It has been made hugely more difficult, of course, by the wider problems the chemicals industry has been facing, including widespread materials shortages in recent months. Winter storm Uri led to unprecedented low temperatures in Texas – while New England may be geared up for –15°C temperatures, Texas certainly isn’t. ‘Pipes froze –there were so many domestic burst pipes the plumbers were worked off their feet!’ Baker said.
And, of course, the petrochemical plants on the Gulf coast were heavily affected, too. ‘The frozen pipes led to huge disruption, and we are still seeing the after-effects of the cold weather rippling through the supply chain,’ he said. ‘We’ve had companies on force majeure, and supplies have been limited. It clearly shows the fragility of the chemical supply chain at the moment.’
On top of this came the shipping crisis in China. ‘The situation was terrible in the second quarter, and while it’s improved a bit, the Chinese authorities had to close one of the Ningbo terminals [for a couple of weeks in August] because of coronavirus,’ he said. ‘We have suppliers telling us that ships are not sailing when they thought they would, and they are having difficulties getting bookings on vessels. He expects it will only get worse during the rest of 2021, with supplies for Christmas competing for space with shipments of chemicals.
He does, however, think HBS is in a slightly better position as it can source a lot of its raw materials locally. ‘We make MDI, a key component of SPF, in three global manufacturing centres, in Shanghai, Louisiana and Rotterdam,’ he said. ‘But there are certain raw materials we need that are increasingly difficult to ship around. Some of the blowing agents and catalysts are quite challenging at the moment. We’re in for a rough ride until the end of the year.’
Part of that rough ride relates to high demand from the construction industry. ‘US housing starts are on the up, leading to really strong demand,’ Baker said. ‘We’re not seeing any sign of that abating. If interest rates go up, that may start to dampen the market, but at the moment there is huge demand for new build. Retrofit is also strong, and we are starting to see some commercial construction pick up, too.’
While institutional building projects such as schools and prisons kept going in North America during the height of the pandemic, that was not the case for the rest of the commercial sector. More recently, he said, there has been a boom in building large distribution centres, as well as big data centres where temperature control is critical for the computer infrastructure. ‘Hotel construction is still a bit flat, but I expect this will pick up as people start to travel again,’ he said. And renovation activity remains strong.
This demand is replicated across the world, he said, and HBS is driving a globalisation of its business to keep up. ‘With the benefits spray foam can offer, we believe the time is right,’ he said. ‘The spray foam industry was born in Canada and the US, and traditionally suppliers would try to support a global market from US-based assets. But this is really difficult to do, because it’s a contractor-based business and they want fast, flexible service to get hold of materials at short lead times.’
To overcome this, they are taking advantage of Huntsman’s global reach; over the years, it has acquired smaller systems houses around the world, including Russia, Turkey, the Middle East, the UK and Germany. ‘They have the local capacity to manufacture, the supply chain, and the back office services,’ he said. ‘We are investing in our frontline people who work with architects and specifiers, and transferring and adapting the technology for use in Europe and Asia.’
A customer centre is being opened at the former IFS plant in Kings Lynn, offering training and technical facilities to the UK contractor base – teaching them how to spray, what PPE to use, and ensuring they are familiar with the product and safe application. Another is being planned at Osnabruck, Germany, complementing existing facilities in Yokohama and Shanghai.
‘We work with architects to understand the benefits that spray foam and our other building services products have,’ Baker said. ‘About 40% of the world’s energy is used to heat or cool buildings, and if we can reduce this, it will be important. We have seen some pretty extreme weather around the world this year and climate change is a reality. Spray foam can help address some of the challenges we face.’
Products may have to be adapted slightly to meet local requirements, however. ‘We make sure we get local certification in different markets,’ he said. ‘It’s not a quick process; it can take more than a year getting all the necessary certifications and running all the performance tests that are required.’ And raw materials available in one market may not be approved elsewhere, so reformulation may be necessary. ‘You have to maintain the overall performance of the product, but as soon as you start reformulating and using different chemicals, you have to recertify.’
Being part of a global business like Huntsman helps, Baker believes, because the relationships with trade bodies and government departments already exist. ‘We are committed to do things the right way, and work with the various authorities to get there,’ he said. ‘But it’s not an overnight process.’
He is particularly excited about the market potential in northern Europe. ‘China is also a huge opportunity,’ he said. ‘It will be more challenging in terms of regulatory standards, but it will catch up quickly. The Chinese authorities have shown that willingness to catch up.’ The big opportunities in China, he believes, are in industrial applications such as large cold stores; the residential use still has a way to go.
And with the US now set to catch up with the transition away from HFC blowing agents, he believes this will also increase demand. Another driver there will be updates to building codes which, in many states, are a decade out of date. ‘We want the building code to drive the energy efficiency of the building that drives not just thermal performance but airtightness as well, as this will have a huge impact on global challenges.’ An airtight building stops draughts and energy leakage, making it more thermally efficient – and spray foam gives both thermal performance and airtightness that helps meet challenging performance requirements, he said.
Baker is optimistic that 2022 will be a strong year for the business. ‘I think market demand will be great, and although coronavirus will continue to be a dampener, the underlying demand will be there,’ he said. ‘Whether it’s increasing environmental awareness, or the need to drive energy efficiency, all the signs are great. We are looking forward to growing expanding globally, and making sure we continue to look after our contractors and customers as best we can.’