Production for key buying industries will revive, supporting demand for adhesives.
Los Angeles, CA (PRWEB) October 12, 2012
The Adhesive Manufacturing industry is holding tightly to its renewed demand. Over the five years to 2012, industry revenue has fallen at an estimated annualized rate of 0.9% to $10.0 billion because the recession decreased demand from downstream customers. Adhesive manufacturers rely heavily on several key industries to purchase their products. These markets include the construction sector, aircraft manufacturers, automotive manufacturers, packaging providers and consumer goods manufacturers. Downstream production directly affects demand for adhesives. Therefore, as these industries increase or decrease production, demand for adhesives will rise or fall, respectively. Similar to other manufacturing industries, demand for the Adhesive Manufacturing industry has been volatile over the five years to 2012. “When the recession hit in late 2008 and carried on through 2009, demand declined for downstream users as consumers reduced purchases in light of falling disposable income,” says IBISWorld industry analyst Radia Amari. This hindered revenue growth for adhesive manufacturers; however, as the economy began to recover and consumers experienced increasing disposable income, demand for end-users like automobile manufacturers, aircraft manufacturers and construction contractors began to grow, which caused demand for adhesives to jump.
In addition to shifts in demand, the industry has endured high raw-material costs and strict government regulation; these challenges remain constant in 2012. Nevertheless, the economy continues to grow, and in 2012, revenue will increase 1.5%. Profit will amount to about 7.4% of revenue in 2012, down from an estimated 7.8% in 2007. Key buying industries' production levels are expected to increase, supporting demand for adhesives. Additionally, exports are expected to rise as the dollar weakens and foreign companies take advantage of buying cheaper US goods. According to Amari, while industry revenue is projected to grow, company numbers are anticipated to decrease through 2017 because of acquisition activity. Players like Dow Chemical completed acquisitions over the five years to 2012 in order to expand their market share. This trend is anticipated to continue as the industry's product line remains saturated and firms experience the most growth potential through mergers and acquisitions. From 2012 to 2017, the number of firms is forecast to decline at an annualized rate of 2.3% to 327.
The Adhesive Manufacturing industry has moderate market share concentration, with the top four players accounting for an estimated 51.2% of industry revenue. Over the five years to 2012, concentration has increased as many firms exited the industry or have been acquired by larger players. Over the past five years, the number of industry firms has declined at an estimated average annual rate of 3.8% to 367. There have also been several acquisitions over the same period. For example, in 2009, major player Dow Chemical acquired Rohm and Haas, a multinational chemicals manufacturer. For more information, visit IBISWorld’s Adhesive Manufacturing in the US industry report page.
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IBISWorld industry Report Key Topics
This industry manufactures adhesives, glues and caulking compounds. Adhesives are materials that are initially fluid or semifluid, but when placed between two opposing solid materials, they become solids. They bond to the surfaces they are applied to and prevent joint movement. This industry excludes asphalt, dental and gypsum-based adhesives.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.