Adhesive Makers Take Advantage of Stricter Emissions Rules image

As automaker tries to make their vehicles tougher and lighter, adhesive companies see profits increase.

Auto suppliers such as Henkel and PPG, which provide tailor-made adhesives which absorb the crash shock and reduce rattles, take advantage of the automakers’ need of the material, increasing prices and profits. Stricter emission rules force car makers to find solutions to improve fuel-efficiency, cut CO2 emissions and make their vehicle lighter. VW, PSA Peugeot Citroen and Daimler are using more aluminum and other exotic composites, and the only material to keep them together and preserve their strength is adhesive.

“Those who can demonstrate that their glue has something different to offer, and that it can be easily integrated into production processes, will achieve good margins,” said Fabrice Roghe, a partner specializing in industrial goods at Boston Consulting Group in Dusseldorf.

Henkel, which is the largest maker of adhesives in the world, has already began to sell smaller divisions to be able to focus on the more complex products used for vehicles, mobile phones and airplanes. During the first quarter the margin for adhesive technologies was 16.5%, surpassing the group as a whole which stood t 14.9%.

Source: Reuters