Composites Industry Outlook: Interview with Stefan Osterwind2 September 2022
With the Composite industry going through dynamic times, AOC continues to be committed to supplying quality resins and to delivering new product innovations. Stefan Osterwind, AOC Managing Director in the EMEA region, explains the AOC strategic direction and shares his view on the Composites market.
What is the outlook for the Composites industry?
Composites are widely accepted as durable, lightweight, and sustainable material solutions, through their design flexibility and great product versatility. AOC believes composites will continue to play a great role in society, being instrumental materials for key industries like wind energy, transportation, infrastructure and construction. We are convinced that there is a lot of room for composites to grow and add value. Consequently, as a company we are working hard with our customers around the world to keep the business healthy and sustainable, offering security of supply of quality resins and through continued support.
What is required to keep the Composites industry sustainable?
Composites have been able to compete well with traditional materials like steel, wood and concrete, both with respect to sustainability and cost. Composite parts feature inherent low maintenance, they are driving lower emissions in cars and energy efficiency in wind turbines, they provide longevity (in applications like bridges and relining of pipes this can be more than 50-75 years), and often they are the most cost efficient material solution. That by itself is a good starting point for a sustainable business.
Access to quality raw materials and energy is instrumental for being able to manufacture these versatile materials. AOC has been working on a continuous basis with its suppliers to build reliable sourcing, both for the immediate future as well as long term. This also means working on new raw materials for improving supply security and/or performance, changing the energy mix in our operations, and a drive to reduce energy consumption and greenhouse gas emissions.
At the same time, AOC recognizes that working safely with chemicals, and the availability of solutions for end-of-life are prerequisites for a successful business. With those goals in mind, we take an active role in helping our customers and the supply chain in becoming more professional and sustainable.
What specific actions do you take as company?
As AOC, we support our customers in making their operations more robust, taking out waste, and ensuring end-part performance is consistent and predictable. Also, we take the lead in promoting safe working practices and a healthy working environment in our customers’ factories.
Research and Development activities at AOC have led to the development of low styrene emission and styrene-free resins, to resins based on bio-content and/or renewable content, and solutions for lightweight composites based on carbon fibers. The latest development has been the quality resins based on recycled PET which we produce in our Czech plant. So from a product side we have a long history of looking for sustainable solutions.
At the same time in our plants we have searched for ways to reduce energy consumption, reduce waste of all kinds including chemicals and water. AOC is strongly committed to this industry, and has been continuously investing to build capacity, install state-of-the-art equipment, and develop its professional team. Through the industry associations EuCIA and Cefic, we have been working on the development of solutions for recycling.
What is your view on the supply of raw materials for composite resins?
The composite industry has been going through some rough times in the past two years. After an initial drop in volumes in 2020 caused by COVID-19, the industry has experienced a major increase in demand, resulting in an unprecedented tightness of supply chains. At that stage and despite many of these difficulties, AOC has been able to meet most customer requirements and enable security of supply for its leading partners.
The recent conflict in Ukraine is leading to more uncertainty about availability of natural gas and is impacting the energy mix available both for consumers and industries. Like many others, also AOC is experiencing a big surge in energy costs affecting the cost of our operations. It is not easy at this stage to make any prediction on the impact of natural gas availability and energy mix variation on raw material availability. At this stage, we are confident that our suppliers are taking the right measures for ensuring continued supply.
Do you see changes in cost drivers for the industry?
Traditionally, the cost of UPR manufacturing has been influenced mostly by the cost of raw materials. In many cases, a significant portion of the cost was associated with raw materials like styrene, maleic anhydride, phthalic anhydride, and glycols. In the past months, we have seen an interesting change: the increased cost of energy and logistics have shifted this ratio significantly downwards.
In addition, because of different movements of key raw materials like Phthalic Anhydride, Isophthalic acid and Dicyclopentadiene, the historical finished product price difference is no longer valid and needs to be reviewed.
Also, the rising cost of new equipment and capital investments is increasing significantly due to the lack of availability of key items like semi-conductors, Stainless Steel and a skilled workforce to produce them.
Can you elaborate more on the AOC business strategy?
Customers require a security of supply that is sustainable, they want to professionalize their operations for increasing production series, and need a supplier that grows with them and they can build on. The number of resin suppliers that can bring that perspective is limited, yet AOC is determined to be a supplier of choice.
The AOC strategy is very much focused on delivering value from sustainability and innovation. We focus on selling quality resins and on working closely together with our customers in creating material solutions for new applications. The goal is that our customers can continue to meet the needs of OEMs and end-customers around the world. At the end, we can only flourish if our customers are growing and remain competitive.
In the coming years you will see many more examples coming from AOC of how innovation can drive better performance and improved competitiveness. We believe such collaboration can rejuvenate the industry and bring business successes for our partners.