SIC 2822
SYNTHETIC RUBBER (VULCANIZABLE ELASTOMERS)



This category covers establishments primarily engaged in manufacturing synthetic rubber by polymerization or copolymerization. An elastomer, for the purpose of this classification, is a rubber-like material capable of vulcanization, such as copolymers of butadiene and styrene, or butadiene and acrylonitrile, polybutadienes, chloroprene rubbers, and isobutylene-isoprene copolymers. Butadiene copolymers containing less than 50 percent butadiene are classified in SIC 2821: Plastics Materials, Synthetic Resins, and Nonvulcanizable Elastomers. Natural chlorinated rubbers and cyclized rubbers are considered as semifinished products and are classified in SIC 3069: Fabricated Rubber Products, Not Elsewhere Classified.

NAICS Code(s)

325212 (Synthetic Rubber Manufacturing)

Industry Snapshot

Production of synthetic rubber on a commercial scale began in the United States during the 1930s, though natural rubber has been used since the early 1800s for multiple applications. The United States assumed an early lead in the development and production of vulcanizable elastomers—a position that it maintained throughout the twentieth century. Indeed, the value of shipments increased from $4.7 billion in 1994 to $5.7 billion in 2001.

Rubber manufacturers were holding their own in the early 2000s, although the industry was suffering from the general malaise of a weak economy. A sluggish economy, product maturity, stagnant demand growth, and increasing foreign competition were the dominant factors suppressing industry profitability. Although producers tried to counter this downward momentum with increased productivity and the development of new rubbers, oversupply, increases in raw material prices, and slow demand were working against rubber producers. Ironically, past industry successes contributed to the industry's stagnation. Long-lasting rubbers, for instance, reduced demand in large market segments such as the tire industry. Competitors were looking to new rubbers for growth in the 2000s.

Organization and Structure

The synthetic rubber industry represents about 8 percent of the entire U.S. synthetic materials manufacturing sector. Plastics ( SIC 2821: Plastics Materials, Synthetic Resins, and Nonvulcanizable Elastomers ) and manmade fibers ( SIC 2824: Manmade Organic Fibers, Except Cellulosic ) are the other synthetics.

The synthetic materials industry is considered part of the overall U.S. chemical industry, of which synthetics account for about 25 percent. Natural rubber, which represents about 20 percent of all rubber consumed in the United States, is derived from rubber trees and other organic sources. Production and processing of natural rubber is not included in this industrial classification.

Synthetic rubber offers important advantages over natural materials. Among its most beneficial characteristics are its great resistance to corrosion caused by fluids and gases, its very poor electrical conductivity, and its ability to flex and then regain its original shape. Because of the endless variety of compounds that can be created, synthetic rubber has increasingly been used as a substitute for more expensive, lower performance natural materials. Besides displacing woods, metals, and ceramics in many traditional applications, rubber has allowed the creation of completely new products.

The synthetic rubber industry shipped $6.06 billion worth of material in 1997, which was equivalent to about one-quarter of the value of sales by U.S. tire and inner tube manufacturers. By 2000, this number was expected to increase to $6.68 billion. Despite its relative economic insignificance, however, the industry supplied billions of pounds of material and has been an integral part of the U.S. and global industrial machine. Rubber serves a vital role in transportation industries but is also an important production material for medical supplies, packaging and sealing devices, construction equipment, and other goods. Furthermore, U.S. producers supply about onequarter of total world rubber consumption.

Competition and Markets. The industry is highly consolidated, with only about 120 firms competing in the late 1990s. Of the 143 U.S. rubber production establishments operating in 1997, only 57 employed a workforce of 20 or more. Geographically, nearly 33 percent of the U.S. industry's 143 establishments—or 47 establishments in all—were located in the five states of Texas, Louisiana, Ohio, Florida, and Indiana. Even more telling, the 47 establishments in those five states employed 6,617 workers in 1997 which was more than half of the total U.S. synthetic rubber workforce of 12,009.

Tire and inner tube manufacturers consumed about 35 percent of industry output in the late 1990s. The remainder of the rubber market, though, is highly fragmented and is represented by a vast array of fabricated rubber products. Paper mills and floor covering producers each use about 5 percent of all rubber absorbed domestically, while about 2 percent of output is required to make hoses and belts. Adhesives, gaskets, sealants, and packing devices also consume about 5 percent of production. Other popular uses of rubber include the manufacture of sporting goods, medical supplies, footwear, paint, printing ink, chemical preparations, communication equipment, batteries, and cord. Outside of North America, tires and inner tubes represent about 60 percent of rubber demand.

Rubber Production. Synthetic rubber is produced by first chemically rearranging molecules in a process called polymerization, during which the molecules are made to link up in very long chains. The polymer exists as a soft, tacky thermoplastic, which can be remelted and manipulated. The thermoplastic resin is then treated with heat and chemicals to create a thermoset, a compound that cannot be remelted and formed. This process, called vulcanization, is what contributes to the resilience and elasticity of rubber compounds—physical properties that have earned rubbers the name elastomers. Most elastomers are made using petroleum, although potatoes and grains, coke (made from coal), limestone, salt, or sulfur may also be used.

Endless varieties of rubbers are produced, each of which offers different physical properties and comes in a variety of grades. Different rubbers are created during the production process, for instance, by integrating additives, adding processing chemicals, or creating alloys with natural rubber or other thermoplastics. Numerous chemical processing agents include accelerators, activators, vulcanizing agents, antidegradants, antioxidants, flame retardants, and stabilizers. Additives include reinforcement fibers, fillers, colorants, and catalysts, such as carbon black and sulfur.

The two major elastomer divisions are commodity and specialty. Commodity elastomers, which account for the bulk of industry sales, are available at relatively low prices from several manufacturers. The most popular commodity rubber is styrene butadiene rubber (SBR), which represented about 25 percent of total output (by value) in the late 1990s. SBR is used primarily in tires and inner tubes, though it is also found in industrial applications such as carpet backing, nonwoven materials, and paper coatings. Major manufacturers of this compound include Uniroyal, Goodrich Tire Company, and Goodyear.

Polybutadiene, the third largest industry segment at about 7.6 percent of sales (by value), is also used mostly to create tires and treads. In addition, it is an important production material for hoses and belts. Ethylene-propylene elastomers (EP) accounted for approximately 10.9 percent of shipments in the late 1990s. This compound is used in the construction supply industry for such products as roof membranes and foundation sealants. It is also used as an impact modifier for plastic resins. Other uses include oil viscosity additives and various auto parts, such as gaskets and seals, hoses, belts, and tubing. Other commodity thermoset elastomers include nitrile, butyl, polyisoprene, polychloroprene, and silicone.

Specialty elastomers, the second division of the synthetic rubber industry, represented about 8 percent of sales in the mid-1990s. Specialty elastomers offer enhanced performance characteristics, are typically more expensive, and are sold by fewer competitors than commodity elastomers. The two main categories of specialty rubbers are silicones and fluorocarbons. Silicones are used to make vehicle mechanical parts and sealants, adhesives for construction, and electronic products. Fluorocarbons are used for O-rings, seals, and gaskets, as well as and for high-tech aerospace, automotive, electrical, and petrochemical applications.

In addition to thermosets, the specialty category also encompasses a relatively new category of rubbers called thermoplastic elastomers (TPEs). TPEs are often more economical to produce and easier to process than are thermosets. TPEs can be categorized as styrenics, polyolefins, elastomeric alloys, polyurethanes, copolyesters, and polyamides. They are often used to create high-performance adhesives, to modify plastics during the production process, and in various consumer goods applications. TPEs provide benefits associated with recycling, and typically offer greater durability, hardness, and chemical resistance.

Background and Development

Natural rubber has been in use since at least the fifteenth century. Christopher Columbus, for one, witnessed Haitian natives playing games with balls "made of the gum of a tree." The first record of rubber used for purposes other than recreation was made by explorer F. Juan D. Torquemada in 1615. He saw Indians brush rubber on their cloaks as waterproofing and also witnessed them compressing rubber in earthen molds to create footwear and bottles. Rubber was brought to Europe in the eighteenth century from the East Indies and used to rub out lead pencil marks—hence the term "rubber." Rubber was later transported to Europe to make raincoats and rubber thread.

A recognizable natural rubber industry evolved in the United States by the 1830s, as numerous factories sprouted along the eastern seaboard. U.S. producers pioneered many important processing machines that furthered industry growth. For example, Edward M. Chaffe invented a rubber milling and rolling machine in 1836. Chaffe's machine, which was nicknamed "The Monster," was completed in 1837 at a cost of $30,000 and a weight of 30 tons. In another important industry breakthrough of the late 1830s, rubber's tendency to soften with heat and harden with cold was mitigated. Indeed, Charles Goodyear's discovery of vulcanization in 1839 lead to the use of rubber in many demanding mechanical applications.

Realizing the potential benefits of creating a synthetic replacement for natural rubber, scientists had been searching for a formula since the early 1800s. In 1826, Michael Faraday, an English scientist, was one of the first to successfully chemically analyze rubber. It was not until 1910, however, that S.V. Lebedev, a Russian, polymerized butadiene to produce the first synthetic rubber. This breakthrough, combined with processing and vulcanizing technologies developed during the 1800s, initiated a new era for the rubber industry.

By the 1930s, synthetic rubbers were being produced on a commercial scale only in Russia and Germany. World War I and World War II both pushed synthetic advances, as countries on all continents sought to sever their dependency on foreign natural rubber supplies. The United States, traditionally dependent on South American suppliers for natural rubber, shifted into overdrive during World War II in its quest for an inexhaustible synthetic supply. Between 1939 and 1945, in fact, U.S. production of synthetic rubber rose from a negligible experimental yield to about 820,000 tons per year.

World War II Era. World output of synthetic rubber was estimated at 10,000 tons in 1935, and 72,000 tons by 1939. Germany and Russia produced all but a small fraction. By the end of World War II, though, global production had skyrocketed to well over a million tons per year, of which the United States supplied the lion's share. Correspondingly, the share of U.S. rubber consumption served by natural rubber declined during the 1940s. In 1939, about 0.3 percent of all rubber used in the United States was synthetic. By 1950 that share had grown to 43.0 percent, and the United States was devouring a whopping 55.0 percent of total global elastomer output.

Although large quantities of synthetic rubber continued to be produced after World War II, natural rubbers still dominated the market because of their superior physical characteristics. Advances in the use of recycled natural rubber boosted its popularity. In 1953, however, German chemists Karl Ziegler and Giulio Natta discovered a polymerization process that resulted in a synthetic rubber virtually identical in molecular structure to that of natural rubber. Commercial production of cis-1, 4-polyisoprene was immediately undertaken in the United States, which became the dominant supplier for many war-ravaged European countries.

Augmenting the proliferation of synthetic rubber in the 1950s and 1960s was the development of new additives. New reinforcing materials allowed manufacturers to strengthen synthetics and reduce production costs, while at the same time achieving advanced performance. Asbestos, hard clay, limestone, and carbon black were among these fillers. Similarly, plasticizers and softeners allowed producers to develop synthetics with physical properties superior to many natural rubbers. Curing and vulcanizing agents, accelerators, and age-resistors all lead to the substitution of synthetics for natural rubbers and other organic materials.

Besides advances in quality and variety, synthetic rubber also benefited from simultaneous breakthroughs in processing and molding technology used in other industries. Furthermore, the postwar U.S. economic expansion generated huge demand growth. Most importantly, the staggering growth of the automobile and truck industries during the 1950s and 1960s resulted in a vast market for tires, inner tubes, belts, and hoses. Construction and consumer markets ballooned as well. By 1960, global production of synthetic rubber stood at more than 2 million tons per year. The United States alone produced about 1.5 million tons and devoured more than 40 percent of global output. Although natural rubber still held more than 50 percent of the world rubber market by 1960, synthetics supplied about 70 percent of U.S. rubber demand.

While it continued to realize growth during the 1960s and 1970s, the rubber industry had clearly surpassed its stage of rapid expansion by the 1970s. Even the 1960s showed evidence of industry maturation, such as consolidation. The number of competitors manufacturing tires, for instance, plummeted from about 60 in the late 1940s to just a handful of big producers by the 1970s. Spiraling petroleum prices during the late 1970s, moreover, dampened industry profitability. Furthermore, popular synthetics that were once cutting edge materials, such as styrene-butadiene, became low-margin commodities. Foreign competition, too, began eating away at U.S. global dominance.

The 1980s and 1990s. By 1980, U.S. synthetic rubber output was about 1.8 million metric tons per year. This represented a relatively slight increase over production levels of the late 1960s and early 1970s. Falling energy prices and an uptick in demand during the early 1980s, however, boosted industry output and profitability. Although the value of shipments jumped less than 1 percent between 1982 and 1983, the cost of production materials fell by about 3 percent as output jumped nearly 8 percent. In 1984, moreover, output value leapt over 8 percent as demand climbed steadily, causing revenues to surpass $3.4 billion.

After 1985, overall U.S. rubber output stagnated. Despite a healthy economy, U.S. synthetic rubber manufacturers were hurt by several factors, including increased imports of automobile, tire, and rubber products; the trend toward smaller cars that used smaller tires; and the increased use of long-lasting radial tires. Exports from southeast Asia, as well as other regions of the world, were also cutting into demand from other market segments. Between 1982 and 1990 total industry output grew just 22 percent, from about 1.8 million to 2.2 million tons.

Despite sluggish demand in traditional commodity synthetic rubbers, such as SBR, the industry managed to maintain a fairly strong revenue growth rate of about 5 percent during the 1980s. This was accomplished through the development and sales of improved compounds and specialty rubbers. Production volumes of polybutadiene and ethylene-propylene, for instance, advanced 44 percent and 89 percent, respectively, between 1982 and 1991. Specialty TPEs, moreover, grew from a negligible share of the market in the early 1980s to account for about 8 percent of domestic industry consumption by 1991.

Although their share of the world rubber market declined in the 1980s and early 1990s, industry participants enjoyed solid export growth as foreign consumption of rubber slowly, but steadily escalated. Despite sluggish domestic markets, exports grew between 3 percent and 5 percent per year in the late 1980s and early 1990s. The demand for proprietary high-tech rubbers by overseas consumers was particularly strong.

Synthetic rubber manufacturers were able to buoy earnings throughout the early 1990s. Unfortunately, though, a domestic and global economic recession that began in 1989 and lingered through 1993 put the squeeze on industry profitability. Shipment volume declined .03 percent in 1989, .07 percent in 1990, and more than 4 percent in 1991, while plant utilization dipped to a depressing 68 percent. Industry revenues grew about 1 percent per year in 1987 dollars during that period. Although output jumped a surprising 9 percent in 1992, revenues gained only 4 percent, rising to about $4.4 billion, and an industry profit slump persisted.

A tepid economic recovery helped to boost industry expectations in 1992 and 1993. Analysts were discouraged, however, by fundamental weaknesses in rubber markets. Importantly, demand by the auto industry, which consumes 70 percent of SBR, was recessed. Over-all production of SBR, in fact, had slipped from 876,000 tons to about 850,000 by 1992. Although shipments to tire producers rose about 8 percent in 1992, long-term growth in that segment was expected to remain weak.

Although commodity polybutadiene and ethylene-propylene elastomers generally outperformed SBR during the 1980s and early 1990s, continued expansion of these segments was in question. As it entered a phase of maturity, polybutadiene was expected to offer a tepid growth rate of only 2 percent through the mid-1990s. Commodity ethylene-propylene markets were already recessing in the early 1990s, following a rapid rise during the early and mid-1980s. Although sales surged slightly in 1992, weak auto and construction markets were expected to restrain demand for this thermoset.

High-Tech and Thermoplastic Opportunities. To sustain profits going into the mid-1990s, producers were looking to smaller industry segments for expansion. The greatest opportunities for profits in the mid-1990s were expected to be in TPEs. Besides their recyclability and often lower production costs, thermoplastics combined the rubber-like flexibility characteristic of thermoset rubbers with the heightened processing versatility of plastic. As a result, TPEs were expected to grow by 7 percent or more per year throughout the 1990s. Furthermore, worldwide consumption of TPEs should rise from 680,000 tons in 1992 to more than 1.1 million tons by the year 2000.

Besides cannibalizing market share held by thermoset rubbers, TPEs were creating entirely new markets for the industry. Styrenic TPEs, for example, offered significant potential for use as an asphalt modifier to keep roofing and roadways from cracking. High-tech niche TPEs were making inroads into industries such as medical, construction, and food packaging. New TPEs, for example, were being used in the plumbing industry to deliver drinking water that could meet strict new federal standards. Other TPEs were being developed to make everything from ski boots and swimwear to auto body panels that could be painted without a primer coat.

Like TPEs, high-performance thermosets also promised to buoy the earnings of the most savvy producers. Growth rates for some specialty ethylene-propylene elastomers, for instance, were expected to exceed 15 percent in the mid-1990s. High-performance nitrile rubbers were finding use in applications that required heat, chemical, and abrasion resistance. Some nitrile rubbers were forecast to realize 15 percent to 35 percent growth during the mid-1990s.

After growing 3.1 percent to 3.3 million metric tons in 1998, North American consumption of synthetic rubber was expected to slow to a growth rate of 1.5 percent per year through 2003, according to the International Institute of Synthetic Rubber Producers (IISRP). This would bring North American consumption to about 3.6 million metric tons by 2003. Fueled by 3.9 percent growth in the U.S. economy, North American synthetic rubber consumption enjoyed its seventh consecutive annual increase. That growth, however, was expected to moderate somewhat into the early years of the new millennium.

Environment. One of the greatest obstacles to success for synthetic rubber producers in the mid-1990s was environmental controls. The overall chemical industry was by far the largest polluting industry in the United States, and rubber producers contributed significantly to that reputation. Besides emitting large doses of hazardous chlorofluorocarbons (CFCs) into the air during the production process, rubber producers were also charged with creating end-user products that would not degrade. Furthermore, rubber manufacturers suffered from environmental controls that affected their consumers, such as fuel efficiency and emissions standards that were encouraging the production of smaller cars (and tires).

Environmental mandates (see SIC 2821: Plastics Materials, Synthetic Resins, and Nonvulcanizable Elastomers ) were forcing manufacturers to bring their production facilities into compliance with federal and state rules. Such retrofitting was costing many companies millions of dollars.

Partially in an effort to allay criticism of nondegradable rubber waste, the Rubber Manufacturer's Association (RMA) took a lead role in reclamation and recycling efforts during the 1980s and 1990s. Although thermoset elastomers cannot be truly recycled, efforts were underway to convert rubber waste to other uses in the mid-1990s, such as highway asphalt production and fuel for energy plants. Tires, which consume about 60 percent of all elastomer output, were a focal point of such endeavors. In 1990, about 8 percent of the 240 million tires discarded annually were reused. By 1992, this percentage had jumped to 24 percent. By the mid-1990s, the RMA's Scrap Tire Management Council estimated that figure would double to nearly 50 percent.

Several years of sluggish demand resulted in consolidation of the synthetic rubber industry and its suppliers. One of the biggest resulting mergers was that of Monsanto Company and Akzo Nobel's rubber chemicals business into a new company named Flexsys. The synthetic rubber business was expected to grow no more than 1.5 percent per year in industrialized nations and 2.0 to 3.0 percent per year worldwide. World demand for TPEs, on the other hand, was expected to increase from 1.3 million metric tons in 1998 to about 1.7 million metric tons in 2003, an increase of more than 6 percent per year.

In 1997, there were 121 operating U.S. companies in the synthetic rubber industry. Consumption of synthetic rubber increased marginally faster than natural rubber consumption in global marketplaces during the 1990s, due in part to a shortage of natural rubber in the latter years of the decade. The major increases in synthetic rubber consumption were in Asia, central Europe, and eastern Europe.

There were two contradictory trends prevalent in the synthetic rubber industry during the late 1990s. While consumption increased, producers were unable to increase prices to make up for the increasing raw materials prices. The economic recovery of industrialized nations, upsurge in automobile production, and the related demand for tires, belts and hoses were the causes for the increased demand and consumption for synthetic rubber.

Current Conditions

Synthetic rubber production is a mature industry in the United States that faces numerous challenges for the future. Because of global overproduction capacity and a strong U.S. dollar, domestic manufactures must struggle to compete with cheaper overseas imports. Europe, in particular, leads the United States in technological advances in synthetic rubber processing, and Asia has greatly expanded production capabilities in recent years. David Shaw noted in the European Rubber Journal, "[U.S.] buyers will face a serious dilemma of whether to buy from Europe and Asia, in order to get maximum quality for minimum price, with the real possibility of putting their U.S.-based suppliers out of business."

Despite the economically difficult early 2000s, the industry is expected to experience a slow recovery, following the economy at large. Sales of industrial rubber products in the United States are predicted to increase by over 5 percent annually, reaching a value of $18.4 billion by 2006. According to The Freedonia Group, Inc., as reported by Auto Interiors, industrial rubber revenues from motor vehicles will grow by 4 percent, from $4.7 billion in 2001 to $5.7 billion in 2006. Rubber products sold to the industrial machinery and equipment segment will see the largest increase, growing by 7.2 percent, from $4 billion in 2001 to equal the motor vehicle category at $5.7 billion. The smaller markets of construction and aerospace and transportation are also forecasted to make gains. Construction-related rubber sales are projected to increase by 6.2 percent, from $2.0 billion in 2001 to $2.3 billion in 2006, reflecting a resurgence in commercial and industrial construction. Aerospace and transportation should increase by 3.3 percent, from $1.3 billion to $1.5 billion in 2006.

As the economy slowly recovers, stresses on the synthetic rubber industry in the United States will create prime conditions for consolidation. Increased merger and acquisition activity is expected to mark the industry during the remainder of the 2000s. Whether such consolidation will shore up the industry to allow U.S. producers to remain competitive with cheaper imports remains to be seen.

Industry Leaders

Most of the major players in the U.S. synthetic rubber industry are large, diversified chemical companies, producing a wide variety of products not limited to elastomers. Within the industry, Houston-based Shell Chemical Co., a subsidiary of Royal Dutch/Shell Group, engaged in a joint venture with BASF to form Basell, based in the Netherlands. Once a leader in polymer production, Shell spun off its polyolefins business into Basell.

Also a major force in the industry historically has been Dow Corning Corp., which in 2002 was operating under protection from its creditors because of thousands of claims from women who received silicone gel breast implants produced by the company. Headquartered in Midland, Michigan, Dow Corning reported 2002 revenue of $2.6 billion. The company, which produces a broad range of silicone products in addition to elastomers, employed 8,200 people worldwide in 2002.

Also active in the synthetic rubber industry is GenCorp Inc. For GenCorp, headquartered in Ranchero Cordova, California, synthetic rubber production is but a small portion of its overall business, which includes its Aerojet aerospace-defense systems subsidiary. The company posted revenues of $1.2 billion in 2002.

Workforce

Despite production increases, the number of U.S. workers employed in the industry actually declined between 1982 and 1992, from 11,800 to 11,100. Although the industry's workforce had rebounded to a total of 12,000 people by 1997, the economic recessive conditions of the early 2000s led to another cutback. In 2001 the industry had 10,340 employees.

Regardless of workforce cutbacks, the synthetic rubber industry, like most chemical businesses, remained a high-paying haven for most of those fortunate enough to find jobs. In 2001 production positions, for instance, earned about $36,000 per year. The average annual salary for all members of the industry's workforce in 2001 was $44,020 including overtime.

Slight productivity gains combined with stagnant output growth forecasts for the early twenty-first century bode poorly for future employment in the synthetic rubber industry. Jobs for most machine operators, which accounted for about 10 percent of the workforce, should decline by more than 25 percent between 1990 and 2005, according to the U.S. Bureau of Labor Statistics. Positions for chemical equipment controllers, which made up 7 percent of the workforce, will fall by more than 15 percent. Indeed, most blue collar jobs will dwindle by at least 5 to 10 percent. On the bright side, occupations related to sales and marketing will leap by more than 15 percent, and work for systems analysts and computer scientists will increase by a hearty 37 percent.

America and the World

In the second half of the 1990s, the United States remained a strong net exporter of synthetic rubber, outpacing imports by nearly two to one. The largest export market for U.S. synthetic rubber was Canada, which accounted for nearly 25 percent of all U.S. exports. Canada also was a major supplier of the synthetic rubber being imported into the United States, accounting for about one-third of total U.S. imports. The economic slowdown in Asia in the late 1990s was responsible for some significant changes in the pattern of U.S. exports. Sales to Japan dropped off sharply, while sales to some non-Asian markets increased dramatically. U.S. synthetic rubber sales to Brazil, for example, increased almost 900 percent.

The United States has gradually lost the dominance of world rubber markets that it enjoyed in the 1950s, when U.S. synthetic rubber producers supplied more than 50 percent of global demand. Nevertheless, the U.S. elastomer industry remains the largest, most advanced, and most productive in the world. The United States produced about 23 percent of total global output in the early 1990s—far more than any other nation. It also exported more than $1 billion worth of rubber and maintained a hefty trade surplus of about $450 million.

U.S. exports rose approximately 17 percent in 1995. The export uptrend slowed somewhat in 1996, increasing only 6.3 percent. In 1997, exports fell nearly 3.0 percent. Although exports resumed their upward climb in 1998, the rate of increase was only about 0.5 percent. Capital investments made during the 1980s that helped domestic producers become more competitive globally were partially responsible for export growth. Canada, the largest buyer of U.S. elastomers, accounted for 24.2 percent of total U.S. exports in 1997. Belgium took 13.7 percent of overseas shipments, while Mexico and Brazil purchased 8.7 and 7.6 percent, respectively.

U.S. consumers purchased between $680 million and $740 million worth of overseas elastomers per year in the late 1990s. In 1997, Canada supplied 33.4 percent of these imports, while Japan and France delivered 12.2 and 8.6 percent, respectively.

In the late 1990s, global demand for both natural and synthetic rubber was being held down by weakness in Far East markets, including Japan, which were burdened with a major economic slowdown. The best prospects for increased consumption into the early years of the new millennium are likely to come in central and eastern Europe, China, and the countries of the former Soviet Union.

Through the year 1999, the International Institute of Synthetic Rubber Producers (IISRP) projected growth of about 2.4 percent per year worldwide, with just 1.0 percent per year growth for North America, 2.2 percent per year for western Europe, 3.9 percent per year for Asia-Oceania, and 4.7 percent per year for Latin America.

While Asia accounted for the majority of rubber producing nations, Japan, North America, and Europe accounted for more than half of the world's total consumption of rubber.

Research and Technology

Companies in the synthetic rubber industry are heavily dependent upon research and development to maintain competitiveness. The average rubber manufacturer in the late 1980s, for instance, invested more than four times more money per employee in research and development than did the average U.S. manufacturer. This amounted to 5 to 7 percent of total industry sales. In 1990, moreover, the industry funneled a full 9 percent, or $380 billion, of total revenues into capital investments.

Technological advances in regulatory compliance were essentially a reaction to the 1990 Pollution Prevention Act, the Clean Air Act, and a multiplicity of other state and federal controls. Although producers were making large investments in new equipment and compounds that would allow them to produce rubber with fewer hazardous emissions, they were also focusing on the development of new recyclable rubbers that would result in less after-market waste. The most important of these was recyclable TPEs. Besides offering many advantageous physical characteristics, TPEs were increasingly being used as a substitute for many nondegradable thermoset rubbers.

Progress in the recovery of thermoset rubber waste was advancing, though at a relatively slow pace. Industry participants were still searching for economically viable uses for the nondegradable compounds. Besides asphalt modification and waste-to-energy applications, elastomer refuse was being used in several civil engineering functions. It was being utilized, for example, to create road embankments, artificial reefs, and as a replacement for gravel in water cleansing systems. Some recycled rubber was also being used as a filler for tires, and to make lowtech items like mud guards for trucks.

In addition to demands for more environmentally friendly rubber products, elastomer manufacturers were constantly under pressure to create new high-performance, cost-efficient products. While huge breakthroughs in tire longevity had been achieved throughout the 1960s, 1970s, and 1980s, producers in the early 1990s were introducing much better products. In 1991, for example, Michelin, the French tire company, introduced a cutting edge tire called the XH4. The company guarantees the tire to last 80,000 miles, which is longer than most people own their car. Michelin also introduced a tire in Europe in 1993 called the MXN. It delivers 4 to 5 percent better gas mileage than competing tires.

Many breakthroughs occurred in the area of specialty elastomers in the early 1990s. One such example was hydrogenated nitrile, a product for which demand was expected to grow by 15 to 35 percent per year in the mid-1990s. Besides allowing manufacturers to more easily meet environmental emissions requirements, the sub-stance offered superior thermo and mechanical properties. Hydrogenated nitrile can withstand temperatures of more than 300 degrees Fahrenheit, for example, compared to normal nitrile, which remains stable only to 212 degrees Fahrenheit.

Further Reading

Alperowicz, Natasha. "DuPont Dow Stretches Its Lead." Chemical Week, 9 October 2002, 35.

Azman, Syed. "No Successor to World Rubber Pact on Horizon." Reuters, 2 October 1999.

Brown, Robert. "SB Latex Market Hurt by End Market Woes in Carpet and Paper." Chemical Market Reporter, 24 December 2001, 5.

Grinwis, Robert. "Rubber Fabricators in North America Slower to Embrace New Material and Process Technology." Rubber World, February 2002, 6.

International Rubber Study Group. "Rubber Statistics." Available from http://www.rubberstudy.com .

"IRP Sales to Grow 5.3 Percent Annually." Rubber World, September 2002, 12.

"Natural Rubber Shortage Predicted." Associated Press, 18 October 1999.

Rosenzweig, Mark. "Automotive, Soft-Touch Markets Promise Strong Year." Modern Plastics, February 2003, 35-36.

"Rubber Manufacturers Association." Purchasing, 7 November 2002, 7.

Rubber Manufacturers Association. "Groups Seek Ways to Put More Rubber 'in' the Road," 14 April 2003. Available from http://www.rma.org .

——. "Tire Shipments Increase for 2002," 16 April 2003. Available from http://www.rma.org .

"Rubber Product Sales Expected to Reach $18.4 Billion in 2006." Auto Interiors, September 2002, 35.

Shaw, David. "EPDM Faces Competition, Overcapacity." European Rubber Journal, February 2003, 16-19.

——. "Things Can Only Get (A Bit) Better." European Rubber Journal, January 2002, 36.

Smith, Don R. "Bring Back Y2K." Rubber World, January 2003, 4.

——. "Not Even a Good Year for Charles." Rubber World, December 2001, 4.

U.S. Census Bureau. 1997 Economic Census. Washington, D.C: GPO, 1999.

U.S. Department of Commerce. International Trade Administration. U.S. Industrial Outlook 1999. Washington, D.C.: GPO, 1999.

U.S. Department of Labor, Bureau of Labor Statistics. 2001 National Industry-Specific Occupational Employment and Wage Estimates. Available from http://www.bls.gov .



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