(Photo courtesy of gremlin via gettyimages.com.)
2022 Voices from the Top: Adhesive & Sealant Industry Insights
To develop Voices from the Top, we reached out to key leaders at some of the top adhesive and sealant companies to get their insights on a number of issues.
I’m excited to introduce our new Voices from the Top series, a companion piece to the 2022 ASI Top 20. To develop Voices from the Top, I reached out to key leaders at some of the top companies in the industry to get their insights on a number of issues.
Thanks so much to the executives at Henkel, 3M, H.B. Fuller, Bostik, and Jowat who participated this year. Here you can discover what they are thinking about subjects such as their companies’ strategies for success, supply chain issues and other challenges, and what opportunities they anticipate for the adhesives and sealants industry.
Jan-Dirk Auris, Executive Vice President, Henkel Adhesive Technologies
Henkel’s Adhesive Technologies segment accounted for 48% of its total sales in 2021, or €9.6 billion (approximately $10.3 billion). Compared to the prior year, the Adhesive Technologies’ segment saw sales increase by 11%, due primarily to industrial recovery following the COVID-19 pandemic, as well as pricing increases. Henkel is ranked number 1 on the 2022 ASI Top 20.
Jan-Dirk Auris serves as executive vice president for Henkel Adhesive Technologies. He recently shared his thoughts on the company’s business strategies, trends facing the industry, and plans for the future.
Jan-Dirk Auris is executive vice president of Henkel Adhesive Technologies. (Photo courtesy of Henkel.)
To what do you attribute Henkel’s success, particularly given the significant challenges of the last couple of years?
The last years have been characterized by multiple unpredictable challenges, especially with the outbreak of the COVID-19 pandemic and a significant decline in the industrial production globally in early 2020. However, after a sequential demand recovery in the second half of 2020 across all business areas and regions, we have been able to even outperform our pre-pandemic results in 2021—despite of the well-known impacts of transport and logistics, availability of raw materials, and increasing costs across our supply chains.
The main success factor in our adhesives business at Henkel is our strong focus on our customers. Based on our global market know-how, our strong team of experts, and our unmatched technology portfolio, we make high-impact solutions happen that create value for our broad customer base around the globe. Therefore, we are in close contact with them on a daily basis, understanding their different needs and collaboratively start working on solutions already in the design phase of new products.
To achieve this, we are constantly reviewing and investing into our portfolio, our tools and teams as well as into our innovation capabilities. In terms of innovation, we are focusing our efforts on key megatrends such as mobility, connectivity, and especially sustainability.
For example, we have started operating our new Inspiration Center Düsseldorf during the pandemic in 2021, the biggest single investment in our company’s history. The €130 million plus [approximately $138.9 million] building serves as an innovation center with more than 30 laboratories, as well as a global customer center that significantly enhances our collaboration and innovation capabilities. For the first time ever, we now can showcase and connect all our technologies under one roof and offer more than 600 employees a modern and inspiring work environment reflecting new work models as well. And we are currently constructing a similar innovation center for the Asia-Pacific region in Shanghai.
On the other hand, the speed and impact of digitalization is a real game-changer for us that not only allows us to develop products faster but also accelerates and improves our abilities to interact and react. Over the past years, we have implemented different tools and technologies that help our teams in R&D, supply chain, and sales functions to reach a new level of agility and collaboration. In addition, we have a strong focus on our people and constantly invest in training and talents.
And last but not least, we are focusing our resources on future opportunities. Today, without a doubt sustainability is the overarching theme that sparks innovation—across all end-use sectors around the globe. The digitalization has changed the way we work, but solutions tackling climate change and contributing to a lower environmental footprint have become key to drive value for our customers and society. At Henkel, we have a longstanding valued tradition to foster sustainability since decades. Thus, we are in a strong position to support our customers to reach their sustainability targets with regards to CO2 reduction, circular economy, or health and safety efforts.
What are your expectations for the adhesive and sealant industry through the remainder of 2022 and the first half of 2023? What challenges and opportunities are you anticipating?
Our Adhesive Technologies business unit had a very strong start into 2022. For the first quarter, we reported nominal sales growth of 11.6%, with all our business areas contributing, from €2,358 million [~ $2.5 billion] in the prior-year quarter to €2,631 million [~ $2.8 billion]. Organically (i.e., adjusted for foreign exchange and acquisitions/divestments), we increased sales by 10.7% compared to the first quarter of 2021. Volumes remained stable, while prices rose in the double-digit percentage range. For the full year 2022, we now expect organic sales growth in the range of 8.0 to 10.0%, mainly due to passing on of higher raw material and logistics costs in the form of higher prices.
We will continue to face a lot of different challenges for the remainder of the year and for 2023 as well. The extraordinarily tense situation on the raw material markets and in global supply chains has been worsened by the war in Ukraine. As a result, prices for direct materials and logistics services have once again increased significantly and stronger than previously anticipated. In addition, we have announced in April to exit our business activities in Russia, and we have decided to discontinue our operations in Belarus as well. This affects total annual sales in a mid-three-digit million euro range for Adhesive Technologies. With regard to material prices, we now anticipate an increase in the mid-twenties percentage range for the full year compared to the average for 2021.
However, we also see a lot of opportunities to further grow our business and to bring the value creation for our customers to the next level. Sustainability has become a key differentiator in the transformation towards a greener world, and we will continue intensifying our efforts here. At Henkel, we are highly committed and well-positioned to support our customers with innovative solutions across industries that will enhance sustainability in a broad variety of applications.
How will your company address these challenges and opportunities moving forward?
In terms of raw materials and logistics, we are working very closely with our customers and suppliers and have installed task forces for each of our business units to mitigate challenges and steer our supply base. Thanks to the full commitment of the teams, we could avoid significant impacts on our operations and in customer supplies until now. As already announced in our outlook for 2022, we are forced to pass on to our customers the significant increase in raw material and logistics costs in the form of higher prices.
Our key focus moving forward will be on executing towards our sustainability ambition to further drive a real impact. Therefore, we aim to lead by example as well as to lead by technology. Besides continuous investment into our own operations, we aim to cut the CO2 emissions from our raw materials by at least 30% by 2030 and will transform our portfolio by using more renewable carbon-based materials.
During the past years, the amount of recycled and bio-based content has already become more important in our material play. For example, we have launched the first bio-based structural adhesive for consumer electronics applications last year. The hot melt consists of up to 60% renewable contents and at the same time offers enhanced properties for the debonding of smartphones.
The focus of our technology innovations will be on solutions and services that enable emission reduction and circularity—and the opportunities are uncountable here. This for example includes new solutions for sustainable mobility such as electric cars, replacing plastics in packaging to improve the recyclability and to drive a circular economy, or debonding solutions to enable the repair of consumer goods and appliances for expanded lifecycles. In all these areas, adhesives play a key role to further drive sustainable solutions contributing to lower CO2 emissions, reducing waste, and enhancing health and safety for consumers and for heavy industrial sectors.
For more information, visit www.henkel.com.
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Jayshree Seth, Corporate Scientist and Chief Science Advocate, 3M
Jayshree Seth, corporate scientist and chief science advocate for 3M, giving a keynote at the 2022 World Adhesive and Sealant Conference. (Photo courtesy of The Adhesive and Sealant Council, Inc.)
Myriad adhesives, sealants, and related products (e.g., tapes, films, wound care/closure products) are produced in each of 3M’s four business segments: Safety & Industrial (representing 36% of 3M’s total 2021 net sales of $35.4 billion), Transportation & Electronics (28%), Health Care (26%), and Consumer (17%). 3M is ranked number 2 on the 2022 ASI Top 20.
Jayshree Seth, who serves as 3M’s corporate scientist and chief science advocate, recently gave a keynote presentation during the 2022 World Adhesive and Sealant Conference. Her topic focused on “Sticking with Science! The Need for STEM Advocacy,” and she shared her thoughts following the event.
You mentioned “science for community” near the beginning of your talk. Why is this concept so important to 3M?
Science for community is one of the pillars in our sustainability framework at 3M. We are very active in the communities we operate in around the world. The work 3M does to make an impact on local communities makes me proud to work for the company.
One of many examples is that last year 3M announced a global, education-focused goal to advance economic equity by creating five million unique STEM and skilled trade learning experiences for underrepresented individuals by the end of 2025. We are aligned with the United Nations Sustainable Development Goals (UN SDGs) and are committed to creating a diverse science community and a more positive world with science.
At 3M, we apply science in collaborative ways to improve lives and help solve some of the toughest challenges. 3M science powers the world around us, and we take a community-first approach in every initiative we put forth and also in every product we manufacture.
What are the key findings of the 2022 State of Science Index?
We recently released the 2022 3M State of Science Index results. It’s the fifth year of this third-party, independent research we do to explore global attitudes toward science. At a high level, this year’s State of Science Index underscores that science will continue to impact our lives in the “next normal” era—in ways that are tangible, highly relevant, and deeply personal. Living through the pandemic has positively impacted the public’s appreciation and trust in science, and over the next five years, more than half the world expects to appreciate science more than they do today. These sentiments are even stronger among Millennials and Gen Z, which gives me tremendous hope for the future of science.
We also continued to track overall global trust in science. This year, we found people looking for science to provide solutions to major social issues from sustainability to health and STEM equity challenges.
Diving deeper into the findings from this year’s index, trust in science remains exceptionally high throughout the world, and younger generations are more likely to put their complete trust in science and recognize its importance in their everyday lives. Despite the positive news for science, our research revealed that the public believes misinformation is pervasive in news and social media, which may pose a threat to scientific credibility.
But, if misinformation is a big threat to scientific credibility, social impact is the next big opportunity for science. Climate change, for one, is becoming increasingly personal and a majority of people are more concerned about climate change, air pollution, and intensifying national disasters than they were last year.
We also found that improving access to quality healthcare is considered the number-one priority for most countries, and is something people want society, corporations, and science to prioritize. And, while interest in STEM education and careers remains high, diversity in science and equal access to a quality STEM education remain barriers for many, particularly underrepresented minorities and women.
How can the adhesive and sealant industry help expand people’s perception of science?
We know from our State of Science data that when science is relatable to people, they tend to be more interested and appreciative. Obviously, most consumers are not waking up in the morning thinking about adhesives and sealants. But when scientists communicate about innovations that focus on the outcomes and benefits of adhesives, vs. the science itself, it can be more interesting, relatable, and can help draw them in.
I believe context is key in making people appreciate the crucial role adhesives and sealants play in everyday life. When I joined 3M almost three decades ago, I was working on diaper tapes. The adhesive science involved in achieving the right properties to meet all the performance requirements is quite complex, but when asked what I was working on, I would start with the human context—I am working on tapes that help the diapers stay put on wiggly babies!
What role can science/STEM play in the industry’s talent acquisition and retention efforts?
The contextual importance of science and its connection to societal goals can play an enormous role in attracting the next generation of talent. However, we also need to level the playing field for people of all genders, races, and backgrounds. While we are breaking down barriers, we still need diverse scientists today to be more visible so that the younger generation can say, “If I can see it, I can be it.”
There’s still not enough people of color and women in many scientific fields. Our research found 87% of people around the world believe it’s important to increase DE&I in STEM fields, and 88% of people say the scientific community should do more to attract a diverse workforce.
However, many people aren’t seeing representation gaps that clearly exist in the STEM workforce. The perception doesn’t match the reality. Our 2022 study found that only 53% of people believe a gender gap exists in the STEM workforce; only 44% believe there is a racial gap; and only 39% see a LGBTQ+ gap. We need greater acknowledgment of these gaps to work on closing them. The world believes we’ll see results if we can improve DE&I in the STEM workplace, and 84% of people say science companies would have a greater impact on society if there was greater diversity and representation within their workforce.
I’m proud to share the belief that greater diversity will lead to greater impact, which is why I’m such a passionate advocate for breaking down barriers and stereotypes to help women, girls, and racial minorities enter the field. Last year, 3M premiered a docuseries, Not the Science Type, featuring four diverse women scientists, and I am honored to be one of the scientists featured in it. With this docuseries we want to inform, influence, and hopefully inspire by showing that we can all be the science type regardless of gender, race, age, or ethnicity.
I have written about this, and related topics, in my books available on Amazon, The Heart of Science series: Engineering Footprints, Fingerprints, & Imprints and Engineering Fine Print. Sales proceeds from both books go to a scholarship for underrepresented minority women in STEM administered by Society of Women Engineers (SWE).
For more information about 3M, visit www.3m.com. To explore the full State of Science Index results, visit www.3m.com/scienceindex.
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Rob Hubbard, Vice President, Global Strategic Sourcing, H.B. Fuller
H.B. Fuller’s net revenue grew by 17.5% to reach almost $3.3 billion in 2021. The company’s three business units—Hygiene, Health and Consumable Adhesives (HHC); Engineering Adhesives (EA); and Construction Adhesives (CA)—all saw double-digit increases in net revenue for the year. H.B. Fuller is ranked number 4 on the 2022 ASI Top 20.
Rob Hubbard, H.B. Fuller’s vice president for Global Strategic Sourcing, participated in a roundtable discussion focusing on the supply chain. He shared his thoughts on some of the ongoing challenges, as well as strategies H.B. Fuller has taken to navigate them.
Rob Hubbard is vice president of Global Strategic Sourcing for H.B. Fuller. (Photo courtesy of H.B. Fuller.)
What major supply chain challenges are impacting the adhesives and sealants industry?
The two major challenges to receiving desired amounts of goods on time currently are: logistics challenges and high demand outpacing supply. In the first half of 2020, demand dropped dramatically, and many production assets were throttled down or shut down because of COVID-19. This major disruption to the world’s normal flow of goods caused shipping containers and shipping vessels to become imbalanced.
In the second half of 2020, consumer demand surged at an unexpected rate to very high levels. As a result of this fast rise in demand, supply was initially caught off guard. Demand continued to outpace supply into 2021, and then the cold weather event that struck Texas and Louisiana further constrained supply. As of today, supply has not caught up with the ever-increasing demand in the petrochemical space. Most markets remain short, which is continuing to push prices to record levels.
The lingering logistics challenges mean lead times are much longer and delivery times are unreliable. This is especially true for goods shipped transoceanic. Nearly 40% of the world’s chemicals are sourced from China, and most companies in the adhesives and sealants industry are being impacted to some degree. And, limited domestic supply of some materials, like MDI in the U.S., has caused us to increase supply from offshore production sites. This has involved incrementally higher transportation costs, longer lead times, and unreliable delivery dates.
Unreliable deliveries also are forcing many companies to increase normal inventory levels where possible, negatively impacting working capital and increasing costs.
What steps has your company taken to alleviate or compensate for supply availability issues?
For many years, H.B. Fuller has taken a proactive, strategic approach to building strong relationships with our suppliers. We truly consider our suppliers to be partners, and the resulting collaboration has enabled us to secure the materials we need to meet growing customer demands, despite countless external challenges across the global supply chain.
It is nearly impossible to succeed in short markets, like we’ve experienced over the past 18 months, without the preparations we made in the years leading up to 2020. Our preparations leverage the best practices of strategic sourcing. We routinely look for ways to create value in the supply chain as opposed to taking value from our suppliers. This collaborative win-win approach has helped foster strong, healthy relationships with our suppliers, which have been key to our procurement success in these most challenging times and have helped grow our topline results throughout 2020 and 2021.
Learn more about H.B. Fuller at www.hbfuller.com.
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Jeff Merkt, President and CEO, Bostik Inc.
Bostik, Arkema’s Adhesives segment, achieved almost €2.3 billion (approximately $2.5 billion) in revenue in 2021. An increase of 14.1% over 2020, this represented 24% of Arkema’s total revenue for the year. Arkema is ranked number 5 on the 2022 ASI Top 20.
Jeff Merkt, president and CEO of Bostik Inc., recently discussed challenges, opportunities, and plans for the future with Susan Sutton, editor-in-chief. Watch the ASI Insider video or read this partial transcript* to learn more.
Can you walk us through what you attribute Bostik’s success to, particularly given all of the challenges that we’ve seen over the past couple of years? How is the company faring and able to succeed?
Speaking broadly, our culture and long-term strategies have been our greatest drivers of success, and this has taken shape in many ways. Let’s start with agility and how our culture makes us agile. We have a really lean structure, which helps us to make decisions and take actions quickly. Our culture is also one of empowerment in which people are encouraged to act when appropriate. This enables us to adapt to changing environments.
We live in a world in which business, economic, social, and political conditions have been changing frequently. Being able to respond to those changes quickly means we can meet customer needs fast and effectively. I might add that empowering people to make decisions is also a powerful way to develop and retain top talent. To succeed in today’s world, we must be able to rapidly adjust to a number of factors, changes in technology trends such as the increasing importance of sustainability, changing of the regulatory framework, and the volatility of the global markets we serve.
We can all agree that the recent years have tested every company’s fragility, and one challenge we faced was the need to start up a new factory in Japan producing adhesives and sealants for that marketplace during the pandemic. Our experts, who normally would associate the startup of a factory, were not able to join because Japan was locked down. So we had to collaborate at a very high level. You can imagine the experts from France and North America were getting up at incredible early hours or staying up incredibly late.
We saw innovation happen. We introduced the use of smart glasses. We did some online training in different languages because some of the experts were French, some of the experts were Spanish, some of the experts were Americans. And then that language was translated so that the operators, who normally would have someone physically there—it’s so much easier to communicate—really understood what we were trying to do. We had a great startup of that factory.
Another factor that drives our success is consistency. The Arkema Group and Bostik had the same long-term strategy for many, many years. That consistency during this dynamic period of time has really helped every employee know what the long-term goal is, and then they can adjust how to behave or act.
A hugely important thing as part of Arkema and Bostik is customer intimacy. Having a keen, in-depth understanding of our customers is essential to one of our long-term strategies, which is to pursue innovation and drive a more sustainable world. Knowing our customers, their needs, their aspirations, what’s happening in the markets that they face allows us to sharpen our innovation focus in a way that delivers on the real needs for them. In other words, our customers are at the center of our innovation strategy, so we continually create adhesives and technology pipelines that address sustainability and the other challenges our customers face by having the customer at the center of our innovation strategy.
Another factor in our success is the global and local balance. Bostik’s a part of Arkema; it’s a large group. We have the benefits of being a part of a large group, and the organization that comes with it. At the same time, we work hard to be a nimble local company, and this allows us to deliver value to all of the customers we serve. This local balance is something we work really hard to maintain.
What are some of the challenges and perhaps some opportunities you’re seeing for the adhesive and sealant industry throughout the rest of this year and into the beginning of 2023?
It goes without saying that the supply chain, which we’ve experienced for many years now, and geopolitical disruptions have created enormous challenges for the adhesives and sealants industry. We expect this to continue for a long time. Like most challenges, though, there are also opportunities for suppliers that are agile and adapting to those changes in an effective way.
Another major trend that will continue is the acceleration in the demand for sustainable solutions. I really believe this. It’s a trend in every industry we serve, be it hygiene or packaging, housing or transportation. Sustainability trends have clear consequences in our adhesives. In particular, we look at the raw materials we use to formulate the adhesives and sealants. We’re generally looking to increase the amount of bio content or look at materials that are coming from a recycled source. We’re also looking at and making sure that the raw materials we use in our adhesives and sealants don’t have any substances of concern, because the regulatory marketplace is definitely changing rapidly as well. That’s a key success factor, to be able to understand those regulatory changes and then adjust your raw materials accordingly.
One of the things that’s really important is to develop materials that enable other sustainable benefits. For example, we’re working on adhesives that allow or enable things like lighter vehicles so that the energy consumption of the vehicle, be it a gas engine or an electric vehicle, goes down. We also believe in the fact that people will want to develop products that have longer useful lives, so we’re working on adhesives that allow durable goods to have longer, useful lives. This is really an important area of development for Bostik.
One thing we’re also doing is we’re trying to work more intimately with our customers to help enable them to find more sustainable solutions. This means the adhesives enable them to put more natural materials into their product, or the adhesive allows them to manufacture something in a more efficient way, using less energy or creating less waste in the manufacturing process. This enabling umbrella or concept is really key because adhesives pull everything together. We’re also developing materials that allow people to make products more reusable or recyclable or compostable. These are key themes or pillars that we’re formulating our long-range R&D programs on.
Can you talk a little bit more about Bostik’s plans for the future to address some of the challenges you talked about?
I spoke earlier about customer intimacy. It’s amazing to me after 30 years in the industry, how important it is to keep mentioning to everyone that we need to know our customer. It’s also important to know that as part of Arkema, corporate social responsibility is a key theme, a very important dynamic for us.
Knowing our customer means that we understand what they’re trying to do, what they need in terms of adhesives, what the trends are happening in the markets that they serve. This deep understanding of our customer is going to allow us to continue to meet their needs, in particular in the area of sustainability that I mentioned earlier.
The other factor I mentioned is CSR, and it may not seem like that’s an obvious factor in meeting future challenges, but if you look at it in broad terms, it already is helping us think about our environmental footprint in terms of us reducing the amount of water we use in our sites, the energy we use, the greenhouse gases that we emit. Pursuing efforts to become more sustainable allows us also to bring real value to our customers because they are worried about scope three. They want us to be reducing the scope three in the products that we buy, even though sometimes adhesives are a small part of the total article.
Our CSR program is really bracketed by five key pillars or five key areas. As part of the group of Arkema, we’re focusing on making lighter weight materials, high-performance materials that allow us to enable new energy formats. Batteries and electric vehicles are really a key opportunity not only for adhesives and sealants but also for some of the polymers that Arkema produces. Materials that support effective use of natural resources—water is a key theme for the world. Adhesives are used in the creation of filters that allow people to take greywater and make good water for drinking or for bathing.
Advanced materials that support advanced electronics is really key. I mean, the adhesives are so critical to the continued trend of people being dependent on electronics. Finally, materials either from Arkema or adhesives and sealants that allow homes or buildings to be more energy efficient or more comfortable, quieter, or have better air management. These solutions are things that we believe will make the world a more sustainable place and are really the key themes for Arkema for the next five years.
For more information, visit www.arkema.com and www.bostik.com.
*edited for length and other factors
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Gerhard Haas, Chief Officer for Human Resources, Purchasing, Quality Management, Research and Development, and Technical Service, Jowat
Jowat produces industrial adhesives for a range of applications. With approximately 1,250 employees worldwide, the company has 23 global sales organizations and operates three manufacturing facilities in Europe, one in the U.S., and one in Malaysia. Jowat is ranked number 17 on the 2022 ASI Top 20.
Gerhard Haas, chief officer in charge of Human Resources, Purchasing, Quality Management, Research and Development, and Technical Service, recently chatted with Susan Sutton, editor-in-chief. Watch the ASI Insider video or read the partial transcript* to learn more.
To what do you attribute Jowat’s success, particularly with the coronavirus? Everything has been so challenging over the past couple of years.
Yes, it has been. But I think we have been very good with our products and technical expertise. We were able to use technology to reach out to our customers and still provide the technical service we provided before the pandemic began.
And also, we were able to engage our workforce and continue manufacturing our quality products and, despite the difficult supply situation, keep our customers supplied. I think that overall contributes to our success during the pandemic.
Looking to the rest of 2022 and into perhaps the first half of 2023, what are some of the challenges and opportunities you’re envisioning for the adhesive and sealant industry?
The challenges definitely are raw material supply and logistics, increasing prices, and basically the general inflation. Keeping up with wage increases. There’s a very large pressure on increasing costs, and of course, we have to pass that on to customers. And I think it gets to a point where probably the economy will have to slow down somewhat to get back to a somewhat sustainable level, because this is not sustainable.
I think that’s the biggest challenge for the current situation and probably for the mid-term future. I would think that as we go on in 2022, the economy will somewhat slow down and then hopefully things will get back to a more normal, sustainable level.
Opportunities are there to look maybe at raw materials that are better available, some of them new technologies, to introduce them into the market and grow with those technologies.
How is Jowat going to address some of these issues moving forward?
We have a global strategy when it comes to sourcing of raw materials. We also have multiple supplier strategies. We also increased, of course, our inventories. But a lot of the challenges, to be quite honest, are not necessarily in our control, so we can just manage as best as possible.
To give you an example, an imported raw material from us was on the Evergreen ship that grounded in Chesapeake Bay, and we didn’t get to the container for over four weeks. Those are all challenges that we just can’t control.
To learn more about Jowat, visit www.jowat.com.
*edited for length and other factors
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