GLOBAL PERSPECTIVES ON TPE MARKETS, GROWTH TRENDS, AND THE RUBBER … 07 pres.… · ·...

1

GLOBAL PERSPECTIVES ON TPE MARKETS, GROWTH TRENDS, AND THE RUBBER INTERFACE

PREPARED FOR:

RMA/EPG ANNUAL MEETING FEBRUARY 26, 2007

r/mydox/papers/rma 07 pres.ppt

RESENTED BY:Robert Eller, PresidentRobert Eller Associates, Inc.Phone: 330-670-9566E-mail: [email protected] Site: www.robertellerassoc.com

2

REA BACKGROUND

• ESTABLISHED IN 1991• ANALYSIS IN SUPPORT OF MANAGEMENT

DECISIONS IN: PLASTICS, TPEs, ELASTOMERS, COMPOUNDING

• MULTICLIENT/PRIVATE STUDIES; MERGERS/ACQUISITIONS

• OPERATIONS IN U.S./EUROPE/ASIA • MOST STUDIES ARE GLOBAL IN SCOPE• POSITIONING STUDIES: MOST NEW TPEs ENTERING

MARKET• MOST ANALYSES ARE AT ADVANCED R+D/EARLY

COMMERCIALIZATION INTERFACE• OPERATE IN ALL MARKET SECTORS

3

MANAGEMENTDECISIONSANALYSIS

MARKET

ECONOMIC

TECHNICAL

Robert Eller Associates, Inc.CONSULTANTS TO THE PLASTICS AND RUBBER INDUSTRIES

Specialty Thermoplastic Elastomers . . . Markets,Economics, Technology, Intermaterials Competition

ENGINEERINGTPEs

METALLOCENEPLASTOMERS/ELASTOMERS

THERMOSETRUBBERS

PVCCOMPOUNDS

TPO SEBS

TPVs

SUPER-TPVs NANO-FILLERS

A Europe/U.S./Japan Multiclient Industry AnalysisCompleted January 2007

4

M AN AG E M E N TD E C IS IO N SAN AL Y S IS

MARKET

ECONOMIC

TECHNICAL

R ob ert E ller A ssocia tes, In c .C O N S U L T AN T S T O T H E P L AS T IC S AN D R U B B E R IN D U S TR IE S

40 00 E m b assy P arkw ay, S u ite 208 , Akro n , O h io 4 4333 -83 28 U S AP ho n e 330 -67 0 -9 566 / F ax 3 30 -670 -984 4

W eb S ite : h ttp ://w w w .ro b erte lle ra sso c .c omE -m ail: b ob e lle r@ prod ig y.ne t

U S A E U R O P E C H IN A JAP AN S O U TH AM E R IC A

S p ec ia lty T h erm o p lastic E las to m ers . . . M arkets ,E co n o m ics , In term ateria ls C o m p etitio n , an d In d u stryS tru ctu re in C h in a

E N G IN E E R IN GT P E s AN D

S U P E R -T P V s

M E T AL LO C E N EP L AS TO M E R S /E L AS T O M E R S

T H E R M O S E TR U B B E R S

P V CC O M P O U N D S

T P O s S E B S

A M ultic lien t In dustry A n alysis2006

TP U sT P V s

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PRESENTATION OVERVIEW

• TPE DEFINITIONS• MARKET PERSPECTIVES/GLOBAL SHIFTS• PATHS TO MARKET/INDUSTRY STRUCTURE SHIFTS• MATERIALS TECHNOLGY EFFECTS• THE RUBBER INTERFACE• FABRICATION TECHNOLOGY EFFECTS• MARKET SECTORS

- AUTO . . . WHY IT'S IMPORTANT- NON-AUTO

• CREATING/DESTROYING VALUE• PROFITABILITY DRIVERS• CHINA IMPLICATIONS• FUTURE VIEW

6

TPE FAMILIES . . . CHANGING STRUCTURE

TPE FAMILIES

OLEFINIC(o-TPEs)

STYRENIC(SBCs) SUPER-TPVs PVC

TPEsOTHERE-TPEs

s-TPO o-TPV HYDRO-GENATED

(SEBS, SEPS)

ISOPRENE-BASEDMIDBLOCKS

SBCTPVs

SILICONE

ACRYLATES

OTHER

COPE

COPA

OTHERS

p-TPV(PARTIAL

CROSSLINKED)

f-TPV(FULLY

CROSSLINKED)

re/mydox/papers/RMA07.vsdlg/myfiles/visio/RMA07.vsdSOURCE: ROBERT ELLER ASSOCIATES, INC., 2007

COMMO-DITY TPO

OBCPENETRATION

7

TYPICAL HARDNESS RANGES OF TPEs AND OTHER PLASTICS

SOURCE: ROBERT ELLER ASSOCIATES, INC., 2005/BAYER

ELASTOMERRIGID PLASTIC

0 10 20 30 40 50 60 70 80 90

ROCKWELL - R

45 55 65 75 85 90 95DUROMETER ADUROMETER D

50 70 90 110 120 130

SEBS/ SBS

(SEBS = BLOCK COPOLYMER)

TPVTPV ALLOYS

SOFT-PVC RIGID-PVC

NYLON 11, 12

NYLON 6, 66

FLUOROPOLYMER

EPDM

NITRILE RUBBER

TPU

NEW TPUs

PLASTICIZED TPU

SILICONE

PP

ABS

PC

POM

PBT & PET

PEBAX

(POLYETHER BLOCK AMIDE)

COPE/COPA

TPO

NANO-TPO

SOURCE: BAYER, 2007

8

TPE PRICE/PERFORMANCE RANGES (N. AMERICA -- 2005)

SOURCE: ROBERT ELLER ASSOCIATES, INC., 2005

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

0 1 2 3 4 5 6 7 8 9 10ENGINEERING PERFORMANCE (1 = LOW, 10 = HIGH)

PRIC

E ($

/LB

.)

Flex-PVCM-PO

TPO

Nano-TPO

SBS

SEBS

M-TPV(M-PO/EPDM)

SEBS/TPU

TPV

EPDM/TPVHybrid

S-TPV

TPU-ETHER

COPE

COPA

TPU-ESTER

TPE PRICE/PERFORMANCE RANGES


9

MKT. PERSPECTIVES (EUROPE/N. AMERICA)

• TPE DEMAND GROWTH (ALL SECTORS):- OVERALL 5-6%/YR. (EUROPE/N. AMERICA)- MAJOR RUBBER BREAKTHROUGH COULD SHARPLY

ACCELERATE GROWTH• AUTOMOTIVE: 7%/YR. GROWTH BETWEEN 2006-2011• FASTEST TPE GROWTH SECTORS WILL BE:

- THERMOFORMED SHEET- AUTOMOTIVE- BUILDING/CONSTRUCTION- FOOD/PHARMACEUTICAL PACKAGING

• PROFITABILITY: - CONTINUED EROSION?- MARKET SEGMENTING INTO COMMODITY/SPECIALTY

10

ASIA EFFECTS ON EUROPE/N. AMERICATPE MARKETS

• TPE DEMAND GROWTH IN WEST REDUCED BY CHINA SHIFT OF MARKETS: - APPLIANCE/TOOL- CONSUMER/HOUSEWARES- PERSONAL CARE- SPORTS/LEISURE- ELECTRICAL-ELECTRONIC/PERSONAL COMMUNICATIONS

• COMPOUNDER SHIFT TO CHINA ACCELERATING (RECENTLY)

• INVESTMENT STARTING TO FLOW FROM CHINA

• AUTO EXPORT: STARTING SLOWLY

• INDIA SHIFT: SLOWER THAN CHINA, CURRENT INTEREST

11

MANUFACTURING DYNAMICS:THE SHIFT TO LOWER-COST LABOR

PRODUCT MANUFACTURING

SHIFTLOW-COST LABOR

COUNTRIES (VIETNAM, INDIA)

CHINAWESTERN COUNTRIES CENT./EAST

EUROPE

CHINA vs. EAST EUROPE: - MORE TECHNICAL APPLICATIONS IN EAST EUROPE- BETTER TOOLING BASE- IP PROTECTION- MORE CAPITAL INTENSE AUTOMATION (PRODUCTIVITY IMPROVEMENTS vs. LABOR)

12

TPE INDUSTRY STRUCTURE SHIFTS• TECHNOLOGY CONVERGENCE: (EUROPE/U.S./ASIA?)• SHARE SHIFT IN U.S. END USE MARKETS:

EUROPEANS, JAPANESE, KOREANS• JAPANESE TPE COMPOUNDERS:

MAJOR SHARE GAIN IN N. AMERICA (o-TPEs)• PRIVATE EQUITY GROUPS ENTERING• REACTOR TPO/METALLO-PLASTOMERS/OBCs:

CAUSE MARKET SHARE SHIFT BETWEEN TPEs• COMPOUNDER PRODUCT LINES: BROADENING• s-TPVs: ATTRACTING NEW SUPPLIERS• SBC-TPV:

COULD SHIFT COMPETITIVE POSITIONS (STYRENIC vs. o-TPV)

• IN-HOUSE COMPOUNDING:WILL CHANGE INDUSTRY STRUCTURE ANDPATH TO MARKET

13

NEW TPE MATERIALS TECHNOLOGIES• s-TPVs (SUPER-TPVs):

- ACRYLIC, NITRILE, AND SILICONE BASED- VERY SMALL CURRENT VOLUMES

(ZEON AND DuPONT ARE LEADERS)- MODERATE GROWTH POTENTIAL- AUTO UNDER-HOOD IS MAIN TARGET- HIGH PRICE LIMITS APPLICATION POTENTIAL

• r-TPOs:- BROADENING PROPERTY RANGE, NEW COMPETITORS

• PLASTOMER/HMS PP: POOR MAN’S CROSSLINKING

• OLEFIN BLOCK COPOLYMERS: - RECENT INTRODUCTION BY DOW SHIFTS TPE

COMPETITIVE INTERFACE

14

TPE/RUBBER SUBSTITUTION STATUS

- STARTEDGROMMETS, BUMPERS, GASKETS*

- SUBSTANTIAL PENETRATION.- SHIFT TO HIGHER PERF. TPEs?

BOOTS/ BELLOWS/ DUCTING*

- UNLIKELY PENETRATION IN AUTO- MAJOR TPV, TPU TARGET

BELTS

- NO SIGNIFICANT PENET. YET- REQUIRES PARADIGM SHIFT

HOSE*

- STARTED- WILL ACCELERATE- FOAMING REQUIRED?

BODY/GLAZING SEALS*

STATUSAPPLICATION


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FABRICATION TECHNOLOGY SHIFTS• 2-SHOT MOLDING• IN-LINE COMPOUNDING?• NEGATIVE FORMING/IN-MOLD GRAINING• PROFILE EXTRUSION• BODY/GLAZING SEAL TPE SUBSTITUTION*• IN-MOLD DECORATION• INJECTION MOLDING ADVANCES (LOW

GLOSS/FEWER FLOW LINES/FINE GRAIN)• SHEET THERMOFORMING• BROADEN BLOW MOLDING POTENTIAL*• CO-EX*; CO-BLOW** = RUBBER CHALLENGE TECHNOLOGIES

16

THE TPEs -- NEW FAMILY MEMBERS/BROADENED PERFORMANCE ENVELOPE, NEW TECHNOLOGIES

TPE FAMILIES

OLEFINIC STYRENIC SUPER-TPVs PVC ENGINEERING TPEs

TPO TPV

NANO-COMPOSITES,

COATED FABRICS,SHIFTING GLOBAL

AUTO SPECS

FOAMS,2-SHOTCROSS-LINKED

RENEWEDINTEREST FOR

DAMPINGPROPERTIES

NEW DISPERSEDELASTOMER

PHASES,BROADENED

MATRIX RESINCANDIDATES

NEWALLOYS (TPU,ACRYLIC, POs)

FOR LOWTEMP. PERF.

HYDRO-GENATED

(SEBS, SEPS)

ISOPRENE-BASED

MIDBLOCKS

NEWSBCTPVs

SILICONE

ACRYLATES

OTHER ALLPVCTPEs

PVCALLOYS

TPU COPA

COPE OTHER

p-TPV (PARTIALCROSSLINKED)

f-TPV (FULLYCROSSLINKED)

BROADENEDAPPLICATIONRANGE FOR

p-TPVs

-BROADER USE OFMETALLO ELASTOMERS

-NEW FOAM TECHNOLOGIES-IMPROVED ADHESION TO

METAL/TEXTILES-INCREASED SOFTNESS W/

REDUCED OIL CONTENT

SOURCE: ROBERT ELLER ASSOCIATES, INC., 2007r/mydox/papers/RMA-TPEs07.vsdlg/myfiles/visio/RMA-TPEs07.vsd

17

GLOBAL LIGHT VEHICLE PROD'N. TREND LINE

• 2011 GLOBAL SALES COULD REACH 75MM UNITS

• GLOBAL AAG = 3%/YR.• ASIA-PACIFIC GROWTH

7.5-8.5%/YR.?• WESTERN GROWTH

STAGNANT OR DECLINE• GLOBAL FLEET SHIFT

TOWARD SMALLER CARS• VARIATIONS HAVE BEEN

IN +/- 5% BAND SINCE 19700

10

20

30

40

50

60

70

80

90

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

SOURCE: GM, WARDS, ROBERT ELLER ASSOCIATES, INC., 2007

SALE

S, M

M V

EHIC

LES

ACTUAL

TREND

PLUS 5%

MINUS 5%

1973 OIL CRISIS

1979 OIL CRISIS

- GULF WAR- EUROPERECESSION

'06 GLOBAL SALES,

65MM UNITS

IRAQ INVASION

18

GLOBAL VEHICLE SALES

0

10

20

30

40

50

60

70

80

'00 '01 '02 '03 '04 '05 '06 '07

SOURCE:ROBERT ELLER ASSOCIATES,INS.,2007

MM

VE

HIC

LES

OTHER

CHINA

EUROPE

U.S

AVERAGE ANNUAL % CHANAGE 4.3%

5759

6768

NOTE: VEHICLE SALES INCLUDE HEAVY TRUCKS

GLOBAL VEHICLE SALES . . . CHINA SHARE GAIN

AVG. ANNUAL % CHANGE 4.3%


19

N. AMERICAN VEHICLE SALES (1999-2011)

13.5

14

14.5

15

15.5

16

16.5

17

17.5

18

18.5

'99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11

SOURCE: ROBERT ELLER ASSOCIATES, INC., 2007 b/mydox/autoindustry/n.americanvehsales.xls

UN

IT S

ALE

S, M

M

20

U.S. MARKET SHARE OF THE FORMER BIG 3

10%

15%

20%

25%

30%

35%

'99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11SOURCE: ROBERT ELLER ASSOC., 2007

GM

FORD

CHRYSLER

MA

RK

ET S

HA

RE

21

SALES SHIFT FROM ('05-'06) BY VEHICLE TYPE IN NORTH AMERICA

-20%

-15%

-10%

-5%

0%

5%


CH

AN

GE,

(%)

SMALL CARS MID-SIZE CARS CROSSOVERSSUVsPICKUPS

22

AUTO SUPPLY CHAIN (N. AMERICA)PETROCHEM PRICE

INCREASES

GLOBALCOMPETITION

OFFSHORECOMPETITION

IMPORTEDCOMPETITORS

HARDBALL PURCHASINGPRESSURES

RAW MATERIALPRICE INCREASES

VEHICLE PRICEDECREASES

FUEL COSTS(PROD. LINE FIT)

LEGACY COSTS,LABOR PRESSURES

PRICECOMMODITIZATION

MATERIALSTECHNOLOGY LAG

IN N. AMERICA

PROCESSTECHNOLOGY

LAG

LEGACYCOSTS

RAW MATERIALS COMPOUNDER TIER 1 FABRICATOR ASSEMBLY

MARKETSHARELOSS

OVERCAPACITY

STOCKHOLDERPRESSURES

PRESSURES PASSED DOWNTHE SUPPLY CHAIN:

PRICING PRESSURES

SUPPLY CHAIN "MANAGEMENT"

DEMAND SLOWDOWN

REVISED SPECIFICATIONS

GLOBALIZATION PRESSURES

ELIMINATE/REDUCE THE INEFFICIENCIES:- MULTIPLE STEPS- EXCESSIVE LOGISTICS- SCRAP GENERATION- INEFFICIENT PROCESS TECHNOLOGIES- SALES/MARKETING COSTS- EXCESS LABOR COSTS- OVER-GLOBALIZATION?

SOURCE: ROBERT ELLER ASSOCIATES, INC., 2007b/mydox/papers/RMA-AutoSupChImplosion07.vsdlg/myfiles/visio/RMA-AutoSupChImplosion07.vsd

23

TPV DEMAND BY MARKET SECTOR (EUROPE, 2005-2010)

AUTO

FLUID HANDLING

PERS CARE*/COSM

MEDICAL

BLDG/CONSTR

APPLIANCE/TOOLS*

CONSUMER/HSWR*

SPORTS/LEISURE*

WIRE/CABLE*

E/E & COMM.*

FOOD/PHARMA PKG

COATED FABRICS

OTHER

DEM

AN

D, k

T2005 2010

SOURCE: ROBERT ELLER ASSOCIATES, INC., TPE MULTICLIENT STUDY, 2007

24

DEMAND FOR TARGET TPE COMPOUNDS BY SECTOR(EUROPE, 2005)

0

AUTO

FOOD/PHARMA P

KG

BLDG/C

ONSTRMEDIC

AL

APPLIANCE/TOOLS

PERS CARE/C

OSM

FLUID

HANDL'G

/INDUSTR

WIR

E/CABLE

CONSUMER/HSW

R

SPORTS/LEIS

UREFOOTW

EARSHEET

E/E &

COMM

COATED FABRICS

OTHER


DEM

AN

D, k

T

s-TPV

TPV

s-TPO

m-PO

SEBS

25

AUTOMOTIVE TPE TARGETS AND THE RUBBER INTERFACE

AUTO TPE SYSTEMS TARGETS

BODY/GLAZING SEALS

INTERIOR(A) BOOTS/BELLOWS ELECTRICAL

BODY SEALS GLAZING SEALS

DOORS HOOD* REARDECK*

PRIMARY* SEC.*

FIXED MOVEABLE

REARQTR.*

WIND-SHIELD

BACK-LIGHT

MECH.

ENCAP.

SURFACEEXTR.

MECH.

ENCAP.

SURFACEEXTR.

MOVEABLE SIDE

SLIDER* PIVOT*

DROP

BELT LINE MOLDING

MOLDING WINDOWLICKER

GLASSRUNCHANNEL

OTHER MOVEABLE

PICKUPTRUCKSLIDERS*?

SUNROOF*?

FLAPPER DOORGASKETS

AIRDUCTS

OTHER

AIRBAGDOORS*

SKINS* COATEDFABRIC*

FLOORSYSTEMS

ACOUSTIC CARPETBACKING

MATS

STEERING

STEERCOLUMNBOOT

CVJBOOTS

R/PBOOTS

SPARK PLUGBOOTS*

SEALS/GASKETS ?

POWER TRAIN ELECTRICAL* DOOR* CABLEJACKET

LIGHTINGGASKETS

OTHER

HOSE/TUBE/DUCTHOSE

AIR MGT. - DUCT*

TUBE

FLEX MANDREL(B)

W. WASHEREGRVAC TUBE (NL)

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)(C) E.G., FUEL, COOLANT, OILS, OTHER HOSE

re/mydox/papers/RMA-AutoTPETargets07.vsdlg/myfiles/visio/RMA-AutoTPETargets07.vsd

EXTERIORHVAC

*

*

* *

**

*

* * * * * *

*

**

*


26

EXAMPLE AUTOMOTIVE APPLICATIONS FOR TPEs

VALVE COVER SEALS(a)

DEFLECTORS, SHIELDS(r-TPV OPPORTUNITY)

COATED FABRICS

BODY SIDEMOLDING*

ROCKERPANELS*

NON-CARPETFLOORING

FUEL SYS-TEMS(a)

SEALS(a)

FASCIA*

SKINS*

NOTES:-DOES NOT SHOW BODY/GLAZING SEALS, A CONTINUING GROWTH OPPORTUNITY* INDICATES NANO-TPE OPPORTUNITY(a) s-TPV TARGET(b) NOTE COMPETITION WITH LGF-PP

HIGH PERFORMANCEBODY PLUGS

EXTERIOR PANELS*

MISC. INTERIORSOFT TOUCH

HIGH PERFORMANCE BOOTS/BELLOWS(a)

STEP PADS ANDRUNNING BOARDS*(b)

HOSE*


27

INTERIOR SKIN DEVELOPMENT(2006 HONDA CIVIC)

• PART: PASSENGER AIRBAG DOOR

• KEY FEATURES: - SEAMLESS- NO PAINT- LOW GLOSS

• MOLDER: VISTEON• TPO SKIN SUPPLIER:

OKAMOTO/O’SULLIVAN• TPO SUPPLIER:

MITSUBISHI CHEMICAL• MOLDING PROCESS:

VISTEON VLIM

SOURCE: VISTEON, 2005

28

2-SHOT MOLDED DOOR MEDALLION

VEHICLE: DODGE CALIBER ('07)MOLDER: LEARMATERIAL: THERMOPLASTIC ELASTOMER ON PP

29

BODY/GLAZING SEALS: EPDM SUBSTITUTION ACCELERATES

- 2007 DCX DODGE RAM- SUPPLIER: JYCO (COMPOUND, PROFILE, DESIGN)- LITTLE GUY SCOOPS THE BIG GUYS- MATERIAL: o-TPV- FIRST o-TPV DYNAMIC BODY SEALSOURCE: JYCO

30

2-SHOT MOLDING: GROWTH DRIVER FOR TPEs

- 2006 DCX CALIBER- SUPPLIER: LEAR- DOOR MEDALLION- 2-SHOT MOLDING: START SMALL, TRANSITION TO

LARGE PARTS/CHALLENGE SKIN TECHNOLOGY- SEBS COMPOUND OPENS THE DOOR FOR TPOs/TPVs

31

Vehicle: Toyota Tundra (2006), mid-sized pickup truck

REA Note:a. Example of New American mfr. entering U.S. auto OEM strongholdb. Growth target for exterior compounded TPO

32

Vehicle: Toyota Tundra (2006)Part: Cargo box side railsTPE Type: Compounded TPO (Sequel 1514)TPE Supplier: SEPKey Features: Scratch/mar resistance (5 finger test), low CLTEMolder: Plastikon (also have plant in China)REA Note: Domestic U.S. compounder/new American mfr.

33

Vehicle: Toyota Tundra (2006)Part: Tailgate coverTPE Type: Compounded TPO (Sequel 1514)TPE Supplier: SEPKey Features: Surface durability, low CLTEMolder: Plastikon (also have plant in China)REA Note: Domestic U.S. compounder/new American mfr.

34

Product Type:Jeep rear tailgate seal

Note: Sponge w/dense EPDM

35

Manufacturer: ValeoTPV Type: TPVMfr. Location: EuropeNote: Example of boots/bellows and EPDM replacement

36

PROJECTED AUTOMOBILE PROD'N. IN ASIA: 2005-2012

0.0

0.0

0.0

0.4

4.6

1.0

1.4

0.9

0.2

0.1

0.2

0.0 2.0 4.0 6.0 8.0 10.0 12.0

VIETNAM

PHILLIPPINES

AUSTRALIA

TAIWAN

MALAYSIA

INDONESIA

THAILAND

INDIA

KOREA

CHINA

JAPAN

VEHICLE PRODUCTION, ASIA (MM UNITS)

2005

2012

7 MM NEW VEHICLES ARE EXPECTED TO COME FROM CHINA, INDIA, AND THAILAND BY 2012.

SOURCE: CSM; ROBERT ELLER ASSOCIATES, INC., 2007

37

AUTO BODY/GLAZING SEALS . . .CHALLENGE TO EPDM

• GLOBAL POTENTIAL IS 600 kT• A TARGET FOR MAJOR TPE COMPOUNDERS• GLASS-RUN CHANNEL/BELTLINE MOLDING

PENETRATED• U.S. HAS BEEN SLOWEST TO SHIFT TO TPEs

(ACCELERATING)• o-TPV AND RECENTLY SBC-TPV COMPETE WITH EPDM• DYNAMIC TPE SEALS STARTING• EPDM WILL LOSE SHARE• PVC COULD RETAIN SHARE• SOME BODY SEAL TIER 1s WILL COMPOUND IN-HOUSE• START OF GLOBAL JOINT VENTURES (JYCO/INOAC)• NEW FOAM TECH. COULD ACCELERATE PENETRATION

38

THE SUPER-TPV CANDIDATES . . .CHALLENGING HEAT AND OIL RESISTANT RUBBER

MARKETS

FREUDENBERG-NOK

FLUORO-POLYMER

FLUORO-ELASTOMER

FLUORO-PRENE

DUPONTCOPEETHYLENE ACRYLATE (AEM)

E-TPV

ZEONPP, PA, POLYESTER

POLYACRYLATE (ACM)

ZEOTHERM

WACKERSEVERALSILICONE

DOW CORNINGPA, TPUSILICONETPSiV

SUPPLIERMATRIX RESIN(S)

ELASTOMER TYPE

GRADE NAME

39

H 250 (482)

OIL RESISTANCE/HEAT RESISTANCE OF TPEs AND THERMOSET RUBBERS

TYPE C (1)

G 225 (437)

F 200 (382)

E 175 (347)

D 150 (332)

C 125 (257)

B 100 (212)

A 70 (158)

HEA

T R

ESIS

TAN

CE

CLA

SS

CLASS NO. REQ.A

140B

120C

100D

80E

60F

40G

20H

10K

% SWELL IN #3 OILOIL RESISTANCE

EPDM(P)

METALLOPLASTOMERS

IIR(S)

SEBS

NR

CR

CSM

VQM

ACSIUM

FVQM

ACM

EAM

KALREZ (R)

FKM

COPE

ECO

ALCRYN

M-ACN NBRTPVs

L-ACN NBR

H-ACN NBR

GEOLAST

NOTESFKM = VITON (R)

FVQM - FLUOROSILICONESCR = CHLOROPRENEACM = POLYACRYLATEVQM = SILICONEEAM = VAMAC (R)

IIR = BUTYLNR = NATURAL RUBBERECO = EPICHLORHYDRINCSM = CHLOROSULFONATED PEH-ACN = HIGH NITRILEFA = THIOKOL(S) = SULFUR CURE(P) = PEROXIDE CURE(R) = RESIN CURE

SBC TARGET ZONE

FA

IIR(R)

EPDM(S)

SBS

O-TPV TARGET ZONE

LOW VALUE OIL RESIST.TARGET ZONE

EPDM TARGET ZONE

s-TPV TARGET ZONE

SOURCE: ROBERT ELLER ASSOCIATES, INC.; TPE MULTICLIENT, 2007

40

NEW SUPER-TPV TECHNOLOGIES

• ZEON AND DuPONT ARE LEADERS

• AUTO UNDER-HOOD IS KEY TARGET MARKET

• PENETRATION REQUIRES (HEAT, OIL RESIST., UV?)

• HIGH PRICES LIMIT PENETRATION POTENTIAL

• SOME COMPETITION WITH o-TPVs, CHLOROPRENE

• CV JOINTS, OIL FILTER, SOME HOSE APPLIC.

41

NEW SUPER-TPV TECHNOLOGIES (CONT’D.)

THE DRIVING FORCES FOR TPE SUBSTITUTION INCLUDE:

• INCREASED UNDER-HOOD TEMPERATURES

• INCREASED FUEL EMISSIONS CONTROL REGULATIONS

• INCREASED REQUIREMENTS FOR DYNAMIC SEAL PERFORMANCE AS WARRANTY PERIODS ARE EXTENDED

• POTENTIAL COST SAVINGS VIA INTEGRATION OF THE CONNECTOR FUNCTION WITH THE BODY OF THE PART

42

TPE SUPPLY CHAIN RECONFIGURATIONS

COMPOUNDER


RESIN SUPPLIER OEM ASSEMBLYTIER 1COMPOUND

r/mydox/papers/RMA-SupplyChainReconf07.vsdlg/myfiles/visio/RMA-SupplyChainReconf07.vsd

A. CURRENT:

A-1. CURRENT (ASIAN OEMs):

B. FUTURE?:

C. FUTURE?:

TIER 3 COMPONENTS

TIER 2

MODULES ORASSEMBLIES

COMPOUNDERRESIN SUPPLIER COMPOUNDOEM

- CAPTIVE TIER 1 - ASSEMBLY

TIER 3 TIER 2

COMPOUNDERRESIN SUPPLIER OEMTIER 1(SIMPLIFIED PROCESSES)


AGREEMENT

RESIN SUPPLIER OEMCOMPOUNDING?AS REQUIRED


AGREEMENT

TIER 1(SIMPLIFIED PROCESSES)

POSSIBLY MEGA-TIER 1s

POSSIBLY MEGA-TIER 1s

43

EPDM ORPLAST.SUPPL.

INDEPENDENTCOMPOUNDER FABRICATOR

FABRICATOR WITHCAPTIVE EPDMCOMPOUNDINGTPV OR EPDM

COMPOUNDING(OFTEN CAPTIVE TO

EPDM SUPPLIER)

FABRICATOR(TIER 1 OR TIER 2)NEAT RUBBER

ADDITIVES

PP

FILLER

OIL

TPO OR TPV COMPOUND

COMPETITIVE ATTACK FROM:- SEBS- REACTOR TPOs- PVC FORCING COMPOUND PRICES DOWN

COMPOUNDING COST

TPO, TPV OR EPDM COMP'D.

EPDM AND PLASTOMER PATHS TO AUTO OLEFINIC TPE MARKET


44

NON-AUTOMOTIVE TPE MARKETS

HIGHLY DIFFUSE/GLOBALIZING/SOME COMMODITIZING:- APPLIANCE/TOOL- BUILDING/CONSTRUCTION- CONSUMER PRODUCTS/HOUSEWARES- ELECTRICAL/ELECTRONICS - PERSONAL COMM.- FOOTWEAR (TPU, SBS)- FOOD PHARMACEUTICAL PACKAGING- MEDICAL DEVICES- PERSONAL CARE/COSMETICS- SPORTS/LEISURE- WIRE/CABLE- FILM/SHEET/FIBER (NEW GROWTH SECTOR)- COATED FABRICS

45

NON-AUTOMOTIVE TPE MARKETS (CONT’D.)

• ABOUT 50% OF TPE DEMAND

• AFFECTED BY DEMAND SHIFT TO ASIA (CHINA)

• SHIFTS TPE GEOGRAPHIC DEMAND PATTERN

• INTRODUCES NEW COMPOUNDERS TO TPE COMPETITION (ESPECIALLY CHINA)

• TWO TIER QUALITY LEVELS? (CHINA?)

• FRAGMENTED, SMALL ORDER SIZES

• 2-SHOT MOLDING WELL ESTABLISHED (SMALL PARTS)

GLOBAL MARKET SHIFT EXAMPLES . . .EFFECTS ON TPEs

47

GLOBAL WET RAZOR PRODUCTION HISTORY

44.9 31 21

580

278

1,307

380

21

980

1,440

890

2,460

0

500

1,000

1,500

2,000

2,500

3,000

2000 2005 2010SOURCE: ROBERT ELLER ASSOCIATES, INC., TPE MULTICLIENT STUDY, 2007

MM

UN

ITS

PRO

DU

CED

N. AMERICAN PRODUCTONEUROPEAN PRODUCTIONINDIAN PRODUCTIONCHINESE PRODUCTION

48

POPULATION LIVING IN EXTREME POVERTY

0

50

100

150

200

250

300

350

400

450

500

1990 2001 2015

NU

MB

ER O

F PE

OPL

E, M

M

CHINA

S. ASIA(b)

SUB SAHARANAFRICA

49

THE CHINA FACTOR IN TPEs: MARKET AND INDUSTRY STRUCTURE

IMPLICATIONS

50

CHINA SHARES OF GLOBAL PRODUCTION

MARKET SECTOR GLOBAL NOTE/TPE IMPORTANCEMARKET SHARE%

CAMERAS 50 GRIPS/SOFT TOUCH/BUTTONSFANS 50 MINORDVD READERS 54 GRIPS/SOFT TOUCH/BUTTONSTELEPHONES 50TV SETS 30MOBILE PHONES 28 GRIPS/SOFT TOUCH/BUTTONSLAPTOP COMPUTERS 12 PADS/BUTTONS/SOFT TOUCHAUTOMOBILE 5

51

PARALLEL SUPPLY CHAINS IN CHINA TPE MARKETSNATIONALITY BASED

U.S.

COMPOUNDERS

EUROPEAN

COMPOUNDERS

JAPANESE

COMPOUNDERS

KOREAN

COMPOUNDERS

TAIWANESE

COMPOUNDERS

CHINESE

COMPOUNDERS


TRANSPLANTMULTINATIONAL OEMs

AND FABRICATORS

JAPANESE OEMsAND FABRICATORS

KOREAN OEMsAND FABRICATORS

TAIWANESE OEMsAND FABRICATORS

CHINESE OEMsAND FABRICATORS

U.S.

EUROPE

JAPAN

KOREA

TAIWAN

CHINA

HIGH QUALITYPRODUCTS(EXPORT)

"PREMIUM"DOMESTICPRODUCTS

LOW QUALITYDOMESTICPRODUCTS

PRIMARY PATHSECONDARY PATHMINOR PATH

r/mydox/papaers/RMA-ParaSuppChChinaTPE07.vsdlg/myfiles/visio/RMA-ParaSuppChChinaTPE07.vsd

52

O-TPVs IN CHINA

-HAVE BEEN SLOW TO INVEST(STARTING)-STARTING TO SERVE DOMESTIC MARKETS

OTHER WESTERN COMPOUNDERS

-PRIMARILY SERVE JAPANESE AUTO OEMs-MORE FOCUS ON INDIA-MITSUI IS LEADER-SHIFT POSSIBLE IN FUTURE?

JAPANESE

-PRIMARILY SMALLER TPV COMPOUNDERS-STRONG PRESENCE IN p-TPVS -PARALLEL SUPPLY CHAIN-COST ADVANTAGES( 30%)- RECYCLATE USE?

LOCAL DOMESTIC COMPOUNDERS

-MINOR ROLE VIA EXPORTTAIWAN/KOREAN COMPOUNDERS

-DOMINATES(VIA EXPORT FROM US)-50% SHARE-NAME RECOGNITION/PREMUIM

EXXON MOBIL

POSITIONSUPPLIER

53

CHINA• 1.3 BILLION PEOPLE

• AGGRESSIVELY BUILDING INFRASTRUCTURE AROUND ECONOMIC DEV’MENT ZONES, FACILITIES OFTEN IN PLACE WAITING FOR NEW PLANTS

• CONTINUITY TO A PLAN, A SENSE OF CONSTANCY

• EXCELLENT CENTRAL PLANNING = STRENGTH

• BECOMING VERY BUSINESS FRIENDLY

– CONTINUALLY OPENING UP FOR MORE FOREIGN INVESTMT

– FLOATING OF THE YUAN– BONDED WAREHOUSING

• CORRUPTION EXISTS, BUT FOCUSED ON A FEW PEOPLE

• WILL DOMINATE GLOBAL MANUF. PARTICULARLY MANUF. FOR EXPORT FOR THE NEXT 10 YRS.

INDIA• 1.0 BILLION PEOPLE

• ROADS/PORTS/LOGISTICS POOR

• GOLDEN QUADRANGLE A HELP, BUT ONLY A START

• DEMOCRATIC GOV’T CHANGED FREQ. (ELECTIONS EVERY 4 YEARS)

• NEW GOV’TS MEANS A STOP-START

• BUREAUCRACY THAT IS NOT HIGHLY BUSINESS FRIENDLY

• CORRUPTION EXISTS BROADLY

• WILL DOMINATE SERVICE CENTER AND SOFTWARE COMPANIES THAT CAN TAKE ADVANTAGE OF QUICKLY BUILT ELECTRONIC HWYS

POT’L DOMESTIC MARKETS

INFRASTRUCTURE

GOVERNMENT

BUSINESS

CHINA vs. INDIA

54

THE ECONOMIC WAR IS OVER?

• MANUFACTURING FOR MANY TPE END PRODUCT SECTORS HAS ALREADY SHIFTED FROM WEST TO EAST

• YUAN REVALUATION:- TOKEN GESTURE?- AGAINST A MARKET BASKET (U.S. DOLLAR EQUALLY WEIGHTED WITH OTHER CHINESE TRADING PARTNER CURRENCIES)- U.S. DOLLAR POWER WEAKENED/LIKELY TO CONTINUE- SUBSTANTIAL ASIAN COST ADVANTAGE CONTINUES

• CHINESE U.S. BOND INVESTMENT SLOWS U.S. RETALIATION POT’L.• ASIAN TPE MARKET SIZES DWARF U.S. AND EUROPE MARKETS

- MARKET POWER OF 3BN NEW CONSUMERS- 1.5BN NEW WORKERS

• ASIA PULLING AHEAD IN TECHNICAL EDUCATION LEVEL AND NUMBERS

5517

Manufacturer: Gillette Product Name: Mach 3, GripTPE Type: SEBS Bond Type: PhysicalManufacturer Location: ChinaNote: Grip and head with different TPEs

Manufacturer: GilletteProduct Name: Venus 3TPE Type: SEBSBond Type: ChemicalManufacturer Location: Poland

55

56

Manufacturer: Black and DeckerTPE Type: SEBSBond Type: ChemicalMfr. Location: China

57

Manufacturer: P&GProduct Name: PanteneNotes:-TPEs expensive vs. incumbents-Plastomers entering competition

with EVA cap liners

58

Manufacturer: MoenProduct: Faucet Mounting PlateTPE Type: TPVBond Type: PhysicalMfr. Location: USANote: 2-shot nylon-bonding TPV, replaces EPDM

59

Manufacturer: StanleyTPE Type: SEBSBond Type: ChemicalMfr. Location: ChinaNote: 2-color

60

Manufacturer: TupperwareProduct Type: TPE Type: SEBSNote: Sold in Europe

61

TPE COMPOUND VALUE KILLERS

• ANY COMMODITY APPLICATION VIA EXTENDED SUPPLY CHAIN

• COMPETITION WITH PVC• DIRECT 1:1 COMPETITION WITH EPDM• CASCADE TO LOWER VALUE TPEs• MOST AUTO APPLICATIONS (NOT ALL)• COMPETITION WITH CHINESE COMPOUNDERS• FABRICATOR IN-HOUSE COMPOUNDING• MULTIMATERIALS CONSTRUCTION• MULTI-STEP FABRICATION

62

TPE RESIN/COMPOUND VALUE CREATORS

• SYSTEMS COST SAVINGS POTENTIAL• MONOMATERIALS CONSTRUCTION POTENTIAL• IMPROVED ADHESION• 2-SHOT MOLDING (ESPECIALLY LARGE PARTS)• FOAMING• CO-PROCESSING• GLOBAL SPECIFICATIONS• ELIMINATION OF CROSSLINKING• MASTERBATCHES• CONTROLLED RHEOLOGY• SPECIALTY NICHES (IN-MOLD DECORATION)• IMPROVED ACOUSTIC PROPERTIES

63

o-TPV PROFITABILITY DRIVERS

- IMPROVED PROPERTIES -- FOAMING -- ADHESION -- COLOR CONTROL- MOMENTUM FROM PREVIOUS MARKETING- CHINA MARKET PENETRATION (FOR EARLY ENTRANTS)

- AUTOMOTIVE DEPENDENCE- TECHNOLOGY PROLIFERATION- INCREASED COMPETITION- PRICE PRESSURES- CASCADE TO LOWER PRICED TPEs

- RUBBER PENETRATION -- HOSE -- BELTING -- SYSTEMS COST SAVE

- CHINA MARKET PENETRATION- DIRECT COMPOUNDING OF TPVs?- COMPETITION FROM IMPROVED STYRENIC TPEs?

SHORT TERM TIMING LONG TERM

DECREASE

INCREASE

PRO

FITA

BIL

ITY

SOURCE: ROBERT ELLER ASSOCIATES, INC., 2007 r/mydox/papers/RMA-oTPVprofitDrivers07.vsdlg/myfiles/visio/RMA-oTPVprofitDrivers07.vsd

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SUMMARY• SUPPLY CHAIN SHIFTING (AUTO, NON-AUTO)• TPE MARKET IS GLOBALIZING• TPE PROPERTY ENVELOPE BROADENING• MORE RAPID MATERIALS/FABRICATION

TECHNOLOGY SHIFTS THAN FOR RUBBER:- CREATES VALUE - CREATES GROWTH - CASCADE TO LOWER VALUE TPEs

• IN CHINA:- ECONOMIC WAR IS OVER - DOMESTIC COMPETITION STARTING

• EUROPE/N. AMERICA: STAGNANT MARKETS• RUBBER SUBSTITUTION IS POTENTIAL

BREAKTHROUGH

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SUMMARY (Cont'd.)

• U.S. AUTO MARKET: - BIG 3 BIG 6- SEVERE SUPPLY CHAIN RESTRUCTURING- TPE SUPPLY BASE SHIFT - EUROPEAN/JAPANESE TECHNOLOGY TRANSFER - CONSOLIDATED CUSTOMER BASE WITH INCREASED

PURCHASE POWER- SALES DOWNTURN IN 2007 - FLEET SHIFT TO SMALLER VEHICLES

GLOBAL PERSPECTIVES ON TPE MARKETS, GROWTH TRENDS, AND THE RUBBER … 07 pres.… · ·...

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