By Miles Moore, Rubber & Plastics News
National Harbor, Maryland - Even in a severe recession, there are financial and business opportunities for the polyurethanes industry, speakers said at the Polyurethanes 2009 Technical Conference at National Harbor 5-7 Oct.
The financial picture is the grimmest in living memory, with the global Gross Domestic Product falling for the first time since the 1930s, noted Martha Moore, senior director for policy and economics at the American Chemistry Council. The Center for the Polyurethanes Industry within the ACC sponsored the conference.
The national unemployment rate hovers near 10 percent, auto and home sales are down significantly, and consumer spending has fallen below 70 percent of the GDP for the first time in decades, Moore said.
"People have been using their houses as ATMs, and that has really come crashing down on them," she said, adding that personal debt in the US now averages 23.8 percent of income. "The way we used credit really changed, and it really got us into a lot of trouble."
It probably will be 2012 before there is anything resembling a return to normal, Moore said.
She quoted projections that the GDP, after contracting 2.7 percent in 2009, will rise 2.3 percent in 2010 and 2.8 percent in 2011. Unemployment, meanwhile, will peak at 9.8 percent in 2010, then fall to 8.5 percent in 2011.
Nevertheless, not all is bleak for PU manufacturers, according to Moore. "Downturns create opportunities to innovate in our products, our operations, our businesses and our business philosophies," she said.
On the up side, a lot of the $787 billion in economic stimulus money Congress approved earlier this year is still in the pipeline, with only about $150 billion spent as of August, Moore said. Some $44 billion of the money is earmarked for stimuli in energy innovation. "This will affect polyurethanes in a positive way, although the outlay has been staggered," she said.
Government acquisition is one area in which PU manufacturers can prosper, according to Kate Lewis, deputy manager of the BioPreferred Program within the US Department of Agriculture.
The BioPreferred Program, Lewis said, is a program in which the federal government promotes the growth of bio-based product industries by maximising their purchases of those products.
"The program is designed to increase the federal purchase and use of mostly finished bio-based products as a way of promoting energy security and creating jobs," Lewis said. For polyurethane manufacturers, many of which are expanding their use of soy-based and other bio-based materials, this is a major opportunity, she said.
Currently the BioPreferred Program lists more than 3400 products in 33 product categories for priority purchasing, including such areas as construction, food service, custodial services and vehicle maintenance, according to Lewis.
More than 800 companies provide products to the program, ranging from small entrepreneurial shops to giant corporations, she said.
Each year the US government spends $500 billion on supplies and services, and the BioPreferred Program - which mandates that procurement officials buy bio-based products as long as they are competitive price- and performance-wise with traditional products - stands to garner a major portion of that, Lewis said.
"For every 1 million pounds of bio-based polyol products purchased, nearly 700,000 pounds of crude oil are saved," she said.
The Commerce, Justice and Defense Departments and the Transportation Security Agency so far have been the most proactive government agencies in following the BioPreferred Program, Lewis said. By next year USDA hopes to have a BioPreferred labeling program in place, with an eye-catching logo to mark those products certified as BioPreferred by the program, she said.
Although the construction market has taken a heavy hit, PU products - particularly insulation - have a promising future there, according to Nigel Maynard, senior editor of Buildermagazine
"The average American is uncomfortable in his or her own home," Maynard said. "The solution is green building."
Houses and other buildings constructed totally from green materials comprise one of the few growth markets in the construction industry, according to Maynard.
From "Forty to 50 percent of the houses built in 2010 are expected to be green," he said.
PU foam insulation is widely regarded as best-in-class by architects and builders, offering more protection from cold and drafts per inch thickness than the more commonly used fiberglass, cotton or composites (recycled newspaper and borax), according to Maynard.
More and more homeowners are retrofitting their houses - especially their attics - with insulation, he said. "The average American spends $1,900 a year on energy," Maynard said. "Fifty percent of that goes for heating and cooling, and half of that gets lost through the attic."
Unfortunately, there is one thing that will prevent the rapid rise of PU foam insulation sales: cost. Maynard said he retrofitted his attic recently with composites spray for about $1,400; if he had used polyurethane foam, he said, the cost would have been $8000.
"Fiberglass has 85 percent of the insulation market," he said. "It will take a while to challenge that."
Meanwhile, the Obama administration is seeing to it that more money is being made available for programs that will benefit the PU industry among others, according to Richard Gold, a lawyer with the Washington firm of Holland & Knight and outside counsel for ACC.
Much of that money, of course, comes from the stimulus package, Gold said. Most of it will be paid out over the next three to four years, and companies interested in learning how to apply for grants can find that information on www.grants.gov or www.FedConnect.net, he said.
State and local governments will be getting large grants from the stimulus package, Gold said; $3.1 billion alone has been earmarked for state energy programs.
"I have yet to see a local government that isn't looking for, as an example, LED lighting," he said.
Another program, the Weatherization Assistance Program for homeowners who need financial help in weatherizing their homes, has received $1.5 billion for the coming year, according to Gold.
"During the previous administration, that program received between $28 million and $40 million annually," he said. "That money will go for windows, doors and insulation."