Competition heats up globally as world adhesive market expands

Citation

(1998), "Competition heats up globally as world adhesive market expands", Pigment & Resin Technology, Vol. 27 No. 2. https://doi.org/10.1108/prt.1998.12927baf.006

Competition heats up globally as world adhesive market expands

Competition heats up globally as world adhesive market expands

The world adhesives market is growing so rapidly due to expansion overseas that it is ready to explode. Several multinational firms have already made significant investments in the global market, and this has inspired a commitment for success in foreign companies that will improve production and stimulate demand for products manufactured with adhesives.

According to strategic research conducted by Frost & Sullivan (www.frost.com), World Adhesive Markets, the world market for adhesives in 1997 was estimated at $19.1 billion. Revenues are expected to grow to $26.2 billion in 2003, with a compound annual growth rate of 5.3 per cent during the forecast period. "The world adhesive market will continue to accelerate in growth from a combination of an extension into global markets as well as an expansion of the adhesive market in all end-user segments", says Frost & Sullivan Adhesive Analyst Tom Mach.

Frost & Sullivan's study divides the world adhesive market into the following seven end-user segments: paper, packaging and converting; tapes and labels; construction; transportation; furniture and woodworking; footwear textiles and leather; and consumer electronics and medical. Packaging, construction and furniture/woodworking are the largest three segments, with a total of over 65 per cent of the market revenues.

Two market drivers common to all segments of the adhesives market are greater investment in expansion overseas and economic improvement in developing countries. Many developing nations are experiencing reduced inflation and the lowest unemployment rates they have had in decades, which increases demand for products made with adhesives. Enormous potential for customer demand exists in China, where a "socialist market economy" is being implemented. However, manufacturers should be wary of depending on China as a trading partner because it is still a communist nation that may change its position concerning capitalistic free enterprises.

North America is forecast to continue its domination only in the packaging end-user industry. Another market trend is Asia's strong growth for the automotive, footwear, textiles and electronics industries. Europe and North America are experiencing the fastest growth for adhesives in both the transportation and the consumer electronics and medical segments, while South America is becoming an important region for the construction adhesive market.

Technologically, solvent-based adhesives are losing importance in the global market as hot melts and water-based adhesives replace them. However, by 2003 the use of solvent-base adhesives will not be drastically reduced because US companies have already invested in solvent recovery systems, and developing nations are reluctant to make the investment needed to convert. Also, the use of ultraviolet and electron beam radiation adhesives is rising in developed countries as companies decide to make the necessary capital investment.

Despite the rosy prospects for growth, a number of challenges face the worldwide adhesive market. One of ten major challenges confronting the industry includes the challenge of raw material shortages and price surges which can disrupt market plans for a number of companies. Asian producers, for example, are increasing ethylene and polyester capacity while depressing world prices of polyethylene terephthalate resins, as well as styrene and aromatics, which are the building blocks of many adhesive products.

Research for the World Adhesive Markets has integrated the market engineering consulting philosophy into the entire research process. Critical phases of this research included: identification of industry challenges, market engineering measurements, strategic recommendations, planning and market monitoring. All of the vital elements of this system help the market participants navigate successfully through the adhesives market.

Frost & Sullivan is an international marketing consulting company that monitors the adhesives industry for market trends, market measurements and strategies. This ongoing research is utilized to update a series of research publications such as #3435-39, European Pressure-Sensitive Adhesive Markets, and to support industry participants with customized consulting needs.

Further details are available from Frost & Sullivan. Tel: +44 (0) 171 915 7824; Fax: +44 (0) 171 730 3343.