Coatings World - November 2013

Henkel found that trends did indeed differ between regions. While the non-European emerging markets developed very well, momentum in North America and Western Europe was more subdued.

Jim Owens, president and CEO, H.B. Fuller, explained that
because of the relatively weak economy their focus has been
on ways to innovate and create value that
drives change in customer’s products and
processes
Tremco’s focus has remained the same
in both good and difficult times.

“We are looking for opportunities
to help designers, contractors and own-
ers build or restore their structures to
high performance standards,” Houk said.
“While we can’t control the amount of
construction activity, we can control how
we approach the projects that are active.
Our ability to help our customers achieve
their design goals is our best insurance for
continued growth.”
Gorman said that DAP saw opportunities
for growth in markets that serve new residen-
tial construction and remodeling/repair.

“As we continue to experience positive trends in the housing market, consumers are increasing the amount of their investment back into their homes. We see this specifically in projects like painting rooms and larger expenditures like kitchen and bath renovations,” he said.

For Henkel, the adhesives for consumers, craftsmen and building business turned in a solid sales performance in the second quarter and household and repair adhesives performed particularly well.

“With our new plant for building adhesives in Russia, which will begin production shortly, we have established the basis for further profitable growth of the business in the region,” a representative from Henkel said.

Owens explained that electronics and hygiene products were in strong and growing demand despite the weak economy.

Rising Raw Material and Energy Costs

The rising costs of raw materials and energy have certainly added to the challenges in the adhesives and sealants market.

“Despite a significant drop in the overall demand for construction products, the cost of raw materials and the energy to convert them into finished goods has continued to rise,” Houk said. “At Tremco, we have been proactive in addressing these challenges. For example, we are relentless in our pursuit of eliminating all forms of waste from our manufacturing processes.

We have set and exceeded goals related to reducing energy and
water usage in our manufacturing facilities. We have achieved
zero landfill contribution in several of our North American
manufacturing sites and that is good from both an environmen-
tal and cost perspective. While price increases are sometimes
necessary, there are many things we can do to mitigate rising
costs that do not impact our customers and make us a better
company to do business with.”
Meenan explained that rising raw material costs are a con-
stant that any manufacturer has to deal with, and customers are
never happy about price increases.

“Therefore, it is prudent to develop new formulations using
alternate raw materials, such as renewable
materials, that can be somewhat immune
to the dynamics of the specialty chemi-
cal cycle,” Meenan said. “Also, the 3M
manufacturing team does an outstand-
ing job squeezing out cost using Lean Six
Sigma principles. This allows us to ab-
sorb some of the raw materials headwinds
without passing on price increases to our
customers.”
Owens said that for H.B. Fuller, rising
raw material costs are seen as an oppor-
tunity to partner with customers, suppli-
ers and others to drive innovation in the
manufacturing process.

“We adapt our product technology based on the changing availability of various raw materials, and then we work with our customers to reduce complexity and lower the overall cost to produce their products,” he said.

Henkel increased selling prices and maintained strict cost discipline in order to increase a gross margin.

“In order to improve efficiency and secure material supplies,
we continuously optimize our value chain while at the same time
maintaining our level of quality,” a representative from Henkel
said “In addition to continuous negotiation of new, competitive
contract terms, our ongoing initiative to reduce total procure-
ment expenses is a major factor in the success of our purchasing
strategy.”
Environmental regulations are also affecting the market for
adhesives and sealants. The goal for adhesives and sealants man-
ufacturers is to develop environmentally compliant products
that deliver the same level of performance as previous products.

“Regulatory agencies are demanding manufacturers in our industry provide environmentally friendly solutions,” Houk said. “The challenge of course is to help these agencies achieve their goals without compromising the performance that our customers have come to expect when they use our products. We take product stewardship seriously and we are working very hard to provide safe, sustainable solutions without compromising our ability to deliver high value to our customers.”

At 3M, reducing solvent and VOCs is a concern for the environment and for worker safety and comfort, and viewed as an opportunity for growth.

“3M sees an opportunity to lead the way through new product development,” Meenan said. “As an example, we launched a line of low-VOC aerosol adhesives that had far lower VOC