ORLANDO, FLA. — The engineering thermoplastics market is moving into a different world as the millennium approaches.
The demands of globalization must somehow match up with specialized regional niche markets as ETPs such as polycarbonate, nylon and ABS try to avoid some of the pitfalls that have overtaken commodity-based resins.
Industry officials and analysts attempted to unravel these riddles and provide a map for the future at Engineering Thermoplastics '99, held Jan. 25-27 in Orlando.
ETPs still have advantages that make them the materials of choice. These qualities include excellent mechanical property-to-weight ratios, good thermal and chemical resistance and excellent opportunities for parts consolidation, according to Reinhard Katz, group vice president of global styrenic copolymers for BASF AG of Ludwigshafen, Germany.
BASF is in a small group of global ETP players that includes Bayer Corp. of Leverkeusen, Germany, GE Plastics of Pittsfield, Mass., DuPont of Wilmington, Del., and Ticona of Frankfurt, Germany.
``You have to ask, `What critical size is necessary to be a global player?''' Katz said. ``We foresee only a few companies becoming global with broad portfolios. Others will stay in niches.''
The list of resources needed to go global in ETPs is a major challenge. This list includes regional manufacturing plants, technology centers and raw material plants, as well as a broad range of materials that can meet global standards, according to Katz.
Growth rates for ETPs should remain positive through 2002, but won't reach the robust levels of the 1990-98 period, according to Eric Linak, a consultant with SRI International in Menlo Park, Calif.
Linak anticipates ABS to grow 3-4 percent annually through 2002, with nylon growing 4.5 percent, polycarbonate 6-9 percent and acetal 5 percent per year in that same period.
ABS makers such as GE, Bayer and Dow Chemical Co. of Midland, Mich., may benefit in the near future from tougher automotive safety standards that favor impact-resistant ABS over polypropylene, which has taken a good chunk of ABS's market share in recent years, Linak said.
The Asian market also could continue to be a problem for ABS makers in 1999, Linak said. ABS suffered from economic slowdowns in Southeast Asia in 1998 that lowered that region's ABS usage by 15 percent.
Broad-based challenges for ETPs are increasing, according to Linak.
``The easy applications are over and things are slowing down,'' Linak said. ``Compact discs, for example, were growing at a 15 percent annual rate, but you can't expect that to continue.''
Jeff Gwinnell, vice president of corporate development and strategy for M.A. Hanna Co. of Cleveland, agreed, adding ``the overheated '90s are coming to an end.''
ETPs already are suffering from the same trends in pricing as their commodity counterparts, Gwinnell said. He added that ETP compounders must work closely with major resin producers to insure their products' success.
``Partnerships are going to require [compounders] earning the respect of the majors not just as an outlet for their material but as an overall conduit to the market,'' he said. ``They're not just dumping their material down a coal chute.''
Hanna expects consolidation among both ETP and commodity plastic compounders, according to Gwinnell.
DuPont, the world's largest nylon maker, obviously has a big stake in the future of ETPs. Michael Crickenberger, DuPont's Americas regional business manager for nylon resins, said ETP makers have to remove waste from their value chains in order to compete.
Crickenberger said most product innovations in the last decade have been minor improvements or blends and alloys of existing products. Even the industry's successes have led to the creation of undifferentiated products and significant price erosion, according to Crickenberger.
``[Processors] feel comfortable moving from DuPont acetal to a less-expensive Korean material in key applications,'' he said. ``In the past, they weren't comfortable doing that, but we're already at that point in a number of applications such as auto radiators.''
This last application hits close to home, since half of DuPont's ETP sales are into the automotive market.
ETP makers' relationships in the auto industry also are changing, as automakers and Tier 1 suppliers continue to put more pricing pressure on injection molders, Crickenberger said. This trend puts molders in ``a value squeeze'' when they deal with ETP makers.
The conference was hosted by Principia Partners, a Lancaster, Pa.-based consulting group.