
2 000
2,500
3,000
WEI
GH
T, L
150
200
FFIC
IEN
CY
RSE
POW
ER
1 000
1,500
2,000
VEH
ICLE
W
100
FUEL
EF
OR
HO
R
Vehicle WeightAdj. Fuel EfficiencyHorsepower
0
500
1,000V
0
50Horsepower
9
1987 1997 2007SOURCE: EPA
r/mydox/papers/PO 08-FUEL.xls
TRADE-WEIGHTED VALUE OF U S DOLLAR
EXTERNAL FACTORS: U.S. DOLLAR DECLINETRADE-WEIGHTED VALUE OF U.S DOLLAR
105
110
95
100
, USD
85
90
xch.
Val
ue,
75
80
Ex
70
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
10
March 1973 = 100
SOURCE: FEDERAL RESERVE BOARD r/mydox/papers/PO 08-Global Ind Vol.xls
EXTERNAL FACTORS: U.S. NEW CAR SALES
U S NEW CAR SALES vs NEW HOME SALESU.S. NEW CAR SALES vs. NEW HOME SALES,2003-2007
17.5 1.3
17.0
UN
ITS
1.1
1.2
UN
ITS
16.5
ALE
S, M
M U
0.9
1.0
SLS.
, MM
U
15 5
16.0
EW C
AR
SA
0.7
0.8
NEW
HO
ME
New Car Sales
15.0
15.5N
0.5
0.6
N
New Home Sales
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'03 '04 '05 '06 '07SOURCES: WARD'S / U.S. CENSUS BUREAU
r/mydox/papers/PO 08-US AUTO SALES vs NEW HOME STARTS.xls
EXTERNAL FACTORS: KEY TRENDS AND DRIVING FORCES
TREND AUTO TPE IMPACT
Dollar weakness - Foreign investment in N. America (state wealth, TPE industry players)
- Increased U.S. exportsStagnant Western auto growth/rapid non-
- Investment in non-Western regions by U.S. Tier 1s- Reluctant U.S. capex by U.S. Tier 1sgrowth/rapid non
Western auto growthReluctant U.S. capex by U.S. Tier 1s
- TPE investment in non-Western regionsRaw material price increase
- Tier 1/TPE compounder profitability squeeze- TPO preference
O ti i t i l ffi i t l ti- Optimize material efficient solutions- Fabrication technology optimization trend (reduced unit
operations, scrap reduction)- Petrochem investment shift to monomer-rich regions
(asset light strategies)(asset light strategies)- TPE supply chain consolidation
Fuel efficiency pressures - U.S. fleet composition shift (favors polyolefin solutions)- Favor light-weighting solutions
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Continued U.S. domestic OEM share loss
- Japanese/European/Korean Tier 1 and TPE compounder share gain
SOURCE: ROBERT ELLER ASSOCIATES LLC, 2008
TPE MARKETPLACE GLOBALIZATION
• TPE investment and technology flows following the globalization of end use markets.
• Most major TPE compounders have established Asia (China) operations.
• A new class of Asian TPE compounders is pemerging (eventually global competitors?/ parallel supply chain).
• China: fastest vehicle production growth region.
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• Petrodollar shifting regional strengths.
TPE INVESTMENT FOLLOWS MARKETS
JAPAN ASIA -MAINLYCHINA(a)
EASTEUROPE
NORTHAMERICA
WESTEUROPE
TURKEYPERSIANGULF OIL
PRODUCERSPRODUCERSTPE RAW
MATERIALS
PETRODOLLAR OUTFLOW
STRONG FLOW OF CAPITAL INVESTMENT AND TECHNOLOGY
WEAK FLOW OF CAPITAL INVESTMENT AND TECHNOLOGY
FLOW OF TPE COMPOUNDS
PETRODOLLAR INFLOW
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FLOW OF TPE COMPOUNDS
NOTE: (a) INDIA IS STARTING
SOURCE: ROBERT ELLER ASSOCIATES LLC, 2008r/mydox/papers/PO 08-InvTechTPE08.vsd // lg/myfiles/visio/PO 08-InvTechTPE08.vsd
• Automotive supply chain implosion drives
AUTO TPE SUPPLY CHAIN SHIFTS
• Automotive supply chain implosion drives TPE technical innovation
• Forward integration of resin suppliers to compounding (TSRC, Kuraray, Basell, others)
• Expanding property envelopes: SEBS o-• Expanding property envelopes: SEBS, o-TPV, TPO, TPU
• Metallocene polyolefin and ionomer technologies challenge SEBS and o-TPV
• Renewed attack (SEBS and o-TPV) on rubber• Parallel TPE supply chain in ChinaParallel TPE supply chain in China• Commodity vs. specialty TPE sector
divergence G i l f t l
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• Growing role for talc• Resin capacity shift to monomer-rich regions
S h i f J i i
AUTO TPE SUPPLY CHAIN SHIFTS (Cont'd.)
• Strengthening of Japanese resin companies in N. America and EuropeK TPE li h ll i th• Korean TPE suppliers challenging the incumbents? (e.g., Hyundai EP) TPE compounders broadening product lines• TPE compounders broadening product lines
• Renewed growth of European compounders in N America ($ weakness driver?)in N. America ($ weakness driver?)
• Resin suppliers riding a wave of new reactor technology (direct access to TPE markets)technology (direct access to TPE markets)
• Tier 1s shifting to o-TPE compounding in-house?
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house?• Enhanced role for TPE masterbatch
AUTO SUPPLY CHAIN EFFECTS
AUTOPLASTIC SUPPLY CHAIN IMPLOSION (N AMERICA)AUTOPLASTIC SUPPLY CHAIN IMPLOSION (N. AMERICA)
PETROCHEM PRICEINCREASES
HARDBALL PURCHASINGPRESSURES
VEHICLE PRICEDECREASES
LEGACY COSTS,LABOR PRESSURES
GLOBALCOMPETITION
OFFSHORECOMPETITION
IMPORTEDCOMPETITORS
RAW MATERIALPRICE INCREASES
FUEL COSTS(PROD. LINE FIT)
RAW MATERIALS COMPOUNDER TIER 1 FABRICATOR ASSEMBLY
PRICECOMMODITIZATION
MATERIALSTECHNOLOGY
LAG
PROCESSTECHNOLOGY
LAG
LEGACYCOSTS
TIER 2, 3SUPPLIERS
MARKETSHARELOSS
OVERCAPACITY
STOCKHOLDERPRESSURES
SHIFT TO MOREATTRACTIVE MARKETS
LAG
ELIMINATION OFEXTRA STEPS
LAG LOSS
PRESSURES PASSED DOWNTHE SUPPLY CHAIN:
PRICING PRESSURES
SUPPLY CHAIN "MANAGEMENT"
DEMAND SLOWDOWN
ELIMINATE/REDUCE THE INEFFICIENCIES:- MULTIPLE STEPS- EXCESSIVE LOGISTICS- SCRAP GENERATION- INEFFICIENT PROCESS TECHNOLOGIES
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REVISED SPECIFICATIONS
GLOBALIZATION PRESSURES
- SALES/MARKETING COSTS- EXCESS LABOR COSTS- OVER-GLOBALIZATION?
SOURCE: ROBERT ELLER ASSOCIATES LLC, 2008re/mydox/papers/PO 08-implosion08.vsd // lg/myfiles/visio/PO 08-implosion08.vsd
AUTOMOTIVE TARGET MARKETS FOR TPEs
METAL SUBSTITUTION- FASCIA- FENDERS
RUBBER SUBSTITUTIONPLASTICS
SUBSTITUTION ADD-ON HOSE TUBE BELTS SEALS GROMMETS,BUSHINGS
FILMS,TUBING
SOFTTOUCH
r/mydox/papers/PO08-AutoTgtMktsTPEs.vsdlg/myfiles/visio/PO08-AutoTgtMktsTPEs.vsdSOURCE: ROBERT ELLER ASSOCIATES LLC, 2008
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AUTOMOTIVE TPE TARGETS AND THE RUBBER INTERFACEAUTO TPE SYSTEMS TARGETS
BODY/GLAZING SEALS*
BODY SEALS* GLAZING SEALS*
HVAC
OTHERFLAPPER AIR
EXTERIOR
BODY SEALS* GLAZING SEALS*
REAR DECK* FIXED* MOVEABLE*DOORS HOOD*
OTHERFLAPPERDOOR
GASKETS*
AIRDUCTS
INTERIOR(a)
COATEDFABRIC*
FLOORSYSTEMS*
AIRBAGDOORS*
BOOTS/BELLOWS
ELEC
STEERING POWERTRAIN
DOOR*
ELECTRICAL
CABLEJACKET
OTHER
MATS*SKINS*
CARPETBACKING*
ACOUSTIC*
ELEC-TRICAL*R/P
BOOTS*
SPARKPLUG
STEERCOLUMN
BOOT*CVJ
BOOTS*
LIGHTINGGASKETS*
HOSE/TUBE/DUCT(c)
HOSEFLEXMANDREL(b)*
NOTES:* = RUBBER/TPE INTERFACE(a) DOES NOT INCLUDE RIGID-FILLED TPOs USED IN INTERIORS(b) RE-USABLE MANDREL TO MFR HOSE (TPVs COMPETING WITH NYLON)
SEALS/GASKETS*?
PLUGBOOTS*
BOOTSAIR MGT. - DUCT*
TUBEW. WASHEREGRVAC TUBE (NL)
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(b) RE-USABLE MANDREL TO MFR. HOSE (TPVs COMPETING WITH NYLON)(c) E.G., FUEL, COOLANT, OILS, OTHER HOSE
re/mydox/papers/PO 08-AutoTPETargets08.vsdlg/myfiles/visio/PO 08-AutoTPETargets08.vsdSOURCE: ROBERT ELLER ASSOCIATES LLC, 2008
TPE Grade Name: DuPontTM E-TPVCrank Case Ventilation Hose
20
Material Type: s-TPVProcess: Co-extrusion
Status: ConceptKey Features: Blow-by gas resist.
Product: Fan shroudManufacturer: Sur-FloMaterial Type: TPV (Nexprene)TPE Supplier: Solvay Engineering Polymers
21
pp y g g yNote: Used in Dodge Ram HD pickup
2- color door trim skin on single natural fiber panel substrate
22
Vehicle: BMW 5 SeriesTier 1: Johnson Controls Photo: BMW
BODY/GLAZING SEALS
• Rapid growth
Hi h l t ti l• High volume potential
• In-house compounding vs. merchant supply
• Evolution to in-line compounding?
Systems will be key to TPE penetration• Systems will be key to TPE penetration
• o-TPV vs. SEBS vs. EPDM battleground
• Tier 1 consolidation
23
BODY/GLAZING SEALS: EPDM SUBSTITUTION ACCELERATES
Vehicle: 2007 DCX Dodge RamSupplier: JYCO (compound, profile, design) Material: o-TPV
24
- Little guy scoops the big guys - First o-TPV dynamic body sealSOURCE: JYCO
I d i SEBS k b d d
EXPANDING/SHIFTING PROPERTIES ENVELOPE
• Inroads into SEBS markets by advanced olefin technologies M k h hif b TPE• Market share shift between TPEs - Reactor TPO
Improved metallo plastomers- Improved metallo-plastomers- Dow's InfuseTM OBC
• POEs with high melt strength broadened• POEs with high melt strength, broadened service temperature, low gloss
• POE/branched PPs• POE/branched PPs - Compete with o-TPVs - Profiles/thermoforming
25
Profiles/thermoforming - Enhanced foam properties
INTRA-TPE COMPETITION: ROLE OF IMPROVED POLYOLEFIN TECHNOLOGY
• Broad range of new PO technologies becoming avail.SEBS d TPO d i di t• SEBS and TPO compound ingredients
• POE displacement of EPDM in TPOs almost complete • Will stimulate transparent TPO, elastic fibers, elastic p
films • Versatile molecular architecture control • Still young technologies with broad growth pot’l e g :Still young technologies with broad growth pot l., e.g.,:
- Nano morphology control (clear TPOs, e.g., from Mitsui) L h i b hi t l- Long-chain branching control
• Direct sale to fabricators or compounders?: - Dow - Mitsui Chemical
26
- ExxonMobil - Sumitomo- Borealis - JPP
NEW MATERIALS/FABRICATION COMBINATIONS
• Small part, 2-shot molding started• Shift to large part, 2-shot moldingg p , g
- Competition with thermoformed skins- Evolving to 3-layer (skin/foam/substrate)- Shifts the supply chain
• Co-fabrication (blow, inject, profile extrude)• Increased role for polyolefin foams
- 2-shot injection- Acoustics- Semi-structural applications
Role in all PO constructions
27
- Role in all-PO constructions
NEW TPE FABRICATION TECHNOLOGY:LARGE-PART, 2-SHOT MOLDING CHALLENGES SKINS
CURRENT PROCESS 2-SHOT
COMPOUNDING
S
SUBSTRATERESIN
TPE COMPOUND(CAN BE FOAMABLE)
MAKE SKIN
TRIM SKIN
TRIMMED SKIN
SCRAP SHOT 1
SHOT 2
BACK-FOAM
TRIMMED SKIN
PU FOAMFORMULATION
SUB-STRATE
MOLDSUBSTRATE 3-LAYER
DOOR TRIMOR
TRIM NON-RECYCLABLE SCRAP
DOOR TRIM OR INSTRUMENT PANEL
INSTRUMENTPANEL
ASSEMBLY ASSEMBLY
- LABOR INTENSIVE- HIGH SCRAP- MULTI STEP
- MULTI MATERIAL- NON-RECYCLABLE- DIFFICULT CRAFTSMANSHIP
- LOW LABOR- LOW SCRAP- SINGLE STEP
- 1-2 CLOSELY RELATED MATERIAL FAMILIES- EASILY RECYCLED
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MULTI STEP DIFFICULT CRAFTSMANSHIP SINGLE STEP EASILY RECYCLED- HIGH CRAFTSMANSHIP
SOURCE: ROBERT ELLER ASSOCIATES LLC, 2008r/mydox/papers/PO 08-LgPt2Shot08.vsd // lg/myfiles/Visio/PO 08-LgPt2Shot08.vsd
2-Shot Molded Door Medallion
V hi l D d C lib ('07)
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Vehicle: Dodge Caliber ('07)Molder: LearMaterial: Thermoplastic Elastomer On PP
LARGE-PART, 2-SHOT, SOFT TOUCH DEVELOPMENT
Part: Instrument Panel UpperPart: Instrument Panel UpperSkin Compound: COPE (Foamed Pibiflex from P Group) Substrate: PBT/ASA (UltradurR S4090IGX from BASF)Injection Machine: Engel
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Injection Machine: Engel Foam Technology: TrexelSOURCE: ROBERT ELLER ASSOCIATES LLC
LARGE-PART, 2-SHOT, SOFT TOUCH: TRUCK IP UPPER
Part: Truck IP UpperPart: Truck IP UpperStatus: PrototypeSkin Compound: COPE (foamed Pibiflex from P Group) Substrate: PBT/ASA (UltradurR S4090IGX from BASF)
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Substrate: PBT/ASA (Ultradur S4090IGX from BASF)Molding Machine: Engel Duo Series (for Dolphin process)Tier 1: IAC SOURCES: POLYMOTIVE; ROBERT ELLER ASSOCIATES LLC
TALC EFFECTS
• New micro-talcs broaden the properties envelopeenvelope
• Exterior and interior applications
• For exterior applications:- Europe ahead (front-end modules, e.g.,
BMW X5; hatchback, e.g., Renault Modus)- Could accelerate exterior panel penetration
• Role for masterbatch?
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BMW X5 Front-end Module Compound: 30% talc-filled TPOCompound: 30% talc filled TPO Molder: Plastic OmniumFiller Type: Jetfine® 3CA (Rio Tinto Minerals) Key Features: Class A finish, zero gap, low temp. (-40ºC) impact,
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y , g p, p ( ) p ,weight save, high scratch resistance, meets European pedestrian safety requirements
SOURCES: PLASTIC OMNIUM; ROBERT ELLER ASSOCIATES LLC, 2007
TPE vs. TSR PATH TO MARKET
FABRICATORCAPTIVEMIXING
TSR: NEAT TSRSUPPLIER
NEATTSR
MIXING
CUSTOMMIXING
FABRICATOR FABRICATED PARTS
REINFORCEMENTREINFORCEMENT
CAPTIVE COMP'DG.BY NEAT TPE
SUPPLIER PROPRIETARYCOMPOUND
FABRI-CATOR
FABRICATEDPARTS
TPE: NEAT TPESUPPLIER
NEATTPE
INDEPENDENT TPECOMPOUNDER
CAPTIVE COMP'DG.
COMPOUND CATOR
- PLASTIC RESINS- REINFORCEMENT
FABRICATEDSYSTEMS
SOURCE ROBERT ELLER ASSOCIATES LLC 2008
CAPTIVE COMP DG.BY MAJOR
FABRICATORS
REINFORCEMENT- OVERMOLDING
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r/mydox/papers/PO 08-TPEvsTSRptm08.vsd // lg/myfiles/visio/PO 08-TPEvsTSRptm08.vsd
SOURCE: ROBERT ELLER ASSOCIATES LLC, 2008
SUMMARY
• Rapidly shifting global automotive TPE marketplace and TPE industry structure:
R i l t ti th diff- Regional automotive growth differences - Strong global investment flows - Internationalization of the N American TPE- Internationalization of the N. American TPE
market - Petrodollar effects - China/India TPE compound imports to N.
America and Europe?
• Commoditization of low end TPE compound markets (shifting supplier rankings and target
35
markets (shifting supplier rankings and target markets)
SUMMARY (Cont'd.)
• New technologies driving TPEs deeper into TSR markets: - Body/Glazing Seals - Boots/Bellows- Hose - Coated Fabrics
• Continued profitability pressure from: - Consolidated customer baseConsolidated customer base - Raw material price increases - Global pricing structures - Direct paths to market by resin suppliers - Increased in-house compounding
M t b t h b f b i t
36
- Masterbatch use by fabricators
• Expanding properties envelope
SUMMARY (Cont'd.)
• Expanding properties envelope
• Interface blurring between SEBS and o-TPV:Compo nd form lations- Compound formulations
- Market sector dominance- Product linesProduct lines
• Forward and backward integration changing the TPE supply chainthe TPE supply chain
• Many opportunities for capturing value (via t h)systems approach)
• Global sourcing accelerating
37• Olefin-based TPEs gaining share