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VALUE AND GROWTH OPPORTUNITIES FOR OLEFINIC-TPEs IN AUTOMOTIVE INTERIORS

PREPARED FOR:SPE TPO 2004Detroit, MIOctober 5, 2004

B/mydocs/papers/spetpo04ppt

PRESENTED BY:Bob EllerPresidentRobert Eller Associates,IncPh: 1-330 670 9566bobeller@prodigy.netwww.robertellerassoc.com

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• EFFECT OF ECONOMIC PRESSURES ON o-TPE MARKETS AND TECHNOLOGY

• VALUE-ADDED OPPORTUNITIES• PATH TO MARKET SHIFTS/ROLE OF o-TPEs• INTERMATERIALS COMPETITION• ROLE OF:

– NANO-FILLERS– SUPER-TPVs– HIGH PROPYLENE PLASTOMERS (hi-P-m-TPO)

• FOAM/FIBER GROWTH OPPORTUNITIES

HIGHLIGHTS

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ManagementDECISIONS

ANALYSIS

Robert Eller Associates, Inc.

Automotive Interior Soft Trim:Skins, Foams, Coated Fabrics, Textiles, and Acoustic Barriers

Prospectus for a Global Multiclient Industry Analysis

MODULEFABRICATION

ANDINTEGRATION

TECHNOLOGIES

REQUIREMENTS

OCCUPANT SAFETYACOUSTIC REQUIREMENTSWEIGHTELV LEGISLATIONESTHETICSTELEMATICS INTEGRATIONSENSORYSMELL

INTERIOR MODULES

- COCKPIT

- HEADLINER

- DOOR

- FLOOR/ACOUSTICS

- TRUNK LINER

- SEATING

- PILLAR COVERS

CONSTRAINTS

MANUFACTURING ECONOMICS

SKINS

FOAMS

SUBSTRATES

COATED FABRICS

TEXTILES (WOVEN, NON-WOVEN)

CARPET

ACOUSTIC BARRIERS

QUALITY

CRAFTSMANSHIP

PRODUCT POSITIONING

SUPPLY CHAIN MANAGEMENT

slide-covautointsofttrim701 02.vsd

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ManagementDECISIONS

ANALYSIS

Robert Eller Associates, Inc.CONSULTANTS TO THE PLASTICS AND RUBBER INDUSTRIES

Specialty Thermoplastic Elastomers ......... Markets,Economics, Technology, Intermaterials Competition

ENGINEERINGTPEs

METALLOCENEPLASTOMERS/ELASTOMERS

THERMOSETRUBBERS

PVCCOMPOUNDS

TPO SEBS

TPVs

Prospectus for a Euro/US/Japan Multiclient Industry Analysis

GRC03

NANOFILLERS

SUPER TPVs

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CURRENT AUTO/SUPPLIER DYNAMICS

AUTO PRICE EROSION

LEGACYCOSTS

MATERIALSPRICE

INCREASES

SUPPLY CHAINMANIPULATION

DIRECTPURCHASE

CREATEALTERNATE

PATHS

GLOBALSOURCING

SUPPLIERREDUCTION

REDUCE NO.OF SPECS

GRADESTANDARD-

IZATION

GEOGRAPHICSHIFT

OUTSOURCEPLASTICS

FABRICATION

SUPPLY CHAINMANIPULATION

DIRECTCOMP'DG.

SHORTENSUPPLYCHAIN

NEWTECHNOLOGY

MAT'LS. PRO-CESS

FEEDSTOCKPRICE

INCREASESPRICE PRESSURE

OEM

TIER 1sLEGACY COSTS

PRICE BATTLESRESINCOMPOUNDSUPPLIERS

TIER 2, 3

SOURCE: ROBERT ELLER ASSOCIATES, INC., 2004re/mydox/dow/auto suppl dyn 04.vsdlg/myfiles/visio/auto suppl dyn 04.vsd

 

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OLEFINIC TPEs (o-TPEs)

• TPOs

• PARTIALLY CROSSLINKED TPVs

• FULLY CROSSLINKED TPVs

• PLASTOMERS

• HIGH ETHYLENE PP COPOLYMERS

• EMERGENCE OF STYRENIC TPVs (SEMI-OLEFINIC)

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NEW TPE COMPETITORS, TECHNOLOGIES, AND TARGETS

TPEs

OLEFINIC(o-TPEs)

STYRENIC(SBCs)

SUPER-TPVsPVCTPEs

E-TPEs

TPO TPV HYDROGENATED(SEBS, SEPS)

ISOPRENE-BASEDMIDBLOCKS

NEWSBCTPVs

SILICONE

ACRYLATES

OTHER

TPU

COPE

COPA

OTHERS

p-TPV (PARTIALCROSSLINKED)

f-TPV (FULLYCROSSLINKED)

SOURCE: ROBERT ELLER ASSOCIATES, INC., 2004

NANO-TPOs

LGF-PPs

NFCs

DAMPINGPROPERTIES

FOAMS,2-SHOT,SEALS

-BROADER USE OFMETALLO ELASTOMERS-IMPROVED ADHESION

-INCREASED SOFTNESS-IMPROVED FOAM

TECHNOLOGY

BROADENEDAPPLICATION

RANGE -- SKINS,AIRBAG DOORS

re/m ydox/SP E TP O 04/new T PE com p 04.vsdlg/m yfiles/new T PE com p 04.vsd

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OPERATING HYPOTHESES

• TECHNOLOGY DRIVERS:– SUPPLY CHAIN SHIFT– BROADENED INTERMATERIALS

COMPETITION – EUROPE, N. AMERICA AND JAPAN

CONVERGENCE– CURRENT INTERIOR FABRICATION

INEFFICIENT– IP: SOURCE OF MAT’L/PROCESS

DEVELOPMENT EFFORTS

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OPERATING HYPOTHESES (CONT’D)

• ECONOMIC DRIVERS:– PRICE PRESSURE: SHIFTS IN o-TPE VALUE

CHAIN– COMMODITY PRICE LEVELS– o-TPE VALE OPP’YS UNDER-EXPLOITED– ASIAN DEMAND GROWTH

• KEEP MONOMER PRICE HIGH

• PLACE PRESSURE ON FABRICATED PART PRICES

• PROFITABILITY SQUEEZE ALL ALONG VALUE CHAIN

• GEOGRAPHIC INVESTMENT FOCUS SHIFT

• ASIAN COMPONENT IMPORTS STARTING

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OPERATING HYPOTHESES (CONT’D)

• GROWTH DRIVERS:– HEAD IMPACT REGULATIONS (FMVSS 201/208)– ACOUSTIC PERFORMANCE– OLEFINIC FOAM DEMAND/PRICE SHIFT?– MATERIAL/PROCESS COST SAVINGS

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BROADENED INTERMATERIALS COMPETITION FORAUTOMOTIVE INTERIORS APPLICATIONS

AUTOINTERIO RS ...

R IG ID, FLEXIBLE,FO AM

NANO -TPO s

SUPER TPVs

HIG HPRO PYLENE

PLASTO M ERS

M INERAL-FILLEDTPO s

BIO PO LYM ERRESINS AND

CO M PO SITESIM PRO VEDREACTO R TPO s

NFCs

LTW T. FIBERM ATS

LG F-PPs

NANO -TPVs

re/m ydox /SPE T PO 04/SPE T P O 04-intm tls com p auto int 04.vsdlg/m yfiles/v is io/SP E T P O 04-intm tls com p auto int 04.vsd

ROBERT ELLER ASSOCIATES, INC., 2004

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VALUE CREATOR EXAMPLE(S)

SUPPLY CHAIN CONSOLIDATION -DIRECT COMPOUNDING/FABRICATION

-CO-PROCESSING

-USE OF CONCENTRATES

-RIGID/FLEXIBLE COMBINATIONS

ELIMINATING LAYERS -SKIN/FOAM COEXTRUSION

-TWO-SHOT MOLDING OF LARGE PARTS

ELIMINATING COATINGS -MOLDED-IN COLOR

-BARRIER/ADHESIVE COATINGS

IN-PROCESS CRAFTSMANSHIP -DOOR MEDALLIONS

-DOOR TRIM

-IP TRIM

-NANO TPEs WITH LOW CLTE

SOFT TOUCH -TWO-SHOT MOLDING (LARGE PARTS)

-CO-EXTRUSION OF SOFT TOUCH SURFACED TPEs

-INCREASES WITH INCREASED HARD SURFACE USE (IP AND DOOR TRIM)

IMPROVED SCRATCH/MAR RESISTANCE -NANO-TPOs

USE OF RECYCLATE -FLOOR MODULES

-DOOR TRIM PANELS

VALUE CREATION FOR O-TPEs IN AUTOMOTIVE INTERIORS

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VALUE CREATOR EXAMPLE(S)

IMPROVED RHEOLOGY -LONGER FLOW

-MULTI-SHOT MOLDING

-THIN WALLING

-PARTS CONSOLIDATION

SAVING WEIGHT -VALUE INCREASE WITH CONTINUED HIGH FUEL PRICES

FOAMING -BODY SEALS

-SKINS

-DOOR TRIM PANELS

MONOMATERIALS SANDWICHES -SCRAP REDUCTION

-REDUCED PROCESS STEPS

ACOUSTIC PERFORMANCE -CONTROLLED DENSITY FOAMS

-ELIMINATION OF HEAVY LAYER CONSTRUCTIONS

IN FLOOR/ACOUSTICS MODULE

ON-BOARD ACOUSTICS/ENERGY ABSORBERS -HEADLINERS

-DOOR TRIM

-PILLAR TRIM

-FLOOR MODULE

IMPROVED STIFFNESS/IMPACT BALANCE -DOOR TRIM

-SUBSTRATES

-THIN WALLING

VALUE CREATION FOR O-TPEs IN AUTOMOTIVE INTERIORS (CONT’D)

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AUTO PP/TPO MARKETPLACE REALTIES

• PRICE DRIFT/INSTABILITY• EUROPEAN, JAPANESE & KOREAN OEMs SHARE OF N.

AMERICAN MARKET GAIN• RESIN SUPPLIER PROFITABILITY DECLINE• HIGH LABOR COSTS, COMPETITION, & WEAK

ECONOMY: VEHICLE PRICING PRESSURE• PRIVATE EQUITY GROUP ENTRIES• BUNDLING OF RESIN/COMPOUND SALES• MAJOR RESIN SUPPLIERS EXITING• OFFSHORE RESIN SUPPLIERS – ENTERING AUTO PO

SECTOR• COMPOUNDING EXCELLENCE – COMMANDS VALUE• SUPPLY CHAIN CONSOLIDATION• ASIA GROWTH IMPLICATIONS

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BROADENED PERFORMANCE ENVELOPE

• SCRATCH/MAR RESISTANCE• QUALITY OF MOLDED IN-COLOR APPLICATIONS• FOAM PROPERTIES• LOW TEMPERATURE PERFORMANCE• ENERGY ABSORPTION CAPABILITY• PERFORMANCE IN VALUE ADDED FABRICATION

PROCESSES– CO-EXTRUSION

– MULTI-SHOT MOLDING

– SEQUENTIAL MOLDING

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HO SE(a)

NO TES:* INDICATES NANO -TPO OPPORTUNITY(a) SUPER-TPV TARG ET(b) LGF-PP AND NANO -TPO COM PETIT IVE TARG ET

G LAZING SEALS EA FO AM S, HEAD IM PACT

NO N-CARPETFLO ORING

b/m ydox/papers/SPE TPO 04/SPE TPO 04-int oT PE nTPE 04.vsdlg/m yfiles/visio/SP E TPO 04-int oT PE nTPE 04.vsd

HIGH PERFO RM ANCEBO OTS/BELLO W S(a)

FASCIA*

EXAMPLE INTERIOR APPLICATIONS FOR RECENTLY DEVELOPED o-TPEs AND NANO-TPEs

SKINS*,(a)

STEERINGW HEEL

M ISC. INTERIO RSOFT TOUCH

STEP PADS ANDSILL PLATES*(b)

CO ATED FABRICS

ENERG Y ABSO RBINGSEAT BACK

HEAD IM PACT

SOURCE: ROBERT ELLER ASSOCIATES, INC., 2004

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NANO o-TPEs

• NANO-SIZED MINERAL FILLERS : LOWER CONCENTRATIONS (3-5 VS 12-20%), THEREBY:– AVOID COMPOSITE MORPHOLOGY DAMAGE

– LOWER DENSITY

– IMPROVED SCRATCH/MAR RESISTANCE

– LOWER CLTE, BETTER DIMENSIONAL TOLERANCE

• CLAY NANO-TPOs: PENETRATION STARTED N. AMERICA (GM)

• ALTERNATIVE APPROACHES (EUROPE/JAPAN?)– FINER TALC

– FORMULATION

– COMPD’G PROCESS

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NANO FILLERS IN TPVs

• CLAY FILLERS CURRENTLY USED IN TPVs • SUBSTITUTION OF NANO-CLAYS IN EPDM

PORTION ON o-TPV:– IMPROVE RHEOLOGY

– BETTER PROCESSABILITY

– REDUCE TAN δ VALUES

– INCREASE STORAGE MODULUS

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SUPER TPVs (s-TPVs)

• NEW GENERATION BASED ON A BROADENED RANGE OF ELASTOMERIC COMPONENTS– MARKET ENTRY PHASE

– ENHANCED TEMPERATURE

– OIL RESISTANCE

– COULD PENETRATE AUTOMOTIVE INTERIORS

– “SILKY” FEEL (SILICONE-TPV)

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GRADE NAME ELASTOMER TYPE MATRIX RESIN(S)

SUPPLIER

TPSiV SILICONE PA, TPU DOW CORNING

ZEOTHERM POLYACRYLATE (ACM) PP, PA, POLYESTER

ZEON

E-TPV ETHYLENE ACRYLATE (AEM)

COPE DUPONT

UNIPRENE XL HYDROGENATED SBC (H-SBC)

PP TEKNOR APEX

SEREL(a) STYRENE BUTADIENE (SSBR)

PP GOODYEAR

SEPTON V H-SBC, REACTIVE HARD BLOCKS

SBC TRIBLOCK

KURARAY

SUPER TPV AND SBC TPV COMPETITORS

NOTE:(a) AVAILABLE IN MASTERBATCH FORM

SOURCE: ROBERT ELLER ASSOCIATES, INC., 2004

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INT APPLICATIONS O-TPE, COMPETITOR TYPE

NANO-TPO

s-TPV PVC ALLOYS

HI-P-M-TPOs LGF-PPs SBC-TPVs

AIRBAG DOORS X X X?

COATED FABRICS X X

DOOR TRIM/QUARTER PANELS X

ELASTIC FIBERS/TEXTILES X

IN MOLD DECORATION FILMS X?

IP SUBSTRATES X

SKINS X X X

SEAT BACKS X X(b)

SOFT TOUCH X

STEP PADS X X

PILLAR TRIM X? X?

FLOOR MODULE X

INTERIOR APPLICATIONS FOR RECENTLY DEVELOPED TPEs AND KEY COMPETITOR TYPES

NOTES:(a) AN ANNOUNCED TARGET FOR DuPONT E-TPV(b) WHERE IMPACT STRENGTH IS REQUIRED

SOURCE: ROBERT ELLER ASSOCIATES, INC., 2004

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SILICONE-BASED s-TPVs

• TPSiV (DOW CORNING) – CROSSLINKED SILICONE BASED ELASTOMER ISLAND IN PA OR TPU MATRIX– GLAZING SEALS

– AIRBAG DOORS

– SOFT TOUCH COMPONENTS

– CHEMICAL RESISTANCE

– SKINS?

– COATED FABRICS?

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ACRYLIC ELASTOMER-BASED s-TPVs

• DUPONT – MODIFIED ETHYLENE-ACRYLATE RUBBER (AEM) IN A COPOLYESTER (COPE) MATRIX– HEAT RESISTANCE (3000 HRS) IN HOT ENVIRONMENT

(150°C)

– HOSE TARGET?

• ZEON’S s-TPV CANDIDATE – POLYACRYLATE RUBBER (ACM) IN PA (NYLON 6) OR COPE MATRIX

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STYRENIC ELASTOMERS

• HYDROGENATED SBR, (SSBR), HYDROGENATED SBC (H-SBC): – GOODYEAR SEREL s-TPV

– TEKNOR APEX – H-SBC

– BOTH USE – PP MATRIX• IMPROVED OIL RESISTANCE

• WET COEFFICIENT OF FRICTION

• LONG TERM COMPRESSION SET

– KURARY SEPTON V - H-SBC

• MASTERBATCH FORM

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SUMMARY

• PRICE WARS• SUPPLY CHAIN SHIFTS• BROADENED PROPERTY

ENVELOPE/COMPETITION• ROLE FOR NANO-FILLERS• ASIA IMPACTS• FOAMS/COATED FABRICS: NEW OPPY’S• BIOPOLYMERS GROWTH• VALUE ADDED OPPORTUNITIES