AUTOMOTIVE INDUSTRY: BREAKING THROUGH THE 2017 HIGH-WATER LINE IN THE COMING YEARS
The shutdowns associated with the New Crown epidemic had a significant negative impact on the supply and demand for light-duty automobiles in 2020. manufacturing shutdowns in the early 2020's brought a sudden halt to the demand for materials, and the economic impacts of the New Crown epidemic further lowered the global demand for new passenger cars. Despite the resumption of production by the summer and a higher-than-expected recovery in demand, global production in 2020 was still down 20 percent from the previous year. Sales of composites for automobiles fell accordingly, to about 3.5 billion pounds.
The recovery in light vehicle production will be gradual, with significant regional variations. China, the first large market to be affected by coronavirus, is expected to fully recover to 2017 levels by 2022. Automotive demand in mature markets such as the EU and North America slowed ahead of the new coronavirus pandemic and is feared to struggle to recover to 2017 levels by 2025. The road to recovery will be long and slow for suppliers of automotive commodities that rise and fall with the market.
Fortunately, many composites are not commodities and are gaining market share because of their clear advantages over competing materials in terms of cost, weight and performance. Demand for lightweight materials is outpacing market growth due to regulatory oversight of CO2 emissions and fuel economy. Between 2021 and 2030, European CO2 emission limits will be tightened by more than 60%. The U.S. may reconsider suspending Obama-era fuel economy standards, which could require a 23 percent increase in fleet fuel economy between 2020 and 2025.
Using lightweight materials, including composites, can help original equipment manufacturer OEMs meet regulations and remain attractive to consumers. Prior efficiency regulations helped composites increase by 2 percent per year in automotive applications from 2008 through 2018, a trend that is likely to continue given the current regulatory environment.
However, lightweight materials alone will not enable OEMs to meet high fuel economy requirements. As a result, automakers plan to deploy a new hybrid-electric vehicle powertrain in the coming years. This will include a significant increase in hybrid, battery-electric and fuel-cell vehicles to complement the internal combustion engine. The rise of electric vehicles creates opportunities for composites in battery boxes, hydrogen fuel tanks and other components that require lightweighting and corrosion resistance.
In addition, opportunities for parts consolidation can be utilized in the design of these new vehicles. These factors are likely to allow composites to capture a greater share of automotive material usage over the next decade and will help drive total automotive composites sales above 2017 levels by 2023.
The growth potential of the composites industry can be illustrated by indexing automotive production and sales of automotive composites to 2017 as the base year and forecasting demand through 2025. If composites continue to grow at a rate of 2% per year above the market, as they have over the past decade, production of automotive composites will exceed the base year of 2017 by 2023, but global automotive production is not expected to return to 2017 levels until 2025.
While 2020 will be a tough year for the automotive industry and composites manufacturers, the long-term outlook for automotive composites is bright. Based on value in terms of cost, weight and performance, the industry is poised to break through the 2017 high-water mark in the coming years.
The 2020 New Crown epidemic has had a major impact and disruption on many industries and aspects of life, and the automotive and composites industries are no exception; both have been dramatically impacted by the New Crown epidemic, and its effects will be felt for years to come. One piece of good news for composites manufacturers, however, is that the anticipated recovery of the automotive industry, global environmental scrutiny and the proliferation of electric vehicles will offer promising prospects for composites and lightweight automotive materials.
Aerospace: innovation-based technology solutions are critical to its success
Over the past few years, the aerospace industry has been dramatically impacted by a series of events, most notably the grounding of the Boeing 737 Max and the New Crown epidemic.On November 18, 2020, FAA Administrator Steve Dickson canceled the Boeing 737 Max grounding order issued on March 13, 2019 But the 18 months in between took a huge toll on the entire industry.
In addition, both Boeing and Airbus had to temporarily close their facilities during the New Crown pandemic. As expected, both Boeing and Airbus are struggling with dramatically reduced productivity and lower orders.
As the aerospace industry recovers, innovation-based technology solutions are critical to its success. Projects that utilize computer capabilities continue to drive composites manufacturing in aerospace, including integrated computational materials engineering (ICME), which can leverage data flow between different modeling frameworks for digital manufacturing, 3D printed parts and their integrity There is a growing gap in certification verification that can be bridged through the use of analytics.
With ICME, aerospace manufacturers can see the significant benefits of agility in a framework that encompasses the entire organization. Composites are ideal material systems to drive modeling, analytics, or digital twin approaches to add value, where the complexity of composite components, additives, and their morphology introduce countless performance differences not only in compositional choices but also in manufacturing processes. This is especially important when calculations can significantly reduce the time between customer requirements and FAA certification.
The intersection of new technologies and priorities for U.S. modernization has been focused on hypersonics, space and cybersecurity, the latter of which poses significant challenges across the aerospace supply chain, particularly the need to protect information. Beginning November 30, 2020, the U.S. Department of Defense (DOD) introduced a self-assessment methodology that requires the DOD supply chain to quantify and report on its current cybersecurity compliance. On the innovation front, government agencies continue to foster collaboration between startup technology developers and Tier 1 aerospace companies. One example is the Air Force AFWERX program, which fosters connections across industry, academia and the military.
Critical to these emerging technologies are advances in materials, based on the need for materials that survive in the harshest space environments between Mach 5 and Mach 20, leading to an increase in research and investment in ceramic matrix composites for additive manufacturing. In order to gain a foothold in aerospace, the composites industry can take the lessons learned in polymer matrix composites and metal matrix composites and utilize the ICME workflow to inform model-driven design of ceramic matrix composites. In addition, translating expert knowledge into basic 2×2 orthogonal experimental designs comparing conventional materials in the same test will build confidence in the use of new composites and manufacturing methods.
While base metrics have historically included high strength-to-weight ratios, corrosion and chemical resistance, new extra-planetary space requires long-cycle serviceability at both extreme high and low temperatures. Institutional resource services such as the American Institute of Aeronautics and Astronautics (AIAA) Standards Steering Committee (SSC) have contributed to the development of standards that will help standardize testing and other activities among aerospace stakeholders.
In summary, the future of aerospace depends more than ever on its ability to innovate. This will require integrated development between government, major organizations, supply chain and startup stakeholders. Each stakeholder will have an important role to play in balancing compliance and business model disruption to ensure rebound.
Fiberglass: a brighter outlook for 2021
2020 is a crisis year for the composites industry as the impact of the New Crown outbreak triggers cash flow and demand crises, supply chain disruptions, and worker safety issues. While 2020 was challenging, the outlook for 2021 appears brighter.
In early 2020, the U.S. composites industry got off to a pretty good start and showed signs of good growth similar to 2019. By the end of March, new orders were delayed or even canceled. The epidemic had its greatest impact in the second quarter, especially in April and May, leading to the worst and most dramatic economic contraction since the Great Depression. More than 20 million people lost their jobs over the summer, and factories in a wide range of industries were closed. The transportation, construction and maritime industries were hit the hardest, resulting in a 20 percent decrease in demand for U.S. fiberglass in the second quarter of 2020 compared to the first quarter of 2020.
However, the second half of 2020 became the fastest period of recovery for the economy and the composites industry. Since July 2020, demand in the U.S. composites industry has begun to grow in a variety of end-use industries, including the automotive, marine, and construction industries, driven by stimulus packages and plant reopenings. As a result, the U.S. fiberglass market grew by approximately 23% in the third quarter of 2020 compared to the second quarter of 2020.
In the fourth quarter of 2020, the U.S. fiberglass market remained strong with a growth rate of approximately 5% in November compared to November 2019. By the end of 2020, the fiberglass market will not be able to fully recover from the pandemic and is expected to decline by about 6%, with demand falling to 2.44 billion pounds compared to 2.59 billion pounds in 2019. Coronaviruses have had an irregular impact across the entire value chain, with automotive, piping and storage tanks, aerospace and marine applications showing significant declines, while wind energy, electrical and electronics, and construction continue to do well.
The wind industry was a bright spot in 2020, achieving double-digit growth despite a temporary slowdown in March and April due to supply chain bottlenecks, cross-border transportation issues and government restrictions. Overall, the market grew because wind farm developers were eager to start construction in time to qualify for production tax credits before they are expected to expire at the end of the year.
COVID-19 is forcing executives to rethink the future of the composites industry. The slow recovery has been exacerbated by excess capacity in certain market segments, such as aerospace. Dave Calhoun, Boeing's chief executive, estimates it will take two to three years for air travel to return to pre-COVID levels.
Consumers are also becoming more aware of sustainability, prompting industry players to explore green materials, renewable energy and recycling technologies in the production of materials and composite parts. In addition, most sectors are increasingly using digital technologies to transform jobs and labor.
With the help of a new stimulus package approved last December and a coronavirus vaccine, Lucintel expects a good recovery in the U.S. fiberglass industry in Q1 and Q2 2021. Favorable trends in automotive, housing, piping and tanks, electrical and electronics, consumer products, and marine will result in the fiberglass market growing at a rate of 8% to 10% in 2021, meeting or exceeding 2019 demand levels.
Carbon fiber: huge growth potential in all segments
Since 2010, the global carbon fiber market has grown from less than 40,000 tons to more than 100,000 tons by 2019. During this period, carbon fiber growth has been steady and uninterrupted, with annual growth rates of 10 to 12 percent.
But in 2020, with the COVID-19 pandemic on the horizon, the global carbon fiber changed almost overnight. in 2020, global demand for carbon fiber totaled about 105,000 metric tons, an increase of just 1 percent over 2019, and in 2021, growth is expected to be just 1 percent.
The carbon fiber market is driven by the growth of applications in many segments such as aerospace, wind energy, sporting goods, marine, automotive, pressure vessels, and others. The growth rates of all these segments, as well as the industry as a whole, are steadily increasing until 2020.
But with borders closing in the early 2020s, international air travel halting, planes grounded, and aircraft manufacturers drastically cutting back on productivity, the carbon fiber industry seems to have lost momentum in an instant. Carbon fiber in aerospace accounts for more than 20 percent of the industry and 40 percent of its value. The slowdown in commercial aviation has severely affected the carbon fiber industry, and it could take years to return to pre-outbreak levels.
Despite the discouraging news on the aerospace front, not all is bad news in 2020. As people learn to work from home and vacation close to home, some markets are doing well, such as a 30 to 40 percent jump in demand for sporting goods in 2020, and wind turbine installations continue to increase by 20 percent over the previous year, as planned.
By end-use market, the market breakdown for carbon fiber applications in 2020 is roughly as follows:
Wind - 23 percent;
Aerospace - 20 percent;
Sporting goods - 12 percent;
Automotive -10 percent;
Pressure vessels-10 percent;
Composites for injection-molded plastics and other short-fiber applications-8 percent;
Construction and infrastructure-8 percent;
Other segments -9 percent
As was the case in the period prior to the outbreak, all segments of the carbon fiber market have significant growth potential as new applications and projects come on line. The potential long-term megatrend of carbon fiber being attractive before the new crown outbreak remains intact. The benefits of carbon fiber - stiffness, high strength-to-weight ratio, corrosion resistance, electrical conductivity, etc. - remain valid today. For growth to occur, carbon fiber and CFRP parts must be both technically and economically viable.
As a result, there are differing views on the various industries and applications that are driving the overall demand for carbon fiber, with some down and others up. Those that have contracted, particularly in aerospace, have resulted in the total carbon fiber industry looking relatively flat in 2020, with only very modest growth expected in 2021. However, the long-term outlook is much more optimistic. Over the next few years, the carbon fiber industry can reasonably be expected to return to stronger year-over-year growth once again.
As for the carbon fiber industry's production capacity, global carbon fiber producers have a combined nameplate capacity of about 160,000 tons, which is sufficient to meet current demand. Some producers are planning to add new plants and capacity to meet growing future demand. Finally, it is important to keep in mind that carbon fiber is still in the early stages of development. Airplanes are made by hand, only one or two per day; other applications are slightly higher, but still not automated. By contrast, automobiles are mass-produced at a rate of more than one per minute. Today, carbon fiber is still mainly used for small-volume applications, and "mass production" has not yet been achieved.
All in all, the new crown epidemic has dealt a blow to the carbon fiber industry, but it is only temporary. Despite all that has happened in this extraordinary year, the future of carbon fiber is promising, and the next few years will be very interesting.
Construction and infrastructure: some curtailment of construction could be a turning point for the industry
The construction industry is not often at the top of the list when people talk about the main applications for composites, but it is growing all the time. The global construction economy is one of the world's largest building economies and one of the largest resource and energy consuming sectors, and it is likewise one of the largest polluters, factors that ****together are driving the need for sustainability across the board, and composites have a role to play in that.
According to Global Construction Outlook and Global Construction 2030, published by Oxford Economics, the value of the global construction industry is projected to grow by 85 percent to $15.5 trillion by 2030, with much of the growth centered in the U.S., China and India. The McKinsey Global Institute reports that by 2025, the world's 20 largest cities will need 36 million new housing units.
Other studies of the construction industry show that 23 percent of air pollution, 40 percent of water pollution and 50 percent of landfill waste in the U.S. is attributed to construction. In addition, the U.S. Green Building Council says buildings and construction projects account for about 40 percent of global energy consumption each year.
The role of composites in construction is varied, from window frames and wood reinforcement to composite steel and fiber-reinforced concrete. Regardless of the material used, the lightweight, design flexibility and durability benefits of composites help speed up construction and improve a building's sustainability score.
Taking the example of the Museum of the Future under construction in Dubai, United Arab Emirates (UAE), the 78-meter-tall building has seven floors containing a circular shell that sits atop a three-story podium. The circular facade includes 1,024 fire-retardant composite panels, each covered with stainless steel, featuring unique 3D shapes and incorporating molded Arabic text.
In Brooklyn, N.Y., USA, additively manufactured composites helped accelerate construction of the 45-story One South First and the connected 10 Grand, which are located in Domino Park. The buildings include a complex concrete fa?ade that required hundreds of concrete frames to be prefabricated through sprues.Gate hired Additive Engineering Solutions (AES) to help manufacture the molds used to shape the concrete frames. For some of the production, AES chose LNP Thermomp AM composite, a high-modulus, low-warp, short-cut carbon fiber-reinforced ABS resin material supplied by SABIC.
Home construction and public **** construction will be curtailed in 2021 due to the new crown epidemic. Most infrastructure and public **** building construction will be constrained by government entities' balanced budgets, declining tax and fee revenues, and unbudgeted pandemic-related expenditures. In the short term, only a few non-residential niches look promising. These include the renovation of many types of existing facilities to accommodate coronavirus-related requirements. In addition, more facilities are needed outside of hospitals and nursing homes to provide medical care, screening, and testing. School construction may be a partial exception. As more families move, the need for new and remodeled or expanded schools will grow.
The epidemic of new crowns increases the need for ways to replace scarce on-site skilled labor. To the extent that composites and products can be substituted for on-site fabrication or installed more quickly by less experienced or lower-skill level workers, demand for composites will continue to grow, even if the products themselves cost more.
So 2021 could be a challenging year for contractors. But it could mark a turning point for composites manufacturers looking to break into the construction market.