Challenging times ahead

of 2-4%, with remodeling a tad lower at 1-3%. Spending on non-residential i.e commercial buildings, will also see annual average growth of 1-3% during the next five years. Should interest rates and inflationary conditions improve, so will construction activity through the forecast period.

Fisher says construction demand will favor remodeling, improvement, and upgrades to facilities — both homes and buildings — as skilled labor limitations, financing costs, and the time taken for local permitting/ regulatory approvals reduce new construction momentum.

Key trends

There are two major trends in construction right now. One of these is the growth of offsite construction, where building panels, walls, and structures are fabricated in a factory and then transported to the job site. This system requires a lot more lamination — and a lot more adhesive — and is, says Fisher, one of the biggest areas of innovation in the building products area in recent years.

“Offsite construction, panelization, and prefabricated/finished product suites will continue to grow at faster rates than traditional construction and offer a long-term opportunity to innovate product/system solutions that further expand advantages within the segment, for example, making it easier to install the building envelope,” Fisher says.

He adds that building envelope performance, including moisture management, air exchange, and fire performance, as well as new technology in construction, will drive more panelization and systems thinking for both non-residential and multi-family buildings.

The second trend relates to environmental, social and governance (ESG), in other words using more sustainable materials in building products. Certainly, the ESG movement is creating new ways of thinking about chemicals and formulations, and toxicity levels. But, cautions Fisher, the industry needs to be careful not to confuse “bad chemical” concerns with adhesives and sealants that can bring multiple benefits to fabrication processes, as well as making high-weight structures lighter, delivering ESG benefits in an indirect manner.

And, adds Consultant and former Scientist Emeritus with Dow Corning, Jerome (Jerry) Klosowski, there is inevitably a trade-off between products that are environmentally durable and biodegradable. “Are customers willing to sacrifice durability for biodegradability?” he asks, noting that bio- degradable adhesives would be more suited to the weather-related market rather than structural applications.

Solar solution

Chris White, Senior Managing Scientist with engineering and scientific consulting firm Exponent, hypothesizes about the potential of using solar energy to degrade adhesives, citing banana skin as the perfect example. “There are a lot of adhesives that will not be exposed to UV light until after use, or can be designed for solar energy to degrade them post use,” he says. “Maybe adhesive manufacturers should look at changing formulations to benefit from photocatalytic degradation and degrade over time, like a banana peel. Possibly using destabilizers, rather than stabilizers, as a trigger.”

One opportunity for his suggestion could be the solar panel market, which is looking as though it may be a very attractive segment for adhesives. No different to any other structural panel, solar panels are generally fixed to frames by mechanical fasteners, which requires skilled labor.

But the mechanical fasteners suffer from thermal ratcheting, where the bolts get hot then cool and loosen over time. A peel and stick adhesive — or a structural glazing sealant

— could do the job and be durable for 30 years or so. “This area is a tremendous opportunity as there is an immense amount of solar panels being installed every year, so market growth would be significant,” says White.

Adhesives are already increasingly replacing mechanical fasteners in the transportation industry, the ASC says, where the benefits include reduced cost in terms of the material used for bonding and the labor required, plus less damage to surfaces during assembly, faster assembly time, and lighter weight of the structure.

Looking at the different types of adhesives, Klosowski sees ongoing growth for silicon products, as well as hybrids. He also notes there are some new and better-performing acrylics on the market that are now acceptable for use in high-rise buildings. Previously, acrylicbased adhesives were not used on commercial buildings because of their lack of durability, but Klosowski sees some acrylic products moving into that area going forward.

Another trend in the market centers on the supply chain challenges that reared their head during COVID-19, when several ports around the world were either closed or running at very significantly reduced rates and freight rates soared.

Because global supply chains have become more fragile — not to say more expensive — Fisher says companies have created new ways of developing formulas and formulations, with components that can be sourced locally, or certainly much closer and faster than having to wait a minimum of 12 weeks for a particular specialty chemical or additive.

An additional change — also related to the supply chain — is the way in that the construction industry and its suppliers are working on their channel to market. Fisher says new business models and practices are finding momentum such as direct to contractor or consumer, the use of valueadded distribution services, and digital tools to solve labor constraints and create greater efficiencies throughout the value chain.

“Go-to-market technology will be disruptive,” he says, pointing out that the resurgence in big-box stores seen during COVID-19, coupled with strong digital platforms, and new investments toward bulk/ pro-dealer services with “professional” type offerings are creating an important customer segment to build greater alignment.

Pricing and value management competency will also be a differentiating factor in the building products industry due to channel power dynamics, slowing demand conditions, and undisciplined trade professionals, according to Fisher.

Furthermore, he adds that optimizing portfolios and rationalizing inventory levels will be important for players in the building products industry in order to maximize their resource efficiency and direct investments toward a different future state of construction materials and practices.

These factors could become increasingly important as 2023 progresses, given the fears of recession. Ducker Carlisle is predicting “a delayed recession but one that bounces back”. A shallow, soup bowl experience, probably in the second quarter,” is how Fisher describes it.

“We had anticipated that in the first quarter of this year, but it has been deferred because of the strength of the consumer,” he says. New residential construction is already down and high interest rates will keep both it and the non-residential segment very slow in the first half of this year, with potential to begin recovering in the second half. “Flat to no growth would be a win for 2023 and hopefully a slower recovery coming into 2024.”

Despite the more challenging outlook for construction in the months ahead, the longer-term outlook for adhesive and sealant manufacturers continues to burn brightly, driven by the environmental benefits they can bring to the sustainability table, particularly in replacing metal components.

Nevertheless, manufacturers must keep pace with shifting business models and digital platforms, or risk getting left behind in a rapidly evolving marketplace.

Elaine Burridge