- Plastics (Best Prospect 2009: U.S. Commercial Service)
Structure and dynamics of the Composites Industry
JEC SA conducted a market survey called "Structure and Dynamics
of the Composites Industry", focusing on the main trends and
future prospects of the composites industry.
"This market survey was conducted on an international level, as
JEC's scope now stretches across the world," said Frédérique
Mutel, JEC General Manager. Our media sources – website,
magazine, forums and show – have become international platforms
enabling composite industrialists to showcase their products and
innovations. The survey therefore had to be global and cover the
main trends, while illustrating the market dynamics of each
continent".
A highly heterogeneous composites industry
The composites industry, employing 400,000 to 450,000 people
worldwide and representing 41.5 billion euros in volume, is
characterised by its great heterogeneity.
Five main segments have been identified: end users (57%), raw
material producers (21%), processors (9%), equipment
manufacturers (8%) and distributors (5%).
Four industrial application groups represent 70% of the total
market value: automotive (23%), building and public works (21%),
aeronautics (17%) and sports (11%).
Future prospects
The composites industry is now considered a mature market: the
industry's growth – linked to GDP growth – has been estimated at
4% to 5% per year in volume for the 2003-2008 period and at 2% to
3% per year in terms of value. Wind energy (+20% per year),
aerospace (+9% per year), automotive (+7% per year), and
shipbuilding (+7% per year) are currently the most dynamic
sectors in terms of volume. Several market segments in the value
chain such as thermoplastic resin production, wood fibres, carbon
fibres and automatic inJECtion processes should experience
stronger worldwide growth than the industry's average growth in
the medium term (6% to 15% per year in value).
The fall in prices – due to the construction of new production
sites in cost-competitive countries, as well as overall
improvements in productivity – puts great pressure on profit
margins and leads to the consolidation of the value chain at
various different stages: upstream, where raw material
manufacturers (resins and fibres) are already consolidated on an
international level, and downstream, where the consolidation
process is underway.
Market dynamics by geographical region
North America represents 40% of the composites industry's total
market value, with 35% for Europe, 22% for the Asia-Pacific
region and 3% for the rest of the world.
Emerging countries: the increasing weight of emerging countries
upon world production is due to 1) increasingly competitive
factor costs and 2) downstream suppliers under the obligation to
follow their customers expanding in fast-growing regions.
Downstream in the value chain for example, the annual volume
growth expected for the production of composite parts used in
end-markets between 2003 and 2008 is higher in China (+9,5%) and
India (+15%) than it is in Europe and North America (+4%).
North America, Europe and Japan: these regions account for 58% of
the industry's market value and are characterised by a high
degree of technicality and/or geographical barriers (product
transportation from one continent to another hindered by
exorbitant costs or safety restrictions). These countries are
rarely affected by price drops or relocation of production in
emerging countries. Consequently, many European, North American
and Japanese players such as raw material producers, intermediate
product manufacturers and final processors (integrated or not)
experience strong growth and profitability. Their annual average
cumulated growth rate over the past 5 or 7 years was estimated at
10% to 30%, generating an average return on capital employed of
10% to 40% over the same period.
Even though environmental regulations restrict the expansion of
composites in Europe and North America, this at least gives
Western composite players the opportunity to improve their
manufacturing processes, which can then be used as a sales
argument.
Key factors behind the success of competitive companies
• Innovation (high quality pitch- or PAN-based carbon fibres for
example): innovation-based strategies are generally backed by
North American and European public organisations and involve
constantly renewing product ranges, which generates hefty R&D
budgets.
• Close proximity to customers: this can encourage a complex
process of daily co-operation. R&D centres shared between
customers and suppliers create entry barriers.
• Leading global position (high market share) in a market subJECt
to strong scale effects: leading fibre producers greatly reduce
unit production costs and generate solid profitability.
• World-renowned brands: particularly valuable for finished
product manufacturers who have integrated composite processing
into their business activities. On market segments where a brand
is particularly reputed and when the company's location is not
the only key factor of success, certain Western players have
created strong entry barriers by heavily investing in
communication strategies.
As Frédérique Mutel pointed out, "this market survey underlines
the fact that – irrespective of geographical region and product
segment – the future prospects of the composites industry on the
whole are looking positive in the short and long term thanks to
the industry's great potential and various new applications for
composite materials".
Source : JEC
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