Globalisation in Transportation is Changing Demand for Chemicals and Materials

16
Impact of Globalisation in Transportation on Chemicals & Materials On-going Globalisation of the Supply Chain Will Create the Greatest Change for Chemical Companies 23 rd May 2013

Transcript of Globalisation in Transportation is Changing Demand for Chemicals and Materials

Impact of Globalisation in Transportation on Chemicals & Materials

On-going Globalisation of the Supply Chain Will Create the Greatest Change for Chemical Companies

23rd May 2013

2

Today's Presenters

Dr. Leo Dokos,

Research Director

Frost & Sullivan

Dr. Brian Balmer,

Industry Principal

Frost & Sullivan

• Performance Materials

• Twelve years' research experience at Frost & Sullivan

• Contributor to the company's Megatrends vision

• Chemicals & Materials in Transportation

• Thirteen years’ experience in technical, materials and market research

• Directing the strategy of two programme areas

3

IntroductionMegatrends and Applications of Chemicals & Materials

Transportation is one of the most important end markets for chemicals. Globalisation is one of four major Mega Trends driving change in the market.

Functionality and performance

Health and wellness

Globalisation Low carbon economy

Construction & Utilities

Food Drugs & Cosmetics

Transportation

"Just to maintain sales, you have to have business 'enablers'. You have to be in lightweight; you have to be in low-emissions. But if you want to grow your volumes, the globalisation trends are a very interesting area to look into".

Source: Transportation marketing manager, major chemical company

4

IntroductionGlobalisation is one of many important trends affecting chemicals in transportation

Hig

h V

a lu

e A

r eas

of

Int e

r est

Electric Vehicles

Lightweight Materials

Green Fuels & Lubricants

Advanced Coatings & Adhesives

Safety Materials & Noise Reduction

High Speed Rail, Marine, Aerospace

Globalisation

5

Chemicals & Materials in Transportation

Within Transportation, Automotive represents the largest sector for most chemicals

Source: Frost & Sullivan analysis

Thermoplastics 25.8%

Tyre rubber & chem-icals 19.2%

OEM paint 15.5%

Refinish paint 7.7%

PU foams 5.8%

Technical textiles 5.2%

Lubricant additives 3.6%

Adhesives & sealants 3.4%

Lubricant synthetic base oils 3.4%

TPE 3.3%

Fuel additives 2.8%Engine coolant 2.5%

Thermosets for composites 1.8%

Chemicals and Materials in the Automotive Market: Segmenta-tion by Product Type, Global, 2012

0 10,000 20,0000%

30%

60%

Thermo-plastics

Synthetic rubber

PU

Lubricant ingre-dients Coatings

Chemicals and Materials Market: Automotive Applications in Context, Global, 2012

Size of Automotive Market ($ Million)

Au

tom

oti

ve a

s a

Per

cen

tag

e o

f A

ll A

pp

licat

ion

s

6

A History of GlobalisationRecent events illustrating the continuing importance of Globalisation for the Transportation sector

In 2010, the UN launched the Decade of Action for Road Safety. This has led to the formation of an NCAP programme in the ASEAN region.

Tata Nano is launched to meet the anticipated need for affordable, city cars in developing economies

An accident at an Evonik plant in Germany has ramifications for the entire global supply of PA12 for critical automotive fuel-tank applications.

India's Golden Quadrilateral road infrastructure project is first announced. The road system is declared complete in January 2012.

Mazda begins manufacturing cars outside Japan for the first time

British standards for engine coolants incorporate several aspects of the ASTM standards, simplifying product testing requirements around the world.

Tata acquires Jaguar & Land Rover from Ford, and has since been credited with establishing each marque as a global brand.

2008 2009 2010 2011 201219991952

Source: Frost & Sullivan analysis

2013

Nissan unveils the Friend-ME concept car, designed specifically for the Chinese market

7

Impact on the Chemical Industry

Each globalisation trend within automotive is developing at a different pace; each will also have a different level of relevance for upstream suppliers such as chemical companies

Note:

Factors are a mix of societal globalisation trends, and globalisation trends within the automotive industry itself.

The diagonal line demarcates the four factors that will be the specific focus of this Briefing.

Source: Frost & Sullivan analysis

Overall Level of Impact

Urbanisation

InfrastructureDemographics

PersonalisationDesign

Supply chainManufacturing

Aftermarket

Chemicals & Materials in Transportation: Criticality and Relevance of Globalisation Trends, Global, 2012–2020

Rate of Globalisation

Rel

evan

ce o

f C

hem

ical

s

8

2000 2010 202075

100

125

150

175

200

Chemicals and Materials in the Automotive Market: Changes in Urban Population, Global, 2000–2020

Total global population

Urban percentage

Major urban share

Population in major urban areas

Year

Ind

ex (

2000

= 1

00)

UrbanisationChanges in the world at large

Electric vehicle demand will be driven, not by low-carbon trends, but by their ability to eliminate many problems associated with urban environments, including the production of smog from exhaust gases and the noise of internal combustion engines.

Winners in Mobility & Electric Vehicles

Win

ner

s in

Meg

acit

ies

DuPont

Lanxess

Ube

SabicDow

Bayer

BASF

Evonik

Many chemical companies see urbanisation and megacities as megatrends for growth, and also see mobility as a megatrend too.

However, they do not always combine these trends to specifically consider mobility needs in megacities.

DSM

3.2% CAGR (2010-2020)

Chemical Company Activity in Meeting These Urbanisation Needs

9

Globalisation in Vehicle Design and EngineeringMost global OEMs centralise major design and engineering developments at HQ...

... However, significant developments still occur in other regions in which those OEMs are active, and these too require direct partnership with chemical companies.

Hyundai's research activities in Rüsselsheim (Germany) have been extremely successful.

Nissan's Technical Centre in Cranfield (UK) is an integral part of the company's global research and development (R&D).

Toyota undertakes local styling and design in key markets. Chemical suppliers must have a similar local presence to be able to find solutions to its needs.

In 2011, Honda R&D Europe UK took on additional responsibility for parts development for new models in the European market.

Key Volkswagen (VW) developments take place in Wolfsburg, but, in the final stages of development, are transferred to other regions where the localisation of the products starts. Chemical companies partner with VW both in Wolfsburg and other locations, including Mexico and China.

Source: Frost & Sullivan analysis

The growth of rapid prototyping technology will change the dynamics between centralised global and regional design centres, creating opportunities for prototyping resin suppliers.

10

Globalisation in the Supply ChainThe greatest effect on the chemical industry will come from vertical consolidation in the supply chain.

Even though suppliers face strong pressure to produce formulated products (especially coatings) near the end user, this demand rarely applies to the ingredients in the formulation.

Only higher-volume additives tend to be produced close to major end-user hubs, whereas lower-volume additives can be stored in sufficient quantities to remove the need to produce locally. Manufacturers of PU foam for seating

are consolidating....

Source: Frost & Sullivan analysis

The disruption of PA12 supply caused by the industrial accident at Evonik's cyclododecatriene (CDT) plant in Marl, Germany, in March 2012 had a major effect on the automotive industry, because the polymer is critical in applications such as fuel lines.

As OEMs move to deeper platform strategies (e.g. VW's MQB), the impact on the supply chain will be dramatic. All their orders of magnitude will increase, so they have to ensure that the supply base is robust enough to cope.

Chemicals and Materials

Formulated products

Tier I companies

OEMs

Processors

... And the value chain is contracting, with more seat manufacturers doing their own foaming in house.

Winners will include polymer companies who can best supply the same grade of material from all manufacturing plants globally e.g. Borealis using its Borstar technology

11

Tyre rubber & chemicals 40.8%

Refinish paint 24.1%

Lubricant ingre-dients 19.4%

Fuel additives 8.6%

Engine coolant 7.1%

Aftermarket Chemicals: Market Segmentation (World), 2012

Globalisation in the AftermarketProduct standards, specifications and competitive structure are all affected by globalisation

New fuel standards in large developing markets tend to be based on existing European or US standards.

Refinish paint is the least globalised of the main aftermarket product groups, and is likely to remain so.

Source: Frost & Sullivan analysis

A UN Informal Working Group (IWG) is working to establish a harmonised global technical regulation for tyres.

In 2011, the British Standard (BS 6580) for engine coolants adopted the ASTM standards, letting producers use the same test data to demonstrate compliance with both standards.

Globalisation is affecting the engine oils market indirectly, through the increasing globalisation in engine design.

Lubricant formulators stress that engine-oil technology must be considered an essential component of the design process for engines.

Catalysts(on the same scale)

12

Summary and ConclusionsImpact on the Chemical Industry

• Issues such as demographics are exhibiting the most rapid changes, but they have little effect on chemicals usage, except indirectly through more vehicle sales.

• Other issues such as urbanisation and vehicle aftermarket needs are changing less rapidly. However, the chemical industry is much more sensitive to changes in these areas.

• Flexibility is key to a successful strategy for chemical companies supplying the automotive market.o Globalised chemicals manufacturing is less important in automotive than in

other, more commoditised, marketso More important is a globalised product development and customer support

structure

The increasing globalisation in the automotive industry continues to affect the chemical industry as a supplier of raw materials.

Source: Frost & Sullivan analysis

13

Next Steps

Develop Your Visionary and Innovative SkillsGrowth Partnership Service Share your growth thought leadership and ideas or

join our GIL Global Community

Join our GIL Community Newsletter Keep abreast of innovative growth opportunities

14

Your Feedback is Important to Us

Growth Forecasts?

Competitive Structure?

Emerging Trends?

Strategic Recommendations?

Other?Please inform us by “Rating” this presentation.

What would you like to see from Frost & Sullivan?

15

http://twitter.com/frost_sullivan

Follow Frost & Sullivan on Facebook, LinkedIn, SlideShare, and Twitter

http://www.facebook.com/FrostandSullivan

http://www.linkedin.com/companies/4506

http://www.slideshare.net/FrostandSullivan

16

For Additional Information

Brian Balmer

Industry Principal

Performance Materials

(44) 1865 398634

[email protected]

Leonidas Dokos

European Research Director

Chemicals & Materials

(44) 1865 398685

[email protected]

Mark Hicks

Sales Manager, North America

Chemicals & Materials

210 247 2490

[email protected]

Chiara Carella

Head of Corporate Communications

Europe, Israel, Africa

+44 (0) 207 343 8314

[email protected]