Industrial rubber products sales growing 5.1% annually.

U.S. demand for industrial rubber products is expected to increase 5.1% annually through 2008, reaching $17.4 billion in sales, a new report from The Freedonia Group claims. This will contrast with the 0.3% growth for the five-year period between 1998 and 2003. when sales only increased from $13.4 billion to $13.6 billion.

Gains will be driven by general economic expansion in the U.S., reselling in increased shipments for key end-use products that use rubber compounds. Aftermarket opportunities will contribute significantly to growth in demand as increased maintenance will be necessary to maintain aging equipment, aircraft, motor vehicles and commercial buildings, according to Freedonia.

Mechanical rubber goods accounted for nearly 50% of demand for IRP in 2003, and future growth will be highly dependent on motor vehicle production levels, as well as the aggregate number of vehicles in use. The remaining two categories of IRP, hose and belting and "other products" will have growth rates similar to mechanical rubber goods. Hose and belting will benefit from strong industrial equipment growth. The other category, which includes rubber roofing, flooring and wall coverings, will be dependent on strengthening nonresidential construction expenditures.

Motor vehicles will continue to be the leading market for industrial rubber products due to the wide range of uses for rubber in this sector. New designs require customized rubber products that can withstand extreme temperatures, as well as harsh chemical environments. Newly developed rubber compounds and products that nicer these new specifications will command premium prices, providing further growth momentum, according to Freedonia. The report says sales of industrial rubber products to the motor vehicle market will reach $6.2 billion in 2008, an annual growth rate of 4.1%. Freedonia said the $5.1 billion in sales in 2003 represented a 1% annual growth rate from 1998 through 2003.

The best growth opportunities, according to the report, will be in industrial machinery and equipment, the second largest market for IRPs. This segment, which had a decrease in sales between 1998 and 2003, is expected to rebound at a 6.6% annual growth rate through 2008, with sales reaching almost $6 billion.

U.S. industrial rubber product sales (million dollars)

                                                      % annual
                                                       growth

                           1998     2003     2008   03/98   08/03

Motor vehicles            4,870    5,115    6,245     1.0     4.1
Industrial machinery/
  equipment               4,565    4,325    5,945    -1.1     6.6
Construction              1,425    1,620    1,995     2.6     4.3
Aerospace/other
  transportation          1,600    1,580    2,080    -0.3     5.7
Other markets               975      975    1,175      --     3.8
Total                    13,435   13,615   17,440     0.3     5.1