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Adhesives Demand Projected to Increase

October 24, 2012
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The adhesive manufacturing industry is holding tightly to its renewed demand, according to a new report from IBISWorld. Over the five past years to 2012, industry revenue has fallen at an estimated annualized rate of 0.9% to $10 billion because the recession decreased demand from downstream customers. Adhesive manufacturers rely heavily on several key industries to purchase their products, including the construction sector, aircraft manufacturers, automotive manufacturers, packaging providers, and consumer goods manufacturers. Downstream production directly affects demand for adhesives.

“When the recession hit in late 2008 and carried on through 2009, demand declined for downstream users as consumers reduced purchases in light of falling disposable income,” said Radia Amari, industry analyst. This hindered revenue growth for adhesive manufacturers; however, as the economy began to recover and consumers experienced increasing disposable income, demand for end users like automobile manufacturers, aircraft manufacturers and construction contractors began to grow, which caused demand for adhesives to jump.

In addition to shifts in demand, the industry has endured high raw material costs and strict government regulation; these challenges remain constant in 2012. Nevertheless, the economy continues to grow, and in 2012, revenue will increase 1.5%. Profit will amount to about 7.4% of revenue in 2012, down from an estimated 7.8% in 2007. Key buying industries’ production levels are expected to increase, supporting demand for adhesives. In addition, exports are expected to rise as the dollar weakens and foreign companies take advantage of buying cheaper U.S. goods.

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