Composite Materials as Competitive Threat to Metal Fabrication Industry

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Composite Material Threat - Transportation/Logistics and Trucking Industry

Composite materials represent a significant threat to the traditional metal fabrication industry as more parts of automotive are expected to be increasingly made with composite materials instead of steel/metal/aluminum. However, the overall transportation industry is expected to grow, leading to an increased market for metal fabrication in the near future.

Composite Materials Transportation/Logistics

  • Composites are increasingly being adopted in the transportation industry because of the superior efficiency they offer and analysts believe that adoption will only increase in the near future.
  • Composites are believed to "offer savings on weight and are superior in durability, leading to increased fuel efficiency and a longer life."
  • The transportation industry is the biggest market for composites and it is expected to grow further. According to the US government, "the automotive industry is continuously looking for innovative materials to help reduce vehicle weight and achieve fuel efficiency and carbon emission targets" and are increasingly turning to composite materials.
  • The logistics/transportation industry represents 28% by volume and 25.1% by value of the overall composites market and more growth is expected in the future.
  • The US government further states that "the biggest trend in the automotive industry is the development of technologies for making carbon fiber parts for mass-volume vehicles. Carbon fiber demand by the automotive industry will rise sharply in the coming years as lightweight vehicles become increasingly important."
  • In the aerospace industry for example, Boeing Co. "first used fiberglass in its 707 passenger jet in the 1950s, and it comprised roughly 2% of the structure. Since that time, each generation of Boeing aircraft has had an increased percentage of composite materials. Boeing’s 787 Dreamliner is approximately 50% (by weight) composites."
  • The aerospace industry is expected to be one of the fastest-growing end-users of composite materials. This dominance is attributed to the high demand for honeycomb core materials from next-generation aircraft.
  • "Airbus, Boeing’s main competition in the large transport aircraft category, has countered with the A350, which makes extensive use of composites, as well, also roughly 50% by weight."
  • According to industry analysts, the predicted annual growth rate for automotive composites over the next several years is between 6% and 9%. This is probably because there is an increasing demand for sustainability development in the transportation industry which requires weight reduction, lowering gas emissions, fuel consumption, and increasing recyclability.

Trucking

  • There is no doubt that the application of composites in heavy vehicle manufacturing is being adopted and prototypes are being developed, however, it is happening at a slower pace than the rest of the automotive industry. This is partly because trucks demand heavier and stronger materials capable of withstanding the pressure the truck will be subjected to in varying conditions.
  • For instance, in 2015, Volvo announced a prototype 18-wheelers truck made up of composite material that is still in this research stage. While these shows that composite materials will be gradually introduced in this segment, it lags behind other automotive where composites are already being deployed.
  • Although adoption in the truck industry may be slower, the same forces (sustainability, weight reduction, lowering gas emissions, fuel consumption, and increasing recyclability) driving the adoption of composite material in the overall transport industry are still going to impact the trucking industry.
  • Hence, in both the trucking and transportation industry, the adoption of composites poses a significant threat to the metal fabrication industry. However, the market for metal fabrication is expected to increase in the future due to the expanding transportation industry and a vibrant US economy.
  • Hence, although more composite material will be adopted in this sector in the future, the demand for metal/steel/aluminum still keep increasing because the overall market is increasing. However, growth in the composite market is expected to be faster (5.8%) compared to the growth of the metal fabrication market (1.4%) in the coming years,
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Composite Material Threat - Agriculture and Construction

While composites are finding increasing applications in the agricultural and construction industry, the threat of composite materials to traditional metal fabrication employed in the agricultural sector is rising at a comparatively slower pace due to a number of factors. Both the construction and agricultural industries have substantial obstacles limiting the adoption of composite material and as such the threat to both industries is low to moderate at the moment.

Construction Industry

  • Composites are increasingly being adopted in the construction industry in the US.
  • According to the U.S. Department of Commerce, "construction continues to be the second-largest market for composite materials after transportation." The market is largely driven by the increasing housing construction market which comes with an increased demand for "composite materials used in the manufacturing of bathtubs, doors, windows, and other applications."
  • The construction industry accounts for 28% by volume and 25.1% by value of the total composite market. This shows the widespread adoption of composites in the industry.
  • While there is no doubt that composites will be increasingly adopted going forward in construction, it is unclear how much of a threat it is to metal fabricators given that the expected increase in construction in the coming years is expected to be a key driver of the metal fabricator industry.
  • Composite materials are currently being adopted in fast-build residential projects, curtain wall panels, roofing systems, among others, while the use of composites reinforcement in wood beam structures and foldable composite structures are being explored.
  • According to industry experts, while composites are being increasingly adopted for rehabilitation of buildings or other infrastructure, "the knowledge of long-term performance and of durability behavior of FRP, in terms of their degradation/aging causes and mechanisms taking place in common as well as in harsh environmental conditions, still represents a critical issue for a safe and advantageous implementation of such advanced materials."
  • The above opportunities and challenges suggest that the threat composite materials pose to traditional metal fabrication employed in the construction industry is moderate.

Agriculture Industry

  • Although Composites are gradually being adopted in the agriculture industry, there are major obstacles that are slowing down the process.
  • The agricultural market is highly fragmented and the demand that each equipment needs to meet varies by geography. For instance, in the US, the demand is for larger and more modular equipment so farmers can farm increasingly large tracts of land efficiently, but in Europe where farm sizes are smaller, the demand is for appropriately sized farm equipment.
  • This is an issue because the geographically fragmented agricultural equipment market results in "fewer opportunities for global OEMs like John Deere (Deere & Co., Moline, Ill., U.S.), Case New Holland (CNH Global NV, Amsterdam, Netherlands) and AGCO (AGCO Corp., Duluth, Ga., U.S.) to create world models that permit sharing of parts and reduction of costs as is done in other transportation segments."
  • Lightweight is one of the key advantages of composites and why many industries are adopting it, however, in the agricultural industry, lightweight isn't always desirable despite the fact it can reduce fuel consumption and increase sustainability. This is because lightweight can impact vehicle stability.
  • For instance, "front-heavy combines need weight at the back of the vehicle to keep the rear wheels on the ground during operation. Hence, distribution of weight is key to ensuring safety and efficiency. All these factors mean weight is complicated when it comes to agricultural equipment, and its reduction doesn’t have nearly the buzz that it does in truck, bus and passenger vehicles. "
  • The challenges above suggest that the threat composite materials pose to traditional metal fabrication employed in the agriculture industry is quite minimal at the moment.
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Metal Fabricator Industries/Markets

The three metal fabricator industries and/or markets that are the most insulated against further adoption of composite materials include the agriculture industry, the healthcare industry, and the construction industry. It is important to note that although the industries may be the most insulated, no industry is immune from the adoption of composites in the long term. The composite market is experiencing rapid innovation and current challenges are increasingly being surmounted in all industries leading to increasing adoption across all industries analyzed.

Industries Where Metal Fabricators are most Insulated

Agriculture Industry

  • Although Composites are gradually being adopted in the agriculture industry, there are major obstacles that are slowing down the process.
  • The agricultural market is highly fragmented and the demand that each equipment needs to meet varies by geography. For instance, in the US, the demand is for larger and more modular equipment so farmers can farm increasingly large tracts of land efficiently, but in Europe where farm sizes are smaller, the demand is for appropriately sized farm equipment.
  • This is an issue because the geographically fragmented agricultural equipment market results in "fewer opportunities for global OEMs like John Deere (Deere & Co., Moline, Ill., U.S.), Case New Holland (CNH Global NV, Amsterdam, Netherlands) and AGCO (AGCO Corp., Duluth, Ga., U.S.) to create world models that permit sharing of parts and reduction of costs as is done in other transportation segments."
  • This also "means that global purchasing agreements are less common, so manufacturers, molders and materials suppliers must qualify in each region where they wish to make sales."
  • Another reason the adoption of composites in the agricultural industry is more difficult is that agricultural equipment makers target a use life of 50-60 years as the used equipment market is active and long-lasting equipment is expected, whereas typical car makers target 10 years use. This is also "complicated by the fact that most farm equipment spends its entire life outside, constantly exposed to heat, cold, wind, moisture, and UV radiation while being subjected to stone, gravel and dust impingement during operation."
  • There is also the issue of lower production volumes which makes composites less cost-effective than metals and steels. "With the exception of small riding lawnmowers, which can be produced in car-like volumes of 350,000 annually, most equipment is produced on the order of a few hundred to the low tens-of-thousands annually."
  • Lightweight is one of the key advantages of composites and why many industries are adopting it, however, in the agricultural industry, lightweight isn't always desirable despite the fact it can reduce fuel consumption and increase sustainability. This is because lightweight can impact vehicle stability.
  • For instance, "front-heavy combines need weight at the back of the vehicle to keep the rear wheels on the ground during operation. Hence, the distribution of weight is key to ensuring safety and efficiency. All these factors mean weight is complicated when it comes to agricultural equipment, and its reduction doesn’t have nearly the buzz that it does in truck, bus and passenger vehicles. "
  • The above reasons are why the agricultural industry is one of the most insulated against further adoption of composite materials in the United States.

Healthcare Industry

  • The healthcare industry is one of the industries that is expected to be the most insulated against further adoption of composite materials.
  • The healthcare industry isn't in the top eight industries where composite materials have been adopted even though it is one of the industries witnessing "staggering growth" in the metal fabrication market.
  • One of the main reasons there is low adoption of composites in the healthcare industry is due to the requirement for FDA approval and a need to demonstrate improved effectiveness over currently used alternatives before health insurance companies will consider funding.
  • In addition, although carbon fiber is used in the foot braces, the preference in the industry is for metal and a mix of ABS and polycarbonate plastic.
  • Cost is also a big issue even when composites have been shown to have slightly superior qualities. For instance, "metal also seems favored by Cyberdyne as they continue to develop their HAL products, with carbon and glass fiber shown as slightly higher in performance, but too high in cost."

Construction Industry

  • The composite material used in construction represents 18.7% by volume and 13.8% by value of all composite material used globally.
  • Although the construction industry is the second-largest market for composite materials in the US and the booming industry is expected to drive the growth in the composite market as adoption increases, it is also one of the markets that is expected to be insulated the most.
  • This is because the durability of composites employed in construction has not fully ascertained and doubt exists despite the tremendous potential because the acceptable durability of materials used in the field is about 100 years.
  • Current applications of composites in construction are mainly in respect to the manufacturing of bathtubs, doors, windows, and other applications, while the main structural strength is still provided by steel and other fabricated metals.
  • According to experts, "data on durability are still not organically collected and rationalized. Discrepancies between results obtained by different durability studies have been even observed and possibly attributed to different materials, processing, or conditioning conditions employed (for instance: different times elapsed before the execution of durability tests), being all fundamental information for a complete understanding of the effects of the external environment on properties of materials and for an accurate prediction of their behavior over their lifetime."
  • The fact metal and steel have cheaper initial cost than composite materials is another factor slowing down the adoption of such materials in the industry.
  • Concerns about the durability of composites, especially when faced with unpredictable conditions such as local weather, fire, explosive blast, earthquake, among others, have also slowed down its adoption in this industry.
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Part
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Metal Fabricators Response - Competition From Composite Materials

Metal fabricators are responding to competition from composite materials by producing lightweight and durable metal, corrosion-resistant metal, as well as by investing in metal 3D printing and composite materials.

Metal Fabricators Competiton Response

  • One of the main advantages of composites over steel/metal/aluminum is its lightweight and resistance to corrosion. Market fabricators are becoming more successful in making lighter and stronger steel that is as durable as steel and that have qualities that make composites desirable such as lightweight, resistant to corrosion, flexible, among others.
  • For instance, Airbus developed a new corrosion-resistant stainless steel alloy, “CRES”, for aircraft landing gear; while Harvard SEAS also developed a portfolio of slippery anti-corrosion coatings that also boost steel's strength;
  • Metal fabricators are also investing in metal 3D printing as a way to respond to the increased competition from composites and to stay innovative. Daimler and General Electric are examples of manufacturers that have started investing in 3D printing.
  • The metal industry is also increasingly adopting robots both as a way to combat labor shortages and as a way to produce cheaper steel and enable them to stay competitive in the face of other factors such as the increasing adoption of composites.

Metal Fabricators Investing In Composite Material Capabilities

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