Materials firms that sell into the automotive market are dealing with a new reality in 2020.
The global COVID-19 outbreak led to almost all automotive production coming to a halt earlier this year. Although production now is resuming in some places, the number of car builds in the U.S. is expected to drop from about 11 million vehicles during 2018 and 2019 to less than 9 million according to forecasters at LMC Automotive.
"There's been a significant depression driven by the number of builds," said Steve Manning, engineering plastics senior business director with nylon 6/6 resin maker Ascend Performance Materials of Houston. "You can't have that kind of slowdown without an effect on the supply chain."
Manning estimated that the global automotive slowdown could remove as much as 375 million pounds of nylon 6/6 demand this year. "Fortunately, assembly lines are coming back and select pockets are creating some demand," he said. "The general consensus is for a rapid recovery this year and next year, but we're still in a slowdown."
In both the short term and long term, Ascend "is positioned quite well" with strategies in place both in and outside of the auto market, Manning added.
"We've looked outside of automotive and tapped into electrical, consumer and industrial," he said. "Some of those markets have held up better."
Recent nonautomotive use for Ascend's nylon 6/6 resins include flame-retardant electrical applications, such as connectors and terminal blocks. The firm's recent acquisition of Italian materials maker Poliblend also has given Ascend color capability that it didn't have before.
"Our strategy is to further balance our business and diversify our markets," Manning said.
Asahi Kasei Plastics North America of Fowlerville, Mich., gets most of its sales from polypropylene compounds for automotive uses. The firm's situation now is improving from the hardships seen earlier in the year, according to President and Chief Operating Officer Ramesh Iyer.
"We've had an increase in our nonautomotive business, especially in medical," he said. "We're selling into a number of applications, including housings for medical equipment and hospital furniture."
At Saudi Basic Industries Corp., the firm has felt the impact of the auto shutdowns, but also it has the benefit of diversification from serving multiple industries, according to Amanda Roble, global automotive business leader.