Measuring the Impact of Covid-19 - on the Foam and Adhesives & Bonding Industries
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Measuring the
Impact of Covid-19
on the Foam and
Adhesives & Bonding
Industries
DISCOVER:
hich organizations are likely to need financial assistance
W
within the near future
How organizations are pivoting their manufacturing
activities to stay operational
hich business activities will be front and center in
W
company investment strategies over the next 24 monthsSurvey Demographics
Who took part in the survey?
Type of organization
Foam / Adhesives & Bonding Manufacture 30%
Converter / Fabricator 21%
Welcome to the Measuring the outbreak of the global pandemic in
Supplier of Chemicals / Raw Materials / Additives 17%
Impact of Covid-19 on the Foam and March 2020. We invited a panel of four End-User / OEM / Component Manufacturer 17%
Adhesives & Bonding Supply Chain industry experts to review the results in Supplier of Manufacturing Equipment / Tools 7%
report. a live webinar and discuss the current Testing / Engineering Services 3%
status of the market and how they view Other 3%
We hope you are safe, healthy and well, the future of the industries. Some of the Supplier Surface Treatment and Coatings 2%
and that you have personally managed points they made are included in this Academia / ResearchWhich markets / industries do you serve?
The respondents serve a variety of end-user verticals:
Automotive 76%
Medical 60%
Construction 57%
Packaging 54%
Electronics and Appliances 51%
Aerospace and Defense 45%
Apparel, Sports and Leisure 34%
Other 5%
Before the pandemic, list the top three performing markets for your organization:
Automotive 23%
Construction 15%
Packaging 13%
Consumer Goods & Appliances 12%
Medical 12%
Electronics 8%
Aerospace & Defense 6%
Furniture and Bedding 6%
Apparel, Sports & Leisure 3%
Marine 2%
How would you describe the state of your organization’s growth before the Covid-19 outbreak?
Performing in-line with projections 54%
Performing beyond projections (sustainably) 20%
Performing below projections (but optimistic) 20%
Performing beyond projections (unsustainably) 3%
I don’t know 2%
Performing below projections 1%
(expect performance to continue)The impact of the Covid-19 pandemic on businesses
in the Foam and Adhesives & Bonding Supply Chain
JANUARY 9% MARCH 65%
FEBRUARY 19%
WE ARE NOT YET EXPERIENCING IMPACT 7%
Given the spread of the virus from the
end of December 2019 throughout China
65% of all organizations indicate March as
the month they started to feel the economic
“We’ve seen that
and the rest of East Asia, some business impact. On March 11, 2020, President Trump Covid-19 has really
already started noticing economic impact suspended nearly all foreign travel as a
before the virus outbreak was declared response to the WHO’s categorization of created and highlighted
a pandemic by the WHO on March 11,
2020. Although only 9% of the total
the disease as a pandemic and most states
had entered lockdown by the end of the focus on vulnerabilities
respondents indicated to have started
noticing an impact as early as January,
month [Map of start dates USA Stay at
Home Order]. A majority of converters and
in the supply chain
nearly a quarter (23%) of end-users / fabricators (72%), foam and adhesives and resulting in a lot of
OEMs / component manufacturers said bonding manufacturers (66%), chemicals
they started noticing the impact during / raw materials / additives suppliers disruption, financial
this month. (64%) and end-user / OEMs / component
manufacturers (57%) all started to take a hit
hardship, quality
A fifth of the total respondents started
noticing the economic impact in
during this time. corruption and many
February: it consisted of 29% of the Only 7% of organizations are saying they other impacts that we
testing and engineering services, 22% of were not yet experiencing any economic
the suppliers of chemicals / raw materials impact at the time of the survey, within have not anticipated”
/ additives and 21% of the foam and this group a third are foam and adhesives
adhesives & bonding manufacturers. manufacturers and a fifth converter / Alexander Zmoira - Managing Director, Risk
fabricators. and Financial Advisory, DeloitteImpact on manufacturing operations
FEBRUARY 12% WE ARE NOT YET EXPERIENCING IMPACT 11%
MARCH 72%
JANUARY 5%
The same can be said about more visible for some (23%) compared to
manufacturing operations. As ‘non- January (9%).
essential’ businesses were forced
to close their doors in March, a It is interesting to note that 21% of DEEP DIVE –
converters and fabricators say they are not
majority of the organizations saw their
yet experiencing impact (as of May 2020),
END-USERS:
manufacturing operations impacted at
which is also the case for some suppliers
this time. This was especially the case It is worth pointing out
for foam and adhesives & bonding of chemicals / raw materials / additives
(14%) and suppliers of manufacturing that a quarter of the
manufacturers (84%), end-users / OEMs
/ component manufacturers (77%), and equipment / tools (29%). respondents in the end-
converters and fabricators (70%). user group operate in
Impact on production & financial aid
This impact appeared to happen more the automotive market,
We asked our respondents to indicate the
gradually over a couple of months level of current production within their whilst 17% serve the
across businesses in the suppliers of organization. On average, suppliers of raw medical market. 14% serve
manufacturing equipment / tools materials and chemicals as well as foam aerospace & defense,
(67%), suppliers of chemicals / raw and adhesive suppliers seem to be least
materials / additives (57%), and Testing affected by the pandemic; whilst OEMs and
followed by construction
/ Engineering Services (57%) tiers of the end-users estimated their production levels (13%). Apparel, sports &
supply chain, as fewer of them seemed to at half capacity. leisure take up 11% and
experience impact during just the month
of March. Unsurprisingly, as more than 200 electronics and packaging
universities closed their doors from the both have 7% of the pie
For suppliers of chemicals / raw middle of March, academics and research
materials / additives, February appeared are on hold at the moment.
to be a key time when impact became
Continued...Average percentage of current production
Supplier of Chemicals / Raw Materials / Additives 68.80%
Foam / Adhesives & Bonding Manufacturer 65%
Converter / Fabricator 61%
Supplier of Manufacturing Equipment / Tools 60.70%
End-User / OEM / Component Manufacturer 50.30%
Testing / Engineering Services 47.10%
Other 45%
Academia / Research 10%
On March 27, 2020, the US Senate passed a financial assistance and just over half (51.5%) According to the NY Times, “midsize
$2 trillion economic relief package to help expect to be needing funding at some point companies, or those with between
companies mitigate the loss of revenue in the future. 500 and 10,000 employees, get to
due to the coronavirus. borrow at an interest rate that is
The same goes for the converters and
Nearly 60% of the respondents have fabricators (14% and 56% respectively). not higher than 2 percent annually,
indicated that their business would and don’t have to repay principal or
require financial assistance at some stage. It seems that relatively few of the foam interest for six months.
11.5% say their organizations have already and adhesives & bonding manufactures
have already received any funding at the The midsize companies cannot “outsource
received financial aid, while 8% thinks
time of the survey (6.5%) but 48% say they or offshore” jobs from the start of the loan
their business could continue without for
expect they will between 1-6+ months. until two years after it has been repaid.
another 1-2 months. 14% of respondents say
they would be able to continue operations Nearly a quarter say they won’t need any
Businesses with 500 or fewer employees
for another 2-4 months and 15% thought at all, as well as 21% of the converters and
will get loans directly from banks to cover
they could continue for another 6 months fabricators and 14% of end-users / OEMs /
more than two months of payrolls and
without financial aid. 20% of the total said component manufacturers.
some other operating expenses, with the
they would not need any. Of all segments in the supply chain the government paying off the balance so
suppliers of chemicals / raw materials / long as the companies either do not lay
Looking at specific tiers within the foam
additives are most resilient: 43% indicated off workers or rehire ones they’ve already
and adhesives & bonding supply chains,
that they wouldn’t require financial let go.” [NY Times, March 26, 2020]
17% of the end-users / OEMs / component
manufacturers have already received assistance.“It’s been nice
to sit back and The role of products for the transportation
industry. One respondent in this
category said their organization
can no longer continue the
essential
watch the industry work it used to do for the
automotive industry and that
innovate rapidly, they have switched to produce
PPE gowns instead, which now
we are able to see classifies them as an ‘essential’
businesses
business.
regulations drop
The remaining 14% of ‘essential’
down and loosen businesses is made up of
up. Companies suppliers of manufacturing
equipment / tools (7%), testing
are quickly able to / engineering services (3%),
suppliers of surface treatment
collaborate and On March 19th the Department Converters and fabricators and coatings (2%) and those
of Homeland Security (DHS) make up for 23% of the
provide solutions. and the Cyber Security businesses that are deemed
who classified themselves as
‘other’ (2%).
What we are and Infrastructure Agency
published an list of essential
‘essential’. When asked why they
are ‘essential’, many respondents The definitions in the initial
asking ourselves critical infrastructure workers.
Organizations operating within
say their business works on
medical equipment (such as face
list by the DHS proved
problematic, however, as
is how do we one of these 14 categories are masks and shields) as well as many States developed their
allowed to continue operations parts used in medical equipment own interpretations, and US
maintain some of during the Covid-19 lockdown (such as foam strips). Others companies vie to be declared
that collaboration and according to our survey,
74% of the respondents
work on packaging solutions and
plastics processing.
‘essential’ in the crisis. Indeed
26% of the respondents say
speed?” indicated that their business
The third largest category (20%)
their business is not classified
is considered an essential as ‘essential’, of which 33% is
business. of businesses classified as foam and adhesives & bonding
Alan Robinson, NA Sr essential represents suppliers
Commercial Director PU & CAV, manufacturers, 22% is end-
A further breakdown shows of chemicals / raw materials user / OEMs / component
The Dow Chemical Company – that 28% of the businesses / additives. They can continue
discussing industry innovation manufacturer, 15% are
classified as ‘essential’ are foam production as they supply raw converters and fabricators, 7%
to meet the needs of essential and adhesives & bonding and basic materials to a variety
industries are suppliers of chemicals /
manufacturers. Many indicate of industries, such as pharma, raw materials / additives, 7%
that their business is classified medical, aerospace, defense and are suppliers of manufacturing
as essential because they supply food packaging. equipment / tools, 6% are
personal protection equipment testing / engineering services,
and other products to the 15% of the ‘essential’ businesses
are end-users / OEMs / 6% classified themselves as
medical industry, or provide ‘other’, and the remaining 4% is
materials products for the food, component manufacturers, as
they continue to supply medical made up of academia / research
construction, defense and and suppliers of surface
infrastructure industries. equipment, electronics, and
treatments and coatings.
Continued...04
“I think we’ve got some big questions for regulators, why is Which industries are foam and adhesives
it ok to take two weeks to qualify an adhesive in emergency but
ordinarily it takes you nine months? If you want us to innovate & bonding organizations still serving?
and help things move forward when this has all disappeared, we
should be taking a long hard look at some of those regulations”
David Hatrick, Vice President Innovation, Huntsman Advanced Materials PERSONAL CARE AND HYGIENE
MEDICAL
FAST-MOVING CONSUMER GOODS AGRICULTURE GOVERNMENT
As such, we decided to look respirator masks, pieces for
further into which industries ventilators and foam strips for
the adhesives and foam supply face masks.
chains are still serving and how
FOOD AND BEVERAGE
AUTOMOTIVE ALL
they have been able to (re)focus Suppliers of chemicals /
their manufacturing activities raw materials / additives are
working on the development of ADHESIVES AND LABELLING
LOGISTICS
to meet the demands of the
additives, antimicrobial inhibitors,
DEFENSE
medical and pharma end-user
verticals, as the demand for hand sanitizers, and increased SPORTS AND LEISURE
production of plastic products
OTHER
automotive and construction BEDDING
goods and services steeply for the medical industry. This
category has also been working
dropped. While many indicated
that what they develop is on developing PPE. PACKAGING MARITIME
APPLIANCES
confidential information, some
organizations were able to share
As with the previous three
categories, the products
(CONSUMER) ELECTRONICS
with us what they have been
working on.
supplied by end-users / OEMs
/ component manufacturers
INFRASTRUCTURE TRANSPORTATION DATA
SURFACING
also vary, but there appears to be CONVERTING / FABRICATING RETAIL PRODUCT ASSEMBLY
The majority of foam and
less activity than is happening
adhesives & bonding
manufacturers say they are in the other sectors. A couple CHEMICALS AND RAW MATERIALS
CONSTRUCTION
working on face masks and of respondents in this category
shields, hand sanitizer and other say their business is designing
types of PPE. Other answers additive manufactured PPE and
include foam and adhesives for prototypes. Another respondent
face masks, cloths, temporary said their business is designing a FOOD AND BEVERAGE AEROSPACE
clean rooms and emergency new type of ventilator.
UTILITIES AND ENERGY PHARMA SIGNAGE AND GRAPHICS
ventilators. The remaining businesses work
Converters and fabricators on development of (components PERSONAL CARE AND HYGIENE
also supply PPE but have also for) PPE, ventilators, assist in
INDUSTRIAL / ADVANCED
HVAC
been working on specific parts the development of temporary
that would be used in urgently hospitals, sanitizers and enabling
required medical equipment,
such as die cut parts for
large scale sanitation.
MANUFACTURING APPARELHas your company identified opportunities
to supply new solutions for mitigating the outbreak?
Yes No
Foam / Adhesives & Bonding Manufacturer
52.4%
Foam / Adhesives & Bonding Manufacturer
47.6%
Type of organization
Type of organization
34% 24%
Converter / Fabricator Converter / Fabricator
20% 21%
Supplier of Chemicals / Raw Materials / Additives End-User / OEM / Component Manufacturer
17% 18%
End-User / OEM / Component Manufacturer Supplier of Chemicals / Raw Materials / Additives
16% 17%
Supplier of Manufacturing Equipment / Tools Supplier of Manufacturing Equipment / Tools
5% 10%
Testing / Engineering Services Testing / Engineering Services
3% 4%
Other Other
3% 3%
Supplier Surface Treatment and Coatings Supplier Surface Treatment and Coatings
2%
2%
Academia / Research
1%Looking ahead – how will Covid-19 impact the future
of the Foam and Adhesives & Bonding Supply Chain
In order to get some insight strategic investment they expect and marketing and business and marketing and business
into how the pandemic has for these activities over the next development. development will become more
affected business priorities 24 months. important in future investment
and investment strategies for During the pandemic, most strategies.
companies within the foam Prior to the outbreak of the business activities were down to
adhesives supply chains we pandemic in March, the foam minimal operationality, although It seems the supply chain will
asked the respondents to and adhesives & bonding sales and account management mainly be consolidating their
indicate how their businesses supply chain prioritized the as well as marketing and manufacturing activities as
prioritized certain activities following business activities: business development continued respondents expect that there
before the pandemic, which corporate sustainability, new on reduced activity levels. will be slightly less investment
activities continued during product development and in hiring and developing talent,
launching products, sales and Looking ahead, industry expanding manufacturing
the pandemic, and how much professionals expect that sales
account management, R&D, capacities and mergers &
and account management acquisitions.
Business priorities and activities: then, now and the future ahead
Before pandemic Now (April – May 2020) After pandemic (expected)
1-2 = no priority, 2-3 = low priority, 2-3 = minimal operationality, 3-4 = reduced 1 = will become less important,
3-4 = medium priority, 4-5 = High priority activity, 4-5 = Business as usual* 5 = no impact, 10 = will become more important
1 3 5 1 3 5 1 4 7 10
Corporate sustainability
Launching new products / product development
Sales & account management
R&D
Marketing & business development
Hiring & developing talent
Expanding manufacturing capacity by investing
in capital goods or opening new plants
Circular economy
Digitization & automation
Mergers & acquisitionsFuture outlook on business plans
While much will remain When asked about the top of the respondents feel there is slowed down, it is difficult to say
uncertain for the ongoing future, challenges in ensuring business enough inventory and availability how the impact on revenue will
it is important to look ahead to continuity, respondents indicated of materials and components to develop in the coming months,
how the industry can and will that a reduction in orders and continue production in the event though the rise in demand
recover from this period of severe sales is the biggest challenge of a prolonged disruption in the within the medical and pharma
disruption. Our respondents do for their business at present. supply chain. sectors, and the fact that many
expect increased investment in Otherwise, it seems the supply companies throughout the
sales and account management, chain is relatively robust in their They are less optimistic supply chain are able to continue
and marketing and business ability to deliver raw materials regarding the impact on a their manufacturing activities,
development, undoubtably to try and fulfilling & delivering orders. business’ revenue. As economies offers many new opportunities.
and recover the losses brought This is reinforced by the results of globally are taking a hit and
on by the crisis. the sentiment poll. The majority supply chains and demand have
CLOSED
Top 3 challenges in business continuity
1. Reduced orders / sales - 34% 2. Availability of workforce - 16% 3. Shutdown of suppliers who classify as ‘non-essential’ businesses - 13%
4. Delay in delivery of orders - 13% 5. Availability of raw materials - 12% 6. Shipping and distribution - 10% 7. Shelf life of stockpiled inventory - 2%3 3
Sentiment on 2 4 2 4
organizational 1 5 1 5
response to crisis There is enough inventory and availability of raw materials The pandemic will minimally impact our
and/or components to continue production in the event of a organization’s revenue
prolonged disruption in the supply chain (2+ months)
3 3 3
2 4 2 4 2 4
1 5 1 5 1 5
The company’s leadership had enough resiliency Leadership has put mental and physical wellbeing Corporate communications to employees were
planning in place to ensure business continuity at the forefront of their strategy timely, structured and clear in response to this crisis
during this crisis
3 3 3
2 4 2 4 2 4
1 5 1 5 1 5
Working remotely will not disrupt the productivity I have a better work-life balance working from I am being more productive working from home
of my team home
1 - Totally disagree 2 - Disagree 3 - Neutral 4 - Agree 5 - Totally agree
Finally, we investigated do not feel that working remotely improvement. When asked to embracing technology sooner,
sentiment towards their has impacted their personal elaborate if their organization stock PPE and to not keep
employer’s handling of the crisis situation much, such as keeping could have done to better inventory levels so tight.
and the impact on their own up productivity while working prepare for the outbreak some
work life. from home and maintaining a of their feedback included: Having said that, an
work-life balance. Of course, it better support for working overwhelming majority of 77% of
On average, respondents indicated must be noted that the majority from home, better and faster the respondents think that their
to be optimistic regarding their of respondents are in a leadership communication, contingency organization couldn’t have done
employer’s preparedness to the role themselves. plans, better availability of virtual anything else to better prepare
outbreak of the pandemic, as tools, identifying which customers for a black swan event like this
well as its communications to However, 23% of the respondents were vulnerable for shutdown, pandemic.
employees and customers. They do feel that there was room forWhat is the new normal for research and development in the technical foam and adhesives and bonding sectors? Join our next webinar: re-inventing r&d in the new normal: re-examining your existing technology and product portfolio for quick wins Tuesday June 30, 2020 5pm ET Reserve your seat now
Virtual Event August 2020
A week long interactive digital event experience
coming to you 24 - 28 August 2020. An opportunity
to inform and educate, connect and build relationships
with peer-peer matchmaking and networking.
More information coming soon
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