Four KEY Industry Trends

Posted on 10/17/2014 9:00:41 AM By Matt Croson

Today, I will pinpoint and discuss four critical trends impacting the $43 billion global adhesive & sealant industry.  They are as follows—

California and TSCA Reform

Adhesives and sealants companies looking for common sense, science based reform to the Federal Toxic Substances Controls Act (TSCA), adopted in 1976, will have to hope that California’s Senate leadership will grace the Senate Energy and Public Works with a hearing to move Sen. 1009 forward.  According to the meetings that ASC has held with Senators, staff and interested groups lobbying for this important piece of legislation, all roads lead to Sen. Barbara Boxer (D-CA) and whether or not she is willing to discuss any aspect of the bi-partisan supported Bill.

ASC isn’t holding its breath.  TSCA reform was the primary issue facing ASC when I started in 2010, and it’s going to be the primary issue facing ASC in 2015.  The more things change, the more they stay the same. 

Sen. Boxer – and any Senator that does this type of stonewalling on other pieces of legislation – continue to do the American people a disservice.  The meetings we have so clearly illustrate why many polls have Congress at a 7-12% approval rating.  There isn’t any debate going on here folks – this is not Democracy.  This is just power.  Only Committee Chairs can set the agenda for hearings, and Sen. Boxer isn’t budging on the Federal Pre-Emption provisions that are written into Sen. 1009.  There are probably many other reasons why her office isn’t supportive of the Bill, but this is what many of her colleagues are quietly pointing to when we talk with them. 

Sen. Boxer apparently believes her state is doing a fine job scrutinizing chemicals….let’s focus on that point in our next trend that is impacting the industry.

DTSC Safer Consumer Product Rulemaking Flaws

As part of the Safer Consumer Products laws in California, its Department of Toxic Substances Control (DTSC) has notified industry on the first 3 of 83 chemicals they are reviewing; one is:  “Spray Polyurethane Foam (SPF) Systems Containing Unreacted Diisocyanates.”

In a sharply worded letter to DTSC, ASC attempted to alert the regulatory agency that there are significant flaws in their staff research.  Here are just a few examples: 

  • “Throughout this document the Department  references many polyurethane applications that have absolutely nothing to do with spray polyurethane foam (SPF) systems—references to adhesives, coatings, truck bed liners are completely out of scope and should be withdrawn from this document to avoid future confusion for both regulators and the regulated community.”
  • “MDI and its oligomers are the only polyisocyanates used in SPF systems. Yet throughout the document DTSC, both directly and through implication, inaccurately makes references to the presence of HDI and TDI as a minor component or as residual constituents in SPF systems.  The inaccuracies in these statements are so basic that it can’t help but raise questions about the fundamental validity of the entire Priority Product profile. “
  • “Similarly DTSC has defined the priority product in such a way as to lump together multiple chemistries and different application systems (aerosol one component foam systems v.s. SPF spray foam systems).  The Department has failed to recognize various application systems represent different exposures and therefore the amount of risk to those using these products.  For example, one component foam (OCF) systems are not delivered as spray but are applied as a ”beaded foam” and thus do not result in airborne exposures.”

Out of the gate, with the first of 83-to-be-reviewed chemicals, and we get information that is just plain wrong, and so wrong, you just have to wonder how it even got the attention of the regulators in the first place. 

Since we sent the letter, the DTSC has updated their files, and the information we had questioned is now adjusted and edited appropriately…but the basic question remains:  if this was so wrong in the first place, how can we trust that we’ll not have a series of mistakes going forward? 

Federal pre-emption needs to be in TSCA Reform so ASC members don’t have to deal with these kinds of issues once the other 49 states start adopting the mistakes California is making.

EPDs Take Hold

The macro trend of transparency with formulation within the chemicals space is an ongoing one, but emerging strongly within the building and construction sector.  Because of the USGBC and its LEEDv4, where their materials credit talks about Environmental Product Declarations (EPDs), industry is now seeing more and more letters from architects looking for formulators to provided EPDs on every product they sell into the space.

ASC and its members have no issues with information sharing – we’ve been doing this for years with MSDS sheets and the new GHS labels that have evolved out of OSHA. 

Here’s the key thing that ASC is really focused on:  risk modeling as it relates to chemicals, not hazard, but risk modeling.  That is the key that we really need to have the design engineering firms really understand.  EPDs allow for positive communication between supplier and customers – but both need to be on the same page when it comes to the information the documents are expressing. 

That is why ASC is focusing some resources on how best to share data via EPDs.  We have developed an EPD team that is going to review what is being learned out of Germany and the EU, and see how we might be able to adopt workable solutions to the North American market. 

Our next steps are to discuss this in a joint conference call with our partners at IVK, the German-based association that focuses on adhesives.  Then discuss next steps with FEICA to see how they are progressing….and ultimately, make a decision on how we want to proceed.

The trend is real, the process is not yet defined….but working together, we will figure out a path forward.

Central and South America a Strong Opportunity

I will close with more of a good news trend, and that is growth in Central and South America for adhesives and sealants.

ASC members and industry leaders looking to expand and grow their business should give ASC’s new Central and South America Market Report a look.

In 2013, the region shipped more than 2.6 million pounds of adhesives and sealants.  And with a solid 5% compounded annual growth rate, the region is expected to grow to 3.2 million pounds of product sold through 2017.   The region is enjoying something of an economic boom, has a growing middle class, there is more awareness of technologies that can be used and also acceptance of new technologies.  These market drivers are providing a positive growth opportunity through the region, but especially in Brazil. Argentina, Colombia and Venezuela, with the report indicates represents 85% of the market in terms of production volume. 

The report, commission by ASC and its Global Resources Committee, and produced by Frost and Sullivan, also includes the “why” companies are buying adhesives and sealants.  The report includes interviews with 50 different end users and buyers of product.  Construction, transportation and assembly operations were all indicating strong growth positions as new buildings take shape, consumers start to buy more automobiles and companies move operations to the region to support the growing middle class.

Overall, the report indicates a strong opportunity for ASC members and industry, and is a good news area for companies looking to expand. 

As always, ASC works to keep its members aware of both regulations that can impact the products we deliver, while also focusing on sharing data and research that provide growth opportunities.  As our motto says, working together, we are “Securing the Future.”

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