European adhesives industry suffering.

Between the end of the Second World War and the late 1980s, the adhesives industry grew in the industrialized countries of North America, Western Europe and Japan by leaps and bounds, trebling in size as adhesion technology advanced and more new uses for adhesives were discovered.

For the first time ever, the European adhesives industry experienced a decline in both volume and value terms in 1993, falling from its 1992 value of 2,237,300 tons ($5,232.5 million U.S.) to 2,144,700 tons ($4,873.7 million), representing a 4.1% fall in unit growth and a 6.9% fall in revenues

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According to a new report by Frost & Sullivan studying the adhesives market in the different national and regional markets of Western Europe in seven categories, the basic cause of this slump is the world recession, characterized by price-cutting, thin profit margins, restructuring and rationalization within the companies.

Frost & Sullivan forecasts that 1994 will be a year of retrenchment and general difficulty in the industry as consumption falls again. From 1995-onwards, the industry is projected to grow at up to 3.2% per annum in volume and 6.5% in value.

The adhesives industry is mature and will not experience again the explosive growth that it enjoyed before - and which it is currently enjoying in the newly industrialized countries of East Asia - but there will remain many opportunities for companies with the right structure, outlook and market knowledge.

The report says: "While the adhesives industry is a highly important one, it remains dependent on the many different industries which it serves, and the adhesives have already succeeded in penetrating most of the market areas open to them."

Frost & Sullivan continues: "In some cases, advances in technology are already succeeding in reducing the total amount of adhesives consumed. However, it is a decline in production in other industries which has brought about the current problems."

Some false impressions of the nature of the industry may have been created inadvertently by media coverage which tends to focus on applications in the automotive and aerospace industries, where formulations change most rapidly and the technology is more advanced and interesting to specialists in the field.

The market is dominated by the paper, packaging and converting industry - including carton-sealing, caseclosing, flexible film and foil-laminated packaging and all uses with paper, such as bookbinding, envelopes, cigarettes etc.- estimated to have been worth $1.04 billion in 1993 and predicted to reach $1.45 billion by the end of the study period in 2000.

This is followed by the construction industry, which covers all roofing, tiling, flooring, wall covering applications, as well as roads, railways and civil engineering, forecast to increase from its 1993 value of $832.4 million to reach $1.17 billion by 2000.

Germany is the largest market accounting for 28% of the shipments and 27% of the overall revenue in 1993.

Despite a big fall in shipments in 1994, Germany is projected to retain roughly these shares of the market for the rest of the decade as the growth in the East German market is counterbalanced by restrictions on packaging and the continuing decline of labor-intensive industries.

The real slump will be experienced in the French market, where the lost market shares of 1993 from 15.1% of the volume and 16.1% of the value to 14.1% and 15.2% respectively will not be recovered.

One key market trend will be Europeanization: products, mixes and application methods will become increasingly standardized across Western Europe, even in those countries which are not members of the European Community (EC), as a result of EC legislation and customer demands.

It is likely that the market structure will change as well, as multinationals move into the smaller and more dynamic markets, notably Spain, in growing numbers.