This has been a good year for the adhesives and sealants industry, as some positive economic trends are taking shape—and some long-unsettled regulatory oversight may be straightened out. The Adhesive and Sealant Council (ASC) is monitoring these trends and keeping members aware of how they might affect their businesses.
The association is currently watching six trends, which were presented by key experts at the ASC Leadership Conference that took place June 22-24 in Big Sky, Mont.
1. Economic Growth Forecast through 2019
Brian Beaulieu, a principal economist at the Institute for Trends Research, believes the U.S.’ economic engine will grow from now through 2019. That’s almost four solid years of growth across all segments, markets and areas. The growth will be different for different markets, but all are pointing in a positive direction.
The ASC agrees with this position. We recently published our 8th North American Market Reportin collaboration with DPNA International, and we believe we will see an average growth rate of 3.1% through 2017, with no indications that this will slow. In fact, some segments, such as automotive, might approach 5%. Members should be deploying assets and resources in their core markets, as well as exploring new areas of growth to leverage this optimistic forecast.
2. The U.S. Is a Net Exporter of Energy
The U.S. is a net exporter of energy—including oil, liquid natural gas and shale gas. According to Nick Jones from ExxonMobil, the U.S. is experiencing incredible growth in raw material sources, including natural gas liquids, tight oil and oil sands. These new energy sources are supported by more than $80 billion in domestic refining capacity investment, according to the American Chemistry Council.
In the chemicals sector, we will see a dramatic increase in raw material sources and continuity in feedstocks that are critical to the adhesives and sealants sector.
Members should be working closely with their raw materials suppliers to leverage this trend. For the foreseeable future, the U.S. will be a primary source for raw materials, which is positive for the domestic formulating community.
3. Acquisitions Will Continue
John Beagle, CEO of Grace Mathews, shared his view on mergers and acquisitions. He believes that the level of M&A activity the industry has seen over the past 18 months will continue, and that large formulators will look for innovation plays and strategic mergers that support long-term growth strategies.
The number of market share mergers and acquisitions will decline. Instead, we will see focused purchases that allow companies to enter new market segments or new geographic markets. He also said that we may see an increase in strategic carve outs, which will occur when a large, former consolidator decides that a core asset could be stronger as an independent entity or as part of another, more synergistic group.
4. The City Will Be the Power Center
Richard Sear, a futurist at Frost and Sullivan, reported that by 2025, 35 mega-cities will exist globally. A mega-city will have a population of more than 8 million and a GDP of $250 billion or more.
These mega-cities will become what Sear calls “smart cities,” with new technologies that enable energy, buildings, transportation, technology, healthcare and governance all working together in a coordinated manner. He said these cities will be the primary place where decisions will be made (contrary to state or federal governments), and will provide new transportation infrastructure, communications strategies and social media connectivity that will begin to make a difference for city dwellers. Formulators will have tremendous opportunities as new transportation models are developed, new communications technologies are introduced, and more people leverage the “Internet of Things” to share, connect, and manage their day.
5. EPDs and HPDs May Be Coming
Ujval Vyas of The Alberti Group shared his beliefs that non-governmental organizations and other design engineers who take a hazard-only approach to chemicals management are developing tools called environmental product declarations (EPDs) and health product declarations (HPDs). These information-sharing tools require a lifecycle assessment to be conducted following product category rules that are developed by industry participants.
Vyas warned that following a hazard-only approach when accepting these tools will be an issue, and he strongly recommended that industrial manufacturers ensure risk models and exposure information are incorporated into all product development programs. He even suggested that, if exposure is not included, design engineers won’t get a full picture of how a product interacts in the manufacturing environment, where many of these trends are starting.
6. TSCA May Be Reformed in 2015
After more than five years of dialogue and debate, the decades-old Toxic Substances Control Act (TSCA) Statute—the primary regulatory statute that governs the chemicals sector—may finally be reformed. Both the House (H.R. 2576) and Senate (S. 697) have TSCA reform bills out of Committee. The House has moved further along with a 398-1 vote in favor of H.R. 2576, an unbelievable sign of bipartisanship.
The ASC has been working collaboratively with the American Chemistry Council and its American Alliance for Innovation to lobby Senate leadership to move S. 697 to a floor vote, with a goal of having a bill in conference by the August 2015 recess. One of the primary differences between the two bills is how federal pre-emption is managed; the ASC currently supports the Senate version, which allows for federal pre-emption once the U.S. Environmental Protection Agency (EPA) has designated a chemical on which it will focus.
These trends directly affect the adhesives and sealants industry; learn more about them at the upcoming ASC Fall Convention and Expo, which will take place October 19-21 in Pittsburgh.
For more information, visit www.ascouncil.org.