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Urethane Foam Manufacturing in the USMay 2016 1

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Staying afloat: Increased revenue fueled


expanded operations and new player entrances

IBISWorld Industry Report 32615

Urethane Foam
Manufacturing in the US
May 2016

Jonathan DeCarlo

2 About this Industry

17 International Trade

33 Regulation & Policy

Industry Definition

18 Business Locations

33 Industry Assistance

Main Activities

Similar Industries

20 Competitive Landscape

34 Key Statistics

Additional Resources

20 Market Share Concentration

34 Industry Data

20 Key Success Factors

34 Annual Change

20 Cost Structure Benchmarks

34 Key Ratios

4 Industry at a Glance

22 Basis of Competition

5 Industry Performance

23 Barriers to Entry

Executive Summary

24 Industry Globalization

Key External Drivers

Current Performance

25 Major Companies

Industry Outlook

25 The Dow Chemical Company

11 Industry Life Cycle

35 Jargon & Glossary

26 FXI Foamex Innovations


27 Huntsman Corporation

13 Products & Markets


13 Supply Chains

30 Operating Conditions

13 Products & Services

30 Capital Intensity

14 Demand Determinants

31 Technology & Systems

15 Major Markets

32 Revenue Volatility

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About this Industry


Industry Definition

This industry manufactures plastic foam


products (except polystyrene). These
products are used to insulate objects or
reduce shock. Plastic foam products are
used in bedding, packaging, seat
cushioning, carpet cushioning, car

Main Activities

The primary activities of this industry are

interiors, fluid filtration systems,


anti-noise and vibration systems in
aircraft, medical devices, and a number
of consumer applications such as
sponges, mops, paint brushes and
cosmetic applicators.

Manufacturing plastic foam products (except polystyrene) for furniture and automotive seat cushions
Manufacturing plastic foam products (except polystyrene) for insulating automobiles and buildings
Manufacturing plastic foam shipping pads and shaped cushioning (except polystyrene)
Manufacturing plastic foam ice chests (coolers) and ice buckets (except polystyrene)
Manufacturing carpet and rug, urethane and other foam plastics (except polystyrene)
Manufacturing plastic foam products (except polystyrene) to shape, insulate and pad apparel products
Manufacturing hydrophilic plastic foams (except polystyrene) for absorptive medical products
Manufacturing plastic foam products (except polystyrene) for reducing noise and vibrations in electronic
appliances
Manufacturing plastic vacuum foam jugs (except polystyrene)
Manufacturing other nonfoam plastic products (except polystyrene) such as adhesives and coatings.

The major products and services in this industry are


Flexible Foams
Nonurethane Foams
Rigid Foams
Semi-rigid Foams
Other

Similar Industries

32521 Plastic & Resin Manufacturing in the US


Companies in this industry manufacture resins, plastic materials (i.e. polymers) and synthetic rubber.
32611 Plastic Film, Sheet & Bag Manufacturing in the US
Companies in this industry convert plastic resins into plastic bags, films and sheets.
32612 Plastic Pipe & Parts Manufacturing in the US
Companies in this industry manufacture plastics pipes, pipe fittings and plastics profile shapes.
32614 Polystyrene Foam Manufacturing in the US
Companies in this industry manufacture polystyrene foam products.
32619 Plastic Products Miscellaneous Manufacturing in the US
Companies that manufacture a range of plastic products including housewares, motor vehicle parts, and
appliance parts. This industry excludes plastic foam products.

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About this Industry

Additional Resources

For additional information on this industry


www.americanchemistry.com
Center for the Polyurethanes Industry
www.pfa.org
Polyurethane Foam Association
www.pmahome.org
Polyurethane Manufacturers Association
www.sprayfoam.org
Spray Polyurethane Foam Alliance

IBISWorld

writes over 700 US


industry reports, which are updated
up to four times a year. To see all
reports, go towww.ibisworld.com

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Urethane Foam Manufacturing in the US May 2016

Industry at a Glance
Urethane Foam Manufacturing in 2016

Key Statistics
Snapshot

Revenue

Annual Growth 11-16

Annual Growth 16-21

Profit

Exports

Businesses

4.1%

$11.2bn
$685.9m

$1.3bn

Demand from furniture and related product


manufacturing

Revenue vs. employment growth

The Dow Chemical


Company 
11.0%

20
10

% change

FXI Foamex
Innovations 
6.9%

10
0

% change

Market Share

-10

-30

Year 08

-10
-20

-20

Huntsman
Corporation 
6.9%

2.4%
469

10

Revenue

12

14

16

18

20

-30

Year

22

09

11

13

15

17

19

21

Employment
SOURCE: WWW.IBISWORLD.COM

p. 25

Products and services segmentation (2016)

10.8%

Key External Drivers

Nonurethane Foams

Demand from furniture


and related product
manufacturing

43.4%

12.5%

Rigid Foams

Demand from car


and automobile
manufacturing

Flexible Foams

Demand from
construction
Price of plastic
materials and resin

16.5%
Other

Trade-weighted index
Demand from packaging
and labeling services
p. 5

16.8%

Semi-rigid Foams

Industry Structure

Life Cycle Stage


Revenue Volatility
Capital Intensity

Mature
Low
Medium

Regulation Level

Medium

Technology Change

Medium

Barriers to Entry

Medium

Industry Assistance

Low

Industry Globalization

Concentration Level

Low

Competition Level

FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 34

SOURCE:
WWW.IBISWORLD.COM
SOURCE:
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Low
Medium

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Industry Performance

Executive Summary | Key External Drivers | Current Performance


Industry Outlook | Life Cycle Stage
Executive
Summary

The Urethane Foam Manufacturing


industry has expanded over the five years
to 2016. Improving economic conditions
have sustained increased demand from
important downstream markets, such as
construction and automobile production.
This downstream demand has driven
revenue growth over the period,
benefitting industry operators. Furniture
production and packaging demand have
also grown, drawing industry sales to
both large and small buyers. However,
input prices have been somewhat volatile,
influencing industry profit margin

Downstream

demand has driven revenue


growth, benefitting operators
fluctuations during the period. Industry
revenue is expected to rise at an average
annual rate of 4.1% over the five years to
2016 to reach $11.2 billion, exceeding
prerecessionary levels.
Given the lack significant import
competition, strong downstream demand
has been overwhelmingly satisfied by
industry operators. This is because
industry operators hold a competitive
advantage in the manufacture of high
value-added industry products. Increased
revenue over the period has fueled

Key External Drivers

Demand from furniture and


related product manufacturing
The state of the domestic furniture
manufacturing industry affects demand
for foam products. The more furniture
and furnishing related products that are
manufactured domestically, the greater
demand will be for foam products from
this industry. Cushions and pillows are
the largest use of industry products
because of their lightness and relative
comfort. Demand for furniture
manufacturing is expected to grow during

expanded operations, new player


entrances and increased wages. The price
of crude oil, the industrys most significant
input cost, has fluctuated over the period.
Initially rising then sharply declining by
the end of the period, resulting in
rebounding profit margins but lower
selling prices. As a result, industry
revenue growth slowed to 2.7% in 2016.
Over the five years to 2021, industry
revenue is expected to continue rising.
While growth of major downstream
markets will be less dramatic than during
the five years to 2016, consistently
positive trends will aid industry
expansion. In particular, demand from
construction and furniture production
will drive sales of flexible and rigid
foams, with increasing vehicle sales
benefiting the semi-rigid product
segment. At the same time, enterprises
and employment will grow as it will
become more appealing to enter the
industry. The price of plastic materials
and resin, a major input into urethane
foams heavily influenced by crude oil
prices, is expected to rise, limiting
industry margin growth but increasing
revenue by dictating higher selling prices.
Consequently, industry revenue is
forecast to rise at an average annual rate
of 2.4% over the five years to 2021, to
reach $12.6 billion.

2016, presenting a potential opportunity


for the industry.
Demand from car and
automobile manufacturing
The state of the US automotive industry,
including domestic production volumes,
affects demand for foam products. The
automotive industry uses polyurethane
foam in car seats and insulation
applications. When more vehicles are
manufactured in the United States, more
foam products will be purchased by the

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Industry Performance

automotive industry for inputs into their


vehicles and their components. The Car
and Automobile Manufacturing industry
is expected to grow during 2016.
Demand from construction
Housing construction activity drives
demand for building materials, including
foam insulation products and void-filling
products. It also indirectly affects
demand for furniture and household
appliance manufacturing, which also uses
foam inputs. The construction sector is
expected to grow during 2016.
Price of plastic materials and resin
Prices of plastic resin and recycled plastic
feedstock, which are largely determined
by market forces, affect input costs for the
Urethane Foam Manufacturing industry
and its products competitiveness relative
to substitute products. When the price of
plastic inputs increases, it raises industry
costs and drives down profit margins if
these costs cannot be passed along to
customers. The price of plastic materials
and resin is expected to grow in 2016;
however, plastic material and resin prices

remain volatile, presenting a potential


threat to the industry.
Trade-weighted index
The Trade-weighted Index (TWI)
measures the strength of the US dollar
relative to the currencies of its trading
partners. The TWI has increased over the
five-year period, showing the
appreciation of the US dollar. A strong
dollar makes imports more competitive
and weakens exports, as domestically
produced goods become more expensive
than foreign goods. An increasing TWI in
2016 represents a threat to the industry.
Demand from packaging
and labeling services
The level of demand for packaging
services affects demand for industry
products. Foam packaging materials are
used to help protect packages from
damage when they are shipped.
Therefore, when demand for packaging
services rises, demand for foam increases
as well. The Packaging and Labeling
Services industry is expected to grow
during 2016.
Demand from car and automobile
manufacturing

Demand from furniture and related product


manufacturing
10

50

25

% change

% change

Key External Drivers


continued

-10
-20
-30

Year

0
-25

09

11

13

15

17

19

21

-50

Year

09

11

13

15

17

19

21

SOURCE: WWW.IBISWORLD.COM

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Industry Performance

Current
Performance

The Urethane Foam Manufacturing


industry produces a wide range of
plastic foam products, with the
exception of polystyrene. The industry
has prospered over the five-year period,
primarily due to strong
postrecessionary domestic demand and
an improved economic outlook.
Industry operators have experienced
healthy growth, fueled by increased

downstream market demand. In


particular, the construction, furniture
production and automobile
manufacturing industries have
expanded during the period, driving up
sales of flexible, rigid, and semi-rigid
urethane foams. In turn, IBISWorld
expects industry revenue to increase at
an average annual rate of 4.1% over the
five years to 2016 to $11.2 billion.

Construction and
furniture

Construction activity represents a major


source of demand for industry products.
Urethane and other foams are used
extensively for insulation. These foams are
generally applied by a specialized spraying
device that combines two liquids to form a
quick-drying rigid foam. The relative ease of
application and effective insulating
properties of urethane insulation have
increased its popularity over the past five
years. The value of construction has also
risen notably in the past five years, as
unemployment has fallen and demand for
new homes has increased. During the five
years to 2016, demand from construction is
expected to rise at an average annual rate of
5.3%, driving much greater demand for
foam insulation products. Construction has

also indirectly benefited the industry by


generating greater need for new furniture to
fill new extensions, houses and offices.
As the largest buyers of industry products,
furniture producers have a strong influence
on the urethane foam industry. While foreign
competition has increasingly pressured
domestic furniture makers, demand from
furniture and related product manufacturers
is still estimated to rise at an average annual
rate of 2.3%. In turn, demand for foam has
risen to serve this need. Foam is used in a
range of furniture products such as pillows,
cushions, mattresses and carpet underlay. As
economic conditions have improved,
households have been able to direct greater
disposable income into new furniture
purchases, benefiting industry operators.

Automobile
production

While construction and furniture sales have


grown at a moderate rate, automobile
production has accelerated greatly during the
period. Over the five years to 2016, demand
from car and automobile manufacturing has
risen at an average annual rate of 6.8%.
Increased consumer spending and
purchasing power, low unemployment and
low interest rates have spurred demand,
encouraging strong vehicle sales over the
period, benefiting foam producers. Semirigid urethane foams are principally used to
make automobile seats, but industry
products are also integrated into bumpers
and interior roof coverings. As vehicle

Strong

activity in the
automotive, construction
and furniture sectors has
aided revenue
production has exhibited strong growth since
2011, demand for industry products from
major manufacturers has ramped up. In
addition, demand for more fuel-efficient
vehicles has raised demand for foam, which
offers low weight in addition to effective
sound and temperature insulation.

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Industry Performance

Low import
competition

By utilizing advanced technology and


skilled labor in the production of
urethane foam, industry operators
specialize in higher-value added
products, mitigating the threat of
competitive imports. Foreign
manufacturers, particularly those that
utilize low-wage labor, do not have the
same access to technology or human
capital and, therefore, are not able to
offer domestic consumers competitive
goods. Over the five-year period, imports
grew at an annualized rate of 4.9% to
$565.1 million, while exports increased at
an annualized rate of 2.4% to $1.3 billion.
Given the dollars appreciation over the
period and the resulting relative low price
of foreign goods, imports have managed
to outpace exports. However, import
penetration is minimal, as imports are
expected to account for only 5.4% of

Costs and profit

Industry profit margins have fluctuated


over the period, due in large part to
volatility in the price of key industry
inputs. Plastic resin, the primary
component of plastic foam, is made from
petrochemical feedstock. As a result,
resin prices are linked to the rise and fall
of oil prices. Over the five years to 2016,
the price of plastic materials and resin
has risen at an average annual rate of
0.1%. With initially rising crude oil
prices, industry profit margins dropped
during the former portion of the period.
However, with crude oil prices plunging
by 47.2% in 2015 and 33.4% in 2016,

domestic demand in 2016. Without


strong import competition, industry
operators are able to overwhelmingly
benefit from strong downstream demand
for industry products, leading to
increased sales over the period. With
increased revenue, companies have
expanded their operations, leading to
increased establishments, employment
growth and higher wages. The number of
industry establishments will increase
over the five-year period at an annualized
rate of 1.1% to 672. The total number of
employees in the Urethane Foam
Manufacturing industry is expected to
climb at an annualized rate of 3.4%, to
32,024 in the five years to 2016.
Additionally, industry wages are
projected to increase over the period,
growing at an annualized rate of 4.2% to
$1.5 billion.

Profit

margins have
fluctuated due to volatility
in the price of key industry
inputs
industry profit margins have bounced
back slightly. Although low input prices
have positively influenced profit levels,
they have also reduced average selling
prices across the industry. As a result,
industry growth is expected to slow to
2.7% in 2016.

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Industry Performance

Construction and
furniture

The Urethane Foam Manufacturing


industry is forecast to sustain growth
through 2021. Over the next five years,
industry revenue is expected to grow at an
annualized rate of 2.4% to $12.6 billion. As
with the current period, industry growth
will be predicated on strong overall
domestic demand and a positive economic
outlook, which provide the basis for strong
market demand for industry products.
Downstream demand from residential and
nonresidential construction activity is
expected to boost sales of urethane
products used in insulation, furniture and
carpets. Similarly, demand for
automobiles will increase purchases of
urethane used in seats and vehicle
insulation, and increased consumer

spending will positively effect


polyurethane packaging production.

Construction market growth is expected to


continue over the five years to 2021. This
market mainly represents demand for
insulation, but also indirectly increases
demand for bedding and furnishings
products. In light of falling unemployment,
developers and individuals will once again
be willing to invest in new units. Early in the
five-year period to 2021, the recovery will be
aided by the Federal Reserves commitment
to keep interest rates low. Additionally,
banks will choose to restructure delinquent
mortgages rather than foreclose, which will
keep underpriced homes off the markets.
These conditions will lessen uncertainty for
individuals and developers, promoting
further construction growth. Over the five
years to 2021, demand from construction is
forecast to increase at an average annual
rate of 33%, benefiting industry operators.

Furniture manufacturing revenue is


expected to increase slightly over the
period. The success of this sector is
closely tied to the performance of the
housing market. Since the housing
market and per capita disposable income
levels are expected to improve over the
next five years, furniture sales will also
increase. In all, demand from furniture
and related product manufacturing is
forecast to rise at an average annual rate
of 1.6%. As the largest market for
urethane foam, slower growth in this
market compared to the five years to
2016 will result in more measured
industry expansion over the years to
2021. Still, these trends for furniture
production are a positive sign,
considering the strong import
competition faced by domestic producers.

Revenue vs. exports


30
20

% change

Industry
Outlook

10
0
-10
-20
-30

Year 08
Revenue

10

12

14

16

18

20

22

Exports
SOURCE: WWW.IBISWORLD.COM

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Industry Performance

Transportation and
packaging

Industry landscape

After a strong jump in demand during the


current five-year period, automobile sales
growth is expected to slow down in the
next few years. Fewer incentives for auto
buyers and a general shift towards more
public transportation usage will reduce
many households need for new vehicles.
As a result, demand from car and
automobile manufacturing is expected to
rise at an annualized rate of just 1.1% over
the next five years. However, a greater
focus on fuel efficiency will result in more
prevalent use of foam in automobile
production, given its light weight.
The Packaging and Labeling Services
industry (IBISWorld report 56191) makes
use of foam products as packaging
materials to protect products during
shipping. A large component of demand
for packaging services stems from
e-commerce sales of consumer items

such as cosmetics, electronics,


automotive parts, food, confectionery and
hardware. Consequently, this industry is
sensitive to changes in economic
conditions, particularly consumer retail
expenditure. As economic conditions
improve over the five years to 2021,
demand from packaging and labeling
services is anticipated to rise at an
average annual rate of 1.4%. This will
provide a boost to industry operators that
manufacture products such as
polyurethane packaging foam.

Continued industry revenue growth will


drive additional players to enter the
industry. The number of urethane foam
manufacturing enterprises is expected to
increase during the five-year period at an
average annual rate of 1.3% to 500 in
2021. As the number of operators
expands, so too will the industrys
workforce; overall employment is forecast
to increase at an annualized rate of 1.5% to
34,425 workers in 2021. Industry
profitability is expected to climb slowly
during this time, as efficiency improves.
While oil prices are likely to remain low
through 2016, input prices will be volatile
over the period. The price of plastic
materials and resin is projected to remain
somewhat volatile over the next five years,
so operators will remain hesitant to
expand operations too quickly.
As business confidence continues to
improve, an increase in capital and
research and development (R&D)
expenditures will fuel product innovation

that will expand the use of foam products.


New technology is important in
improving product quality and
characteristics and in driving productivity
gains and securing market share from
substitutes. It will become increasingly
difficult for smaller players in this
industry to survive with major companies
leading innovation. To succeed, smaller
players need to focus on niche markets
and R&D activities, or alternatively,
license technology from larger operators
in the United States or overseas.
Over the next five years, import
penetration is expected to remain low.
Imports will grow at an annualized rate
of 2.5% to $640.2 million, while exports
are predicted to increase at an annualized
rate of 2.1% to $1.5 billion. As imports are
predicted to increase in line with exports,
imports share of domestic demand will
remain at 5.4% in 2021. Such low import
competition will continue to benefit
industry operators.

A

greater focus on fuel


efficiency will result in
more prevalent use of foam
in automobile production

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Industry Performance
Life Cycle Stage

Industry value added is slightly ahead of GDP


Innovation is primarily focused on improving
existing products, not creating new markets

% Growth in share of economy

Industry consolidation is increasing


among major players

20

Maturity

Quality Growth

Company
consolidation;
level of economic
importance stable

High growth in economic


importance; weaker companies
close down; developed
technology and markets

15

Key Features of a Mature Industry


Revenue grows at same pace as economy
Company numbers stabilize; M&A stage
Established technology & processes
Total market acceptance of product & brand
Rationalization of low margin products & brands

10

Quantity Growth

Many new companies;


minor growth in economic
importance; substantial
technology change

Plastic Film,
Sheet & Bag Manufacturing
Carpet Mills

Chemical Wholesaling

Urethane Foam Manufacturing


Plastic & Resin Manufacturing

Chemical Product Manufacturing

Decline

-5

Shrinking economic
importance

-10
-10

-5

10

15

20

% Growth in number of establishments


SOURCE: WWW.IBISWORLD.COM.AU

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Industry Performance

Industry Life Cycle


This

industry
is M
 ature

The Urethane Foam Manufacturing


industry is in the mature stage of its life
cycle. The industry has a dominant position
in established markets such as furniture
and automobile production, where growth
is largely dependent on general economic
conditions. Strong growth over the years to
2021 can be attributed to strong domestic
demand and an improved economic
outlook. Positive macroeconomic factors,
such as low unemployment, increased
consumer spending and confidence and
low interest rates will benefit key
downstream industries, primarily the
construction, furniture and automotive
industries. As a result, downstream
demand for industry products will be
strong throughout the period, leading to
consistent revenue growth.
Overall, during the 10 years to 2021,
industry value added (IVA), which
measures an industrys contribution to
GDP, is forecast to grow at an average
annual rate of 2.8%. By comparison, GDP
is projected to rise at an annualized rate
of 2.2% over the same period. The
industry is a mature industry, given its
centrality to the construction, furniture
and automobile markets, which are
integral to the overall economy. However,

the industry also displays certain aspects


of a growing industry, such as increasing
enterprises and establishments, as well as
technological change and innovation. The
industry has only moderate barriers to
entry, which is another indication of a
growing industry. While larger operators
have the advantage of being able to fund
state-of-the-art machinery and negotiate
long-term contracts with buyers, there
are no licensing requirements,
government regulations or resource
constraints significant enough to prevent
firms from entering and competing.
Additionally, since most industry
operators offer nondifferentiated foam
products to major downstream markets,
more companies are looking to establish
themselves by offering niche products,
such as foam components within certain
electric devices. FXI Foamex Innovations
has devoted a market segment to
producing foams that reduce noise and
vibration within electronic printers.
While the Urethane Foam Manufacturing
industry certainly displays certain
dynamic aspects normally associated
with growing industries, the industry is
mature, given that it is heavily embedded
within the overall economy.

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Products & Markets

Supply Chain | Products & Services | Demand Determinants


Major Markets | International Trade | Business Locations

Supply Chain

KEY BUYING INDUSTRIES


23

Construction in the US
The construction sector uses foam for insulation.

31411

Carpet Mills in the US


Carpet mills use foam in carpet cushion.

33522

Major Household Appliance Manufacturing in the US


Major household appliance manufacturers use foam in some electrical appliances.

33611a

Car & Automobile Manufacturing in the US


Car and automobile manufacturers use foam in auto seats and in insulation applications.

33611b

SUV & Light Truck Manufacturing in the US


SUV and light truck manufacturers use foam in auto seats and in insulation applications.

33636

Automobile Interior Manufacturing in the US


Automobile interior manufacturers use foam in auto seats and in other interior products.

33712

Household Furniture Manufacturing in the US


Household furniture manufacturers use foam in seat cushions.

33721

Office Furniture Manufacturing in the US


Office furniture manufacturers use foam in seat cushions.

33791

Mattress Manufacturing in the US


Mattress manufacturers use foam as cushioning in mattresses.

KEY SELLING INDUSTRIES

Products & Services

32521

Plastic & Resin Manufacturing in the US


Plastic is purchased in the form of resins or in value added form.

32599

Chemical Product Manufacturing in the US


Inorganic and organic chemicals and allied products (including plasticizers) are purchased as
inputs for urethane foam products.

42469

Chemical Wholesaling in the US


Wholesalers can hold, and can efficiently supply, a wide range of products used as inputs for
urethane foam products.

Flexible foams
Flexible foam products account for
43.4% of industry revenue. The major
products in this segment include highresiliency foam for bedding and furniture
upholstery, as well as fabric coatings and
synthetic fibers. This product segment is
has contracted slightly over the five years
to 2016, as other product segments have
expanded faster. Nevertheless, sales of
products within this category have
increased steadily during the past five
years as the key furniture-related
industries have expanded, fueled by
falling unemployment and increased

consumer spending and confidence over


the period.
Rigid foams
Rigid foam products account for 12.5% of
industry revenue. The major products in
this segment include thermal insulation
used in new building construction and
refurbishments, as well as in the walls of
most refrigerators and freezers.
Increasing new home starts and private
nonresidential construction, as well as
growth in the value of construction have
fueled demand for insulation products.
As such, this segment is expected to

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Products & Markets

Products & Services


continued

Products and services segmentation (2016)

10.8%

Nonurethane
Foams

43.4%

12.5%

Rigid Foams

Flexible Foams

16.5%
Other

Total $11.2bn

16.8%

Semi-rigid Foams

achieve a strong increase as a share of


industry revenue in the five years to 2016.
Semi-rigid foams
Semi-rigid foams account for 16.8% of
the industrys revenue. This segment
includes foam used for automotive
seating, protective cushioning and sound
insulation in cars and light trucks.
Semi-rigid foams are also used in
packaging products as well, due to their
strength and durability. Purchases of
semi-rigid foams are heavily correlated
with the automotive industry, which has
has sustained strong growth throughout
the period. As such, demand for this
segment has increased over the five years
to 2016. As consumer confidence grows
and auto sales pick up, industry revenue
for semi-rigid foams is expected to

Demand
Determinants

The diversity of applications for foam


products means demand is determined
by an array of factors. Economic
conditions guiding consumer behavior
have a major effect on industry demand.
With unemployment falling during the
five years 2016, both consumer
confidence and disposable income levels
have improved. In turn, consumers have

SOURCE: WWW.IBISWORLD.COM

increase. However, growth in this


segments share of revenue will be
somewhat subdued by competition from
increasingly popular substitute packaging
products, including corrugated
cardboard, beaded polyethylene, beaded
polypropylene and expanded polystyrene.
Nonurethane foams
Nonurethane foams account for an
estimated 10.8% of industry sales, and
include all foams not made from
urethane or polystyrene. Many of these
foams are used for the same purposes as
urethane alternatives, but are gaining
popularity due to reduced cost, ease of
production, or health benefits. An
example is icynene, which is increasingly
used for spray insulation in homes and
commercial buildings.

greater levels of confidence in their


financial security and more income
available to make large purchases, such
as furniture. In addition, vehicle sales
increase as households are able to make
large investments. Increasing domestic
automobile production drives up demand
for auto seats, foam interior parts and
automotive insulation. Sales to the

Urethane Foam Manufacturing in the USMay 2016 15

WWW.IBISWORLD.COM

Products & Markets

Demand
Determinants
continued

Major Markets

furniture and automotive industries


account for a large portion of industry
revenue, which makes their upstream
demand factors important determinants
of growth for this industry.
The level of residential and
commercial construction activity also
affects demand for foam, specifically for
insulation use. Rigid foams are used
extensively in home construction, due to
their insulating properties and versatility.
In addition, construction activity tends to
drive purchases of furniture, which is
used to fill newly created homes,
extensions and commercial properties.
This reinforces other sources of demand
for furniture. Likewise, consumer
demand for more efficient automobiles
promotes greater demand for foam
goods, due to the weight-saving benefits
of urethane materials. This complements
the increased demand for automobiles
from rising income levels by shifting

consumer preferences toward vehicles


that make greater use of urethane foam.
Competition from urethane foam
substitutes influences the level of demand
for industry products. Some customers,
such as seating and public transit
manufacturers, require foam products
that deliver very high performance
specifications such as durability and
high-fire retardant qualities. The ability
of foam products to incorporate these
desired attributes is a vital determinant
of demand in contested markets.
Additionally, demand is also affected by
the competitiveness of US manufacturers.
By specializing in the manufacture of
high value-added industry goods,
domestic operators hold a competitive
advantage over foreign manufacturers
that rely on low-wage labor. As a result of
low import competition, domestic
demand is significantly fulfilled by
industry operators.

Major market segmentation (2016)

3.9%

Packaging manufacturers
and suppliers
Consumers and institutions

29.9%

8.4%

11.0%

Furniture and
furnishing manufacturers

Building and construction industries

11.0%

Automotive and automotive


parts manufacturers

11.7%

Total $11.2bn

Exports

The major market segments for flexible


polyurethane products include furniture
manufacturers, public seating and trim
manufacturers and end-markets (e.g. rail,
bus, stadium and theater operators), and
mattress and pillow manufacturers. The

24.1%
Other

SOURCE: WWW.IBISWORLD.COM

major markets for semi-rigid foams


include automotive seating and
automotive insulation manufacturers as
well as packaging manufacturers. The
major markets for rigid polyurethane
foam products include the construction

Urethane Foam Manufacturing in the USMay 2016 16

WWW.IBISWORLD.COM

Products & Markets

Major Markets
continued

market and refrigeration manufacturers.


Industry exports also account for a
portion of major markets.
Furniture and furnishings manufacturers
Furniture and furnishing manufacturers
account for an estimated 29.9% of industry
sales revenue. Flexible polyurethane foam
can be used to make a variety of shapes,
and is light, comfortable and durable. This
makes it ideal for furniture applications,
particularly pillows and cushions. Industry
products are also used in seating, mattress
cores, quilts and carpet underlay. Demand
for furniture and furnishings has grown
alongside an improved real estate market,
as well as increased consumer spending
and confidence. However, the household
furniture segment has declined in 2016,
due to increased import competition. This
has constrained sales growth to a degree,
due to the extensive use of urethane foam
in many seating cushions.
Construction
Building and construction industries
account for about 11.0% of industry
revenue. This market primarily demands
rigid polyurethane foam to insulate a wide
variety of products such as walls, roofs,
doors and windows. It is also commonly
used as an adhesive in building materials to
bond, strengthen and weatherproof
roofing, flooring, wallboard and window
materials. This segment has grown over the
five years to 2016, due to the upward trend
in new construction and home renovations,
increasing value of construction over the
period. Recovering consumer sentiment
and income have contributed to the growth
of the Building and Construction industry,
fueling demand for foam products used to
help insulate and homes and offices.
Automotive and automotive
parts manufacturers
Automotive manufacturers account for
11.0% of total industry sales revenue. These
manufacturers demand foam products and

components for motor vehicle interiors,


specifically foam seat cushions and
insulation. Transportation-related
polyurethane foam products have increased
their share of industry shipments in recent
years, due to an increase in the use of foam
products in automobiles (while the average
size of vehicles manufactured increased).
Growth from an expanded automotive
industry and greater interest in new energy
efficient cars have also helped improve
demand from this downstream market.
Exports
Exports account for 11.7% of total industry
revenue. Over the five years to 2016, industry
exports have risen an annualized rate of 2.4%
to $1.3 billion. Industry operators have a
competitive advantage over foreign
manufactures, as they have specialized in the
manufacture of high value-added products
through the use of skilled labor (human
capital), advanced technologies and
production patents. The industrys largest
export destination is Mexico, which accounts
for 40.4% of exports. The second largest
importer of industry goods is Canada,
accounting for 15.2% of exports. Given the
relative ease with which trade is conducted
between these countries, Mexico and Canada
account for over half of industry exports.
Other markets
Due to the versatile nature of foam
products, many downstream markets
make use of industry goods. These uses
include foam insulation in refrigeration
appliances, aquatic sealants and among
myriad other uses. In total, these uses of
urethane and other foam products
account for 24.1% of industry revenue,
with packaging making up 3.9% of sales,
and consumer and institutional usage
contributing 8.4% of industry sales.
Demand of these markets has increased
over the five years to 2016, fueled by
general economic improvement,
particularly growth in per capita
disposable income.

Urethane Foam Manufacturing in the USMay 2016 17

WWW.IBISWORLD.COM

Products & Markets

Level & Trend


 xports in the
E

industry are
Mediumand
Increasing
Imports

in the
industry are L ow
and S
 teady

The Urethane Foam Manufacturing


industry displays a low level of
international trade. The industry
maintains a competitive advantage over
foreign operators, as the industry has
specialized in the production of high
value-added foams utilizing advanced
technology and skilled labor. Foreign
manufacturers, especially those that rely
on unskilled and low capital intensive
production methods, are unable to
compete. Consequently, import
penetration is low; imports only account
for 5.4% of domestic demand. Instead,
industry operators fulfill the majority
domestic demand. Industry operators
have also tapped into foreign demand,
with exports accounting for 11.7% of total
industry revenue. Over the five-year
period, exports have increased at an
annualized rate of 2.4% to $1.3 billion in
2016. Given the growth of industry
revenue, operators have looked to
expand their operations. As a means of
achieving such expansion amidst an
increasingly saturated domestic
competitive landscape, industry
operators are selling more products

Industry trade balance


1500
1000

$ million

International Trade

500
0
-500
-1000

Year 08
Exports

10

12

Imports

14

16

18

20

22

Balance
SOURCE: WWW.IBISWORLD.COM

abroad, tapping into foreign downstream


demand markets. Imports have also
grown over the five-year period at an
annualized rate of 4.9% to $565.1 million
in 2016. The primary driver behind such
growth has been an increasing TradeWeighted Index, which shows the
appreciation of the dollar against other
major currencies. An appreciating dollar
makes imports more competitive, as
domestically produced goods become
comparatively more expensive.

Urethane Foam Manufacturing in the USMay 2016 18

WWW.IBISWORLD.COM

Products & Markets


Business Locations 2016

West
New
England

AK
0.2

Great
Lakes
WA

ND

MT

1.0

Rocky
Mountains
ID

OR
1.0

West NV
0.6

1.9

SD
0.5

WY

0.0

MN

0.2

0.0

Plains

CO

1.3

KY

0.6

OK
1.6

NC
9.0

TN

AZ

NM

0.8

0.6

Southwest
TX
9.8

HI
0.0

Additional States (as marked on map)


1 VT

2 NH

3 MA

4 RI

5 CT

6 NJ

7 DE

8 MD

0.2
1.3

0.0

2.2

2.1

0.3

SC

Southeast

1.1

MS

AL
0.3

0.6

GA
2.5

3.5

LA
0.5

FL
3.8

Establishments (%)

0.5

0.5

AR

0.8

3.2

11.9

WV VA
1.6

2.5

1.7

CA

West

5.4

MO

KS

1.4

OH

4.6

2.7

3.8

IN

IL

0.2

UT

PA

4.9

0.8

0.8

1 2
3
NY
2.7
5 4

MI

2.7

IA

NE

0.0

WI

ME

MidAtlantic

9 DC
0.0

Less than 3%
3% to less than 10%
10% to less than 20%
20% or more

SOURCE: WWW.IBISWORLD.COM

Urethane Foam Manufacturing in the USMay 2016 19

WWW.IBISWORLD.COM

Products & Markets

Distribution of establishments vs. population


30

20

10

Southwest

Southeast

Plains

New England

Rocky Mountains

Establishments

Mid-Atlantic

Great Lakes

0
West

The location of manufacturing


establishments is generally influenced by
how close they are to major markets, as
well as material and supply industries.
Manufacturing establishments also tend
to be highly correlated with population
density. IBISWorld expects that in 2016
the Urethane Foam Manufacturing
industry will be concentrated in the
Southeast, Great Lakes and West regions
of the United States due to their proximity
to major manufacturing industries as well
as population centers. These three regions
combined will account for 64.3% of
industry establishments.
In 2016, the Southeast region is
expected to account for 29.3% of industry
establishments. This is the most
populous region in the United States. The
high percentage of establishments in this
region indicates manufacturers desire to
be near their customer base and lower
transportation costs. This region also
includes a prominent construction
industry. North Carolina holds the third
largest percent of establishments at 9.3%.
The Great Lakes region is projected to
account for an estimated 20.3% of
industry establishments in 2016.The
Great Lakes region is a manufacturing
hub of the United States. Foam products
are used intensively in industrial markets
to insulate, reduce noise and vibration
and transport products. Operators are
mainly concentrated in Ohio and
Michigan, due to their large proportions
of locations in the automotive sector
The West region accounts for an
estimated 14.6% of industry
establishments in 2016. California is one
of the most populous states and also has
the highest proportion of establishments
(11.9%). The state has one of the highest
concentrations of manufacturing activity

Business Locations

Population
SOURCE: WWW.IBISWORLD.COM

in the United States, being a national


leader in several key sectors. California
ranks among the leaders in machinery,
fabricated metals, agricultural products,
food processing, computers and
aerospace technology, which use various
foam products in their production. In
recent years, a significant amount for
construction activity has taken place
within the region, which is also home to a
large and growing consumer market.
The Southwest region accounts for
12.8% of industry establishments in
2016. This is mostly due to Texas, which
housed 9.8% of industry establishments
(second most in the United States).
Texas is a national leader in many
industries. The Mid-Atlantic region
accounts for an estimated 9.5% of
industry establishments in 2016. The
Mid-Atlantic region has access to some
of the largest US seaports, making it an
attractive location for manufacturers to
receive raw materials.

WWW.IBISWORLD.COM

Urethane Foam Manufacturing in the US May 2016

20

Competitive Landscape

Market Share Concentration | Key Success Factors | Cost Structure Benchmarks


Basis of Competition | Barriers to Entry | Industry Globalization
Market Share
Concentration
Level
Concentration

in
this industry is L ow

Key Success Factors


IBISWorld

identifies
250 Key Success
Factors for a
business. The most
important for this
industry are:

The Urethane Foam Manufacturing industry


is relatively fragmented, with the top four
companies accounting for 28.9% of industry
revenue in 2016. The majority of industry
operators have under 100 employees, and
26.0% plurality of companies operate with
between 20 and 49 employees. Given the
diversity of downstream markets, it is
difficult for individual companies to obtain a
large portion of market share. Most of the
industrys expansion opportunities exist for
specialized products in niche markets.

Over time, industry concentration has


been increasing, albeit slowly. Overall
concentration has increased from 22.7%
in 2012. Growth in the number of industry
enterprises has been very low, indicating
that merger and acquisition activity
significantly outpaces new participation.
The trend toward consolidation and
strategic acquisitions indicates that
companies are making a concerted effort
to increase profitability by claiming larger
portions of market share.

Undertaking technical research


and development
Access to technology through in-house
R&D or technology transfer agreements
can help industry firms prosper.

Proximity to key markets


Due to the bulky nature of industry products,
transportation costs can be reduced by
locating plants close to customers.

Must comply with required


product standards
It is essential for this industry to closely
monitoring and following legislation
regarding environmental controls,
product safety, raw materials and
dangerous materials.
Effective cost controls
Profit margins are low, so effective cost
controls are very important in this industry.

Cost Structure
Benchmarks

Urethane foam manufacturers have been


working to develop more efficient and
profitable enterprises. While the industry is
relatively fragmented, certain large industry
companies have consolidated operations in
an attempt to increase efficiencies and build
economies of scale. However, the industry is
sensitive to upstream input prices such as
crude oil. Input cost volatility introduces
some uncertainty into cost structure.
Profit
Industry profit, defined as earnings
before interest and taxes, varies between

Economies of scale
Manufacturers with larger plastic
resin requirements may be in a
stronger position to negotiate lower
prices with suppliers.
Output is sold under contract incorporate long-term sales contracts
Negotiation of long-term supply
contracts with large customers (with
price escalation clauses) can protect an
industrys profitability.

players depending upon the size of their


manufacturing facilities. Larger operators
generally benefit from economies of
scale, while smaller operators experience
reduced margins. Overall, profit is
expected to account for 6.1% of industry
revenue in 2016. Industry revenue has
increased since 2011, but profitability has
declined over the period. Rapid growth in
downstream markets resulted in strong
demand for industry products which
boosted profit margins during the former
part of the period, creeping up to 7.1% in
2012. Nevertheless, rising oil prices, a

WWW.IBISWORLD.COM

Urethane Foam Manufacturing in the US May 2016

21

Competitive Landscape

crucial input for the plastics used in


urethane products, pushed industry
operators margins down during the
following years. By 2015, oil and natural
gas prices fell dramatically, providing
manufacturers with increased profit.
Although the fall of oil prices is expected
to decelerate in 2016, input costs will
remain low. As a result, industry margins
are expected to rise to 6.1%, up from a
5.8% low in 2014.
Purchases
Accounting for an estimated 59.5% of
industry revenue in 2016, raw material
costs are the largest expense for
urethane foam manufacturers. Key raw
materials include resin, which is derived
primarily from crude oil. In recent years,
the cost of resin has followed the
volatility of the price of oil, which has
fluctuated greatly. In the five years to
2016, the price of resin exhibited an

overall increase in response to rising


global demand. However, global oil and
natural gas prices have fallen
dramatically during the latter portion of
the period, reducing the price of resin
for all manufacturers that produce
plastic products. As a result, purchasing
costs are expected to fall this year,
though volatility is expected to remain a
problem for operators beyond 2016.
Wages
The Urethane Foam Manufacturing
industry is capital intensive, though
labor costs are still relatively high given
the industry technical specialization.
IBISWorld estimates that wage costs
will represent 13.0% of industry
revenue in 2016. Wages have risen
slightly over the five-year period. With
growing industry revenue, industry
players are increasingly expanding their
operations, hiring more workers and

Sector vs. Industry Costs


Average Costs of
all Industries in
sector (2016)

Industry Costs
(2016)

7.7

6.1

11.9

13.0

54.7

59.1

100

80

Percentage of revenue

Cost Structure
Benchmarks
continued

n Profit
n Wages
n Purchases
n Depreciation
n Marketing
n Rent & Utilities
n Other

60

40

20

0.7

2.6
2.0
19.9

0.1

2.1
2.4
17.2

0
SOURCE: WWW.IBISWORLD.COM

WWW.IBISWORLD.COM

Urethane Foam Manufacturing in the US May 2016

22

Competitive Landscape

Cost Structure
Benchmarks
continued

increasing wages. Although wages are


expected to rise over the next five years,
they will fall short of their
prerecessionary level.
Depreciation
The cost of depreciation will invariably
fluctuate between operators depending on
their size and the amount of capital
expenses involved. However, it is common
for most operators to spend a significant
amount on new plant equipment to keep
up with technologies and trends in
production and products. Also, operators
look to mechanize their plants by reducing
reoccurring wage costs in favor of paying
for one time capital inputs, especially
when industry revenue is falling.
However, increased industry revenue and
wages have stunted the influx of new
capital, resulting in a slight decline in

Basis of Competition
Level & Trend
 ompetition
C

in
this industry is
Mediumand the
trend is S
 teady

The Urethane Foam Manufacturing


industry exhibits multiple factors that
encourage competition within the
industry. Factors like moderate barriers to
entry increase the threat of competition
from new operators and encourage a
competitive environment, while low levels
of product differentiation provide little
insulation from direct competition among
existing players. The amalgamation of
factors that encourage competition has led
to this industry exhibiting a moderate
level of competition.
Internal competition
There is a low level of concentration
among operators within this industry. The
industrys four largest players collectively
account for 28.9% of industry revenue.
The majority of industry operators are
small- to medium-sized, with 87.9% of
operators employing fewer than 100
workers. Since no players are able to
achieve disparate advantages from
economies of scale, there is a low level of

depreciation costs over the five years to


2016 to 2.1% of industry revenue.
Other
Additional costs include rent and
utilities, which together make up 2.4%
of revenue. Energy costs have fallen
slightly over the five years to 2016, due
to a drop in oil and natural gas prices
during the ladder part of the period.
This has benefited industry operators,
as production of urethane and other
foams requires extensive use of
machinery. Other costs include freight,
repair, insurance and measures to meet
emissions regulations and guidelines.
Marketing is expected to consume less
than 1.0% of industry cost structure
because operators mainly sell directly
to manufacturers through long-term
contracts and established relationships.

industry concentration, which tends to


encourage competition. Additionally,
there are only a small number of raw
material suppliers. With a fixed number of
suppliers, most players experience parity
in fluctuations in the price of inputs. The
combination of low market share
concentration and few input suppliers
create a high potential for operators
outside the industry to enter and compete.
Industry operators compete on
product design and other attributes.
These attributes include comfort (e.g. for
bedding products), weight, performance,
safety, hygiene, presentation, ease of
recycling and other environmental
considerations. Consistency of quality,
reliability of delivery times, innovation
and provision of packaging design advice
also allow players to stand out among the
competition. This industry manufactures
a wide variety of products that are sold in
numerous markets, each of which is
highly competitive. Many of
manufacturers within the industry

WWW.IBISWORLD.COM

Urethane Foam Manufacturing in the US May 2016

23

Competitive Landscape

Basis of Competition
continued

compete with divisions of large


multinational companies, which have
significantly more resources available.
Increased competition may potentially
result in falling market share or reduced
prices, which could result in reduced
profit. This may impair a companys
ability to grow or even to maintain
current levels of revenue and earnings.
External competition
The level of substitute competition within
this industry varies among products
segments. Polyurethane competes with
expanded polystyrene foam products in
the insulation market. Industry goods
also compete with fiberglass and phenolic
foam products. Flexible polyurethane and
latex foam products do not currently have
any significant competition from
substitute products in the furniture and
bedding padding markets. Polyurethane
foam products compete with substitute

Barriers to Entry
Level & Trend
 arriers to Entry
B

in this industry are


Mediumand S
 teady

There are moderate barriers to entry in this


industry. There are no licensing
requirements, government regulations or
resource constraints significant enough to
prevent firms from entering the Urethane
Foam Manufacturing industry. While there
are few practical barriers to entry, some
factors may deter companies from
participating in the industry. A significant
financial investment is required to acquire,
maintain and update plant and equipment.
Larger operators can fund state-of-the-art
machinery and are more able to maximize
utilization of equipment, enabling them to
reduce prices. This may deter smaller firms
from entering the industry.
Research and development (R&D) is
necessary for product innovation that
expands the uses of foam products,
increasing demand. To effectively
compete, an entrant should be committed
to spending a significant amount on
(R&D). Significant costs are also required

foam products on the basis of price,


product attributes (such as fire safety and
strength in public transport seating) and
perceived environmental impact.
The industry also faces minor
competition from abroad. Import
penetration is low and does not pose a
significant threat to the industry. In
2016, imports are estimated to account
for only 5.4% of domestic demand. Low
import penetration is primarily due to
the fact domestic operators hold a
competitive advantage over foreign
competitors, specifically those that rely
on low-wage labor. Domestic operators
offer high-value added products that
require advanced technology, patents
and relatively specialized labor. Since
foreign manufacturers in low-wage
countries have less access to
technology and human capital and
fewer R&D capabilities, they are unable
to compete effectively.

Barriers to Entry checklist


Competition
Concentration
Life Cycle Stage
Capital Intensity
Technology Change
Regulation & Policy
Industry Assistance

Medium
Low
Mature
Medium
Medium
Medium
Low
SOURCE: WWW.IBISWORLD.COM

in technology transfer agreements, to


expand market opportunities to compete
and achieve growth. Joint ventures or
strategic alliances with large overseas
operators may assist to reduce this barrier.
Many incumbent operators within
this industry, particularly those
servicing manufacturing industries, have
developed strong relationships with
upstream suppliers and downstream
markets, making it difficult for other

WWW.IBISWORLD.COM

Urethane Foam Manufacturing in the US May 2016

24

Competitive Landscape

Barriers to Entry
continued

firms to break in. The existing operators


can also negotiate term contracts with
some major customers. Therefore,
significant costs may be involved in
securing customers from competitors.
Existing large players can also negotiate
lower prices for raw materials,

principally plastic resins, which


represent a large percentage of total
industry costs. There is also excess
capacity in this industry, so existing
players are able to increase production
to serve new demand. This serves as an
additional deterrent to entry.

Industry
Globalization

There is a low level of globalization


within this industry, with exports
accounting for 11.7% of industry revenue
and imports accounting for 5.4%
domestic demand in 2016. The disparity
between exports and imports is due to
domestic operators competitive
advantage over low-cost foreign
manufactures in the production of
higher-value added industry goods. With
comparably less access to skilled labor
and technology, low-wage foreign
manufactures have been unable to tap
into domestic demand. Conversely,
domestic manufacturers are able to sell
industry products abroad, as foreign
producers are unable to satisfy the
demand from foreign downstream

demand markets. Both imports and


exports have grown over the five-year
period. Imports have increased at an
annualized rate of 4.9% to $565.1 million,
while exports have risen at an average
annual rate of 2.4% to $1.3 billion.
Several of the industrys biggest
players operate on a global scale,
maintaining a significant portion of their
operations overseas. The Dow Chemical
Company is one of the largest
multinational chemical corporations,
with 179 manufacturing facilities
overwide. Only 30.7% of its facilities are
located in the United States. According to
its 2015 annual report, only 43.6% of
Huntsman Corporations long-lived
assets are located in the United States.

International trade is a
major determinant of
an industrys level of
globalization.
Exports offer growth
opportunities for firms.
However there are legal,
economic and political risks
associated with dealing in
foreign countries.
Import competition can
bring a greater risk for
companies as foreign
producers satisfy domestic
demand that local firms
would otherwise supply.

Trade Globalization
200

Going Global: Urethane Foam Manufacturing


2002-2016
Global

Export

150
100
50
0 Local
0

Urethane Foam
Manufacturing

Import

40

160

80

120

Imports/Domestic Demand

200 Export

Exports/Revenue

in this
industry is L owand
the trend is S
 teady

Exports/Revenue

Level & Trend


 lobalization
G

Global

150
100
50

2016
2002
0 Local
0

Import
40

80

120

160

Imports/Domestic Demand
SOURCE: WWW.IBISWORLD.COM

Urethane Foam Manufacturing in the USMay 2016 25

WWW.IBISWORLD.COM

Major Companies

The Dow Chemical Company | FXI Foamex Innovations


Huntsman Corporation | Other Companies

Major players

FXI Foamex Innovations 6.9%

(Market share)

75.2%
Other

Huntsman Corporation 6.9%


The Dow Chemical Company 11.0%

Player Performance
The Dow Chemical
Company
Market share: 11.0%

SOURCE: WWW.IBISWORLD.COM

The Dow Chemical Company (Dow) is a


multinational chemical corporation
headquartered in Midland, Michigan. It
is one of the largest chemical
manufacturers in the world by both
revenue and chemical production. Dow
produces a wide variety of chemical,
plastic and agricultural products in 55 US
and 179 global facilities worldwide,
employing about 55,000 people
worldwide, with 50.0% of its employees
working in North America. Dow is
divided into five major operating
segments, which include agricultural
sciences, consumer solutions,
infrastructure solutions, performance
materials and chemicals and
performance plastics. The company is
typically referred to as the chemical
companies chemical company due to
the fact that its sales are mostly to
companies in the chemicals industry

rather than to end users. In 2015, Dow


signed a definitive merger agreement
with fellow chemical manufacturing giant
DuPont, which is pending regulatory
approval. If approved, the merger would
create one of the worlds largest chemical
companies. Dows total sales amounted
to $48.8 billion in 2015.
Dow produces polyurethane foam
products in its two industry-relevant
segments. The first is infrastructure
solutions, which is partially devoted to the
development building insulation foam
sealants and adhesives. The segments most
important industry products are FROTHPAK™ and GREAT STUFF™
insulation foams. Dows second industryrelevant segment is performance materials
and chemicals, which manufactures specific
products for use primarily in the consumer
comfort and industrial downstream
markets. In the United States, Dow

The Dow Chemical Company (industry-specific operations) - financial


performance*
Year

Revenue
($ million)

(% change)

2011

1,334.0

N/C

91.1

N/C

2012

1,431.0

7.3

153.1

68.1

2013

1,422.7

-0.6

188.9

23.4

2014

1,449.2

1.9

210.3

11.3

2015

1,161.8

-19.8

200.9

-4.5

2016

1,234.3

6.2

215.2

7.1

*Estimates

Operating Income
($ million)

(% change)

SOURCE: ANNUAL REPORT AND IBISWORLD

Urethane Foam Manufacturing in the USMay 2016 26

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Major Companies

Player Performance
continued

Player Performance
FXI Foamex
Innovations
Market share: 6.9%

currently owns 950 infrastructure solutions


patents and 363 performance materials and
chemicals patents.
Financial performance
Dows US industry-specific revenue is
estimated to have declined at an average
annual rate of 1.5% to $1.2 billion over
the five years to 2016. Demand for
urethane foams has been strong
throughout the period, in line with
greater construction and automotive
production, and has fueled overall

domestic demand growth. However,


company revenue contracted 19.8% in
2015, primarily due to falling raw
materials costs, such as the price of crude
oil. Although beneficial to the companys
operating margins, falling input costs
dictate reduced prices for end users,
resulting in falling revenue. With
sustained downstream demand for
polyurethane foam products, along with
the projected deceleration of falling oil
prices, company revenue is predicted to
rebound by 6.2% in 2016.

FXI Foam Innovations (previously


known as Foamex) is headquartered in
Media, PA, and is one of the largest
manufacturers and distributors of flexible
polyurethane and advanced polymer
foam products in the United States. The
company maintains 18 facilities globally,
with 16 facilities in the United States. FXI
has seven major product segments, all of
which are industry relevant. The three
most important are home furnishings/
bedding, automotive/transportation and
healthcare segments. The companys
home furnishings/bedding segment
manufactures and markets cushioning
foams for bedding and furniture

applications. The automotive/


transportation segment distributes
automotive foam products and laminates
to major suppliers and original
equipment manufacturers. FXIs
healthcare segment develops a variety of
disposable medical foams used in wound
care. Other relevant segments include
industrial filtration foams, foam-based
consumer products, foam gutter filters
for construction and technical foam
products used in electronics.
FXI has about 30 manufacturing and
distribution facilities. Over the last five
years, FXI has undergone a series of
changes. The company had previously

FXI Foamex Innovations (industry-specific operations) - financial


performance*
Year

Revenue
($ million)

(% change)

Operating Income
($ million)

2011
2012

588.0

N/C

40.0

N/C

654.1

11.2

46.4

16.0

2013

684.8

4.7

43.1

-7.1

(% change)

2014

726.6

6.1

42.1

-2.3

2015

741.4

2.0

44.5

5.7

2016

772.2

4.2

46.7

4.9

*Estimates

SOURCE: IBISWORLD

Urethane Foam Manufacturing in the USMay 2016 27

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Major Companies

Player Performance
continued

Player Performance
Huntsman
Corporation
Market share: 6.9%

filed voluntary Chapter 11 bankruptcy


petitions in 2009, the second time in less
than four years. The following year, the
company emerged from bankruptcy as
the privately held FXI. The new company
was created through the acquisition of
Foamexs assets by an affiliate of
MatlinPatterson Global Opportunities
Partners and Black Diamond Capital
Management. Through both
bankruptcies, the company continued
operations through debtor-in-possession
financing. In August 2015, FXI
announced plans to boost the productive
capacity of one its 16 US facilities.
Financial performance
FXI Foamex Innovation is a privately held
company and does not disclose its

financial information. Over the five years


to 2016, FXIs revenue is expected to
increase at an annualized rate of 5.6% to
$772.2 million. Since 2011, revenue has
grown, given strong demand from key
downstream markets. Demand from
automotive customers has been sustained
by the automotive industrys expansion of
the period, and residential customers
rising demand for products has been
driven by increased consumer spending.
Since restructuring its debt through
bankruptcy proceedings, the company has
posted positive revenue and profit growth.
However, a looming lawsuit brought
against FXI in early 2015 accusing the
company of engaging in anticompetitive
price fixing practices may affect its future
earnings (latest available information).

Huntsman Corporation is a leading


global chemicals and polyurethane
manufacturer founded in 1970.
Headquartered in Salt Lake City,
Huntsman has grown through
acquisitions, joint ventures and internal
expansion to produce roughly 33 billion
pounds of products for a variety of
markets including the chemical, plastics,
automotive, aviation, textile and footwear

industries. The corporation has roughly


15,000 employees, with operations in
more than 30 countries around the
world, including the four polyurethane
plants in the United States. In 1992,
Huntsman became the first global
supplier of polyurethane chemicals to
open a technical service plant in China.
Since then, it has grown its production
overseas through many joint ventures,

Huntsman Corporation (industry-specific operations) - financial


performance*
Year

Revenue
($ million)

2011

850.8

N/C

90.0

N/C

2012

939.1

10.4

139.3

54.8

2013

952.5

1.4

133.6

-4.1

(% change)

Operating Income
($ million)

(% change)

2014

965.6

1.4

128.4

-3.9

2015

731.3

-24.3

99.0

-22.9

2016

776.9

6.2

106.1

7.2

*Estimates

SOURCE: ANNUAL REPORT AND IBISWORLD

Urethane Foam Manufacturing in the USMay 2016 28

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Major Companies

Player Performance
continued

opening plants in Shanghai and Nanjing


to capitalize on growing polyurethane
demand in China.
Huntsman produces a variety of
chemical products for US markets. The
company has five primary segments to its
operations, with polyurethane accounting
for about 37.0% of revenue. Within this
segment, Huntsman offers different
polyurethane products used in the
production of rigid and flexible foams, as
well as coatings, adhesives, sealants and
elastomers. Its focus has been on highermargin, higher-growth polyurethane
products, such as MDI and MDI-based
polyurethanes, which have become popular
substitutes for materials used in a broad
range of products. Overall, an estimated
18.5% of Huntsmans revenue is expected
to come from urethane and other foam
products. In addition, the company has
expanded its presence in the industry over
the past five years, with acquisitions such
as Oxid LP, a producer of rigid foams, in
2013 for $76.0 million.

Financial performance
In the five years to 2016, Huntsmans
revenue from the polyurethane segment is
expected to decrease at an annualized rate of
1.8% to $776.9 million. Automotive and
construction sector growth throughout the
period has promoted greater use of foam
products by a wide range of downstream
industries. Some of Huntsmans largest
customers are automotive producers such as
BMW and Firestone, as well as electronics
and appliance makers such as Electrolux
and Haier. Improving income levels have
driven up purchases of these products, as
well as encouraged greater investment in
construction. At the same time, planned
maintenance to meet emissions regulations
resulted in a significant drop in US-specific
revenue in 2015. Coupled with a fall in crude
oil purchase costs reducing selling prices,
revenue is declined 5.4% in 2015. However,
continually strong downstream demand,
together with a deceleration in crude oil
prices, are strong indications of rebounding
industry revenue in 2016.

Other Companies

Carpenter Co.

Carpenter Co. is a privately held


company and does not disclose financial
results. As with most industry operators,
strong demand from downstream
construction and consumer retail sectors,
along with the recent deceleration in
falling crude oil prices, has contributed to
revenue growth in 2016. Additionally, the
company has increased revenue by
pursuing new product development, such
as its new line of odorless urethane
products. In 2016, Carpenters US
industry-specific revenue is estimated to
reach $463.1 million.

Estimated market share: 4.1%


Carpenter Co. is a private company
founded in 1948 and based in
Richmond, VA. The company
manufactures polyurethane foam,
chemicals and polyester fiber. Carpenter
operates in the United States and
Canada, maintaining 14 product
segments. Carpenters industry-specific
segments include bedding, furniture
fabrication, consumer products and
flexible foam packaging. Carpenters
products are used primarily by bedding,
floor covering and furniture industries.
In November 2014, Carpenter Co.
agreed to pay $108.0 million to direct
purchasers to settle a class action
lawsuit alleging the company engaged in
an anticompetitive scheme to fix the
price of flexible polyurethane foam.

Rogers Corporation

Estimated market share: 0.8%


Rogers Corporation is a US specialty
materials manufacturing company
headquartered in Rogers, CT. Founded in
1832, the company has locations in North

Urethane Foam Manufacturing in the USMay 2016 29

WWW.IBISWORLD.COM

Major Companies

Other Companies
continued

America, Asia and Europe. Of its three


operating segments, only the elastomeric
material solutions segment (previously
known as high performance foams)
produces polyurethane foam products.
Its goods are sold to fabricators,
distributors and original-equipment
manufacturers for applications in
portable communications, consumer

electronics, mass transit and other


markets. Rogers Corporations brand
name product is PORON™, a
urethane foam used for making highperformance gaskets and seals in
vehicles. In 2016, Rogers Corporation is
expected to generate $85.6 million in US
industry-related revenue from its
elastomeric material solutions segment.

Urethane Foam Manufacturing in the USMay 2016 30

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Operating Conditions

Capital Intensity | Technology & Systems | Revenue Volatility


Regulation & Policy | Industry Assistance
Capital Intensity
Level
The level

of capital
intensity is M
 edium

The Urethane Foam Manufacturing


industry has a moderate level of capital
intensity. IBISWorld estimates that for
every $1.00 spent on wages, industry
operators will spend $0.16 on capital
investment. Polyurethane foam
manufacturers use capital intensive and
highly mechanized batch or continuous
production line processes to convert new
and recycled plastic into industry goods.
The cost of new plants and equipment is
significant and product innovation
necessitates periodic investment in new
technology. Although capital intensity has
declined slightly over the five years to
2016, mechanization remains an
importation aspect of the industry, as
manufacturers attempt to lower their costs
of production. Paying a one-time or

Capital intensity

Capital units per labor unit


0.5
0.4
0.3
0.2
0.1
0.0

Economy

Manufacturing Urethane Foam


Manufacturing

Dotted line shows a high level of capital intensity


SOURCE: WWW.IBISWORLD.COM

periodic investment in equipment is more


affordable than paying the recurring
salary expenses associated with a larger

Tools of the Trade: Growth Strategies for Success


Investment Economy

Recreation, Personal Services,


Health and Education. Firms
benefit from personal wealth so
stable macroeconomic conditions
are imperative. Brand awareness
and niche labor skills are key to
product differentiation.

Information, Communications,
Mining, Finance and Real
Estate. To increase revenue
firms need superior debt
management, a stable
macroeconomic environment
and a sound investment plan.

Chemical Wholesaling
Plastic & Resin Manufacturing
Old Economy
Plastic Film,
Sheet & Bag
Agriculture and Manufacturing.
Manufacturing
Carpet Mills
Traded goods can be produced
Chemical Product Manufacturing
using cheap labor abroad.

Urethane Foam Manufacturing

Traditional Service Economy

Wholesale and Retail. Reliant


on labor rather than capital to
sell goods. Functions cannot
be outsourced therefore firms
must use new technology
or improve staff training to
increase revenue growth.

Capital Intensive

Labor Intensive

New Age Economy

To expand firms must merge


or acquire others to exploit
economies of scale, or specialize
in niche, high-value products.

Change in Share of the Economy

SOURCE: WWW.IBISWORLD.COM

Urethane Foam Manufacturing in the USMay 2016 31

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Operating Conditions

Capital Intensity
continued

workforce. However, wages have


increased over the period. The design and
manufacture of industry products is highly
technical and requires a specialized
workforce that cannot be easily replaced
by machines. Additionally, since industry
revenue has grown over the period,
operators have expanded their operations,
hiring more workers.
According to the Polyurethane Foam
Association (PFA), polyurethane foam is
manufactured through a chemical reaction
involving two key raw materials, a polyol
and a diisocyanate with water. The

Technology & Systems Foam production systems tend to be


Level
The level

of
Technology Change
is M
 edium

purchased off the shelf from plastic


machinery manufacturers. Polyurethane
flexible foam products are manufactured
by combining a two-part mix of
isocyanate and polyol, which then reacts
to produce foam. The foaming process
can occur in a crate or a mold (after
injection). Manufacturers either use
continuous-line or batch processes.
Various blowing agents are used in the
production processes of foams:
methylene chloride for flexible
polyurethane foams and 141B (which is a
hydrochlorofluorocarbon being phased
out in accordance with the Montreal
Protocol and being replaced by an agent
that does not deplete the ozone) for rigid
polyurethane foams and skins.
Many applications require high safety
and fire retardant performance, good
mechanical properties and high strength
to weight ratios. Other performance
attributes include comfort, breathability,
durability and soft-touch. Research and
development (R&D) activities are
undertaken to improve product
performance. Access to advanced
polymer composite manufacturing
techniques and to composite material
feedstocks can provide competitive
advantages in some markets (particularly

reaction forms bubbles, causing the


mixture to expand. After several minutes,
the raw material inputs are converted to a
usable foam product. Production
equipment can range in price due to the
variety of products offered by the industry.
For example, polyurethane manufacturing
lines can range from small, hand poured
piece-part operations to large, highvolume assembly lines. All of these
production processes are highly technical
and require a skilled workforce to operate.
As a result, wages for employees in the
polyurethane industry tend to be high.

where very high performance is


required). For example, Foamex
announced the release of three bedding
products using the companys patented
Variable Pressure Foaming technology.
The company states that this technology
has enabled it to produce ultra-soft,
super supportive foams.
Dow Chemical Company has also
developed fabric-free molded
polyurethane foam technology that can
be used in various seating applications.
The Dow polymers will allow
manufacturers to produce car seats and
other interior parts that look and feel as if
they were covered with leather. The
technology uses an elastomeric layer over
molded foam: the elastomer takes the
place of conventional materials like fabric
or leather as the skin of the upholstery,
while the foam serves its traditional use
as internal padding for comfort and
durability. This single-step technology
can be used in the production of car
seats, office furniture and even stadium
seating, making the seats easier to wash
and repair. At the same time, the
polyurethane elastomer offers both the
comfort and breathability of leather seats
and provides a durable, high-quality,
soft-touch material for vehicle interior
parts, such as seating and headrests. In

Urethane Foam Manufacturing in the USMay 2016 32

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Operating Conditions

Technology & Systems addition, by eliminating the use of fabric,


leather or vinyl, manufacturers will
continued

significantly reduce processing steps


required to produce seats and seating
parts. According to Dow, the technology
also offers environmental benefits, as the
finished seat is simpler to recycle at the
end of its useful life, since it is made
entirely from polyurethane foam.
Polyurethane manufactures are also
investing in R&D to develop green
polyurethane products. Biobased
polyurethanes are being developed in
response to consumers demand for more
environmentally sustainable and
biodegradable plastics. Polyurethane

plastics are less hazardous to make and


easier to break down in the environment.
They are also an advantageous substitute
to petrobased polyurethanes made from
resins. Resin prices are often volatile and
highly correlated with industry selling
prices. Companies that are able to adopt
biobased polyhydroxyurethanes (made
from vegetable oils and derivatives) will
be able to avoid resin price volatility, cut
costs and sell their products at more
competitive prices. Industry players such
as Huntsman Corporation are in the
process of investing in green technologies
and expanding their use to a number of
product lines.

Revenue Volatility

Over the past five years, this industry


has experienced a low-to-moderate
level of revenue volatility, as demand
from various downstream markets has
been fairly steady. Demand for this
industrys products is largely sensitive
to the level of construction and
automobile manufacturing activity,
which tend to change with general
economic conditions. Resin prices also
affect revenue volatility and exhibit
moderate volatility. This influences the
price of foam products relative to

substitute products. Over the last few


years, there has been an increase in the
real unit prices for polyurethane foam
products due to the increasing cost of
industry inputs. However, in general,
the diverse nature of downstream
markets for urethane goods insulates
this industry from a significant amount
of volatility. With steady downstream
demand a moderate plastic resin input
price volatility, industry revenue
volatility is expected to be a low-tomoderate 2.9%.

of
Volatility is L ow

A higher level of revenue


volatility implies greater
industry risk. Volatility can
negatively affect long-term
strategic decisions, such as
the time frame for capital
investment.
When a firm makes poor
investment decisions it
may face underutilized
capacity if demand
suddenly falls, or capacity
constraints if it rises
quickly.

Volatility vs Growth
1000

Revenue volatility* (%)

Level
The level

Hazardous

Rollercoaster

100
10

Urethane Foam
Manufacturing

1
0.1

Stagnant
30

10

Blue Chip
10

30

50

70

Five-year annualized revenue growth (%)


* Axis is in logarithmic scale
SOURCE: WWW.IBISWORLD.COM

Urethane Foam Manufacturing in the USMay 2016 33

WWW.IBISWORLD.COM

Operating Conditions

Regulation & Policy


Level & Trend
 he level of
T

Regulation is
Mediumand the
trend is S
 teady

Industry Assistance
Level & Trend
 he level of
T

Industry Assistance
is L owand the
trend is S
 teady

Industry players are subject to federal, state,


local and foreign environmental laws and
regulations. These laws and regulations
cover such areas as those relating to the use,
handling, storage, discharge and disposal of
hazardous substances, the discharge or
emission of materials into the environment,
and the remediation of environmental
contamination. The Comprehensive
Environmental Response, Compensation
and Liability Act and comparable state laws
can impose a liability for cleaning up
contaminated sites.
According to the Polyurethane
Manufacturers Association, the
polyurethane foam manufacturing
process is sophisticated and

environmentally safe. Raw materials used


in the manufacture polyurethane foam
products pose no danger to their
surroundings when handled in
accordance with standard industrial
procedures. Additionally, any trace
emissions from the manufacturing
process are collected by carbonscrubbing devices. In fact, the
polyurethane foam manufacturing
industry phased out all use of ozonedepleting chlorofluorocarbons (CFCs)
well before the deadline set by the
Montreal Protocol. In fact, the FPF
industry phased out all use of ozonedepleting CFCs well before the deadline
set by the Montreal Protocol.

The Urethane Foam Manufacturing


industry receives no significant form of
assistance through government subsidies
or grants. Given the industrys technical
specialization, domestic operators hold a
competitive advantage over foreign
manufacturers that rely on lower-skilled
labor. As a result, there is low import
penetration and, therefore, little need for
protective tariffs.
Manufacturers are supported by a
number of trade and industry associations
including the Center for the Polyurethane
Industry (CPI), the Polyurethane
Manufacturers Association (PMA), and the
Polyurethane Foam Association. These
organizations provide their members with
access to the latest technology and best
practices on polyurethane production. They

also advocate for manufacturers on policy


issues mostly related to changing regulatory
environments affecting the industry. Finally,
membership groups provide technical
expertise and advice to help members
comply with government environmental,
health and safety regulations.
The Polyurethane Manufacturers
Association (PMA) is the primary trade
association of the cast polyurethane
processing industry, serving processors
of polyurethane products, material and
equipment suppliers, and independent
agents. PMA exchanges and
disseminates information on standards,
materials, processes and technical
matters, in addition to monitoring
regulatory and legislative activity
affecting the urethane industry.

WWW.IBISWORLD.COM

Urethane Foam Manufacturing in the US May 2016

34

Key Statistics
Industry Data
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Sector Rank
Economy Rank

Industry
Revenue Value Added
($m)
($m)
11,192.2
1,992.8
10,894.3
1,880.4
7,897.3
1,804.4
8,656.8
2,083.3
9,194.7
2,015.9
10,043.2
2,151.8
10,348.2
2,091.5
10,797.5
2,132.0
10,949.0
2,310.6
11,244.3
2,376.9
11,590.4
2,439.5
11,857.9
2,491.6
12,109.5
2,536.5
12,381.3
2,596.0
12,636.8
2,645.4
125/200
130/200
640/1556
748/1556

Annual Change
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Sector Rank
Economy Rank

Revenue
(%)
-2.7
-27.5
9.6
6.2
9.2
3.0
4.3
1.4
2.7
3.1
2.3
2.1
2.2
2.1
50/200
723/1556

Key Ratios
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Sector Rank
Economy Rank

IVA/Revenue
(%)
17.81
17.26
22.85
24.07
21.92
21.43
20.21
19.75
21.10
21.14
21.05
21.01
20.95
20.97
20.93
122/200
1171/1556

Industry
Value Added
(%)
-5.6
-4.0
15.5
-3.2
6.7
-2.8
1.9
8.4
2.9
2.6
2.1
1.8
2.3
1.9
55/200
721/1556

Imports/
Demand
(%)
3.70
3.75
4.13
5.13
5.25
5.18
5.14
5.79
5.37
5.38
5.39
5.40
5.40
5.41
5.41
163/188
433/523

Establishments
648
671
655
622
636
637
631
653
661
672
683
695
701
712
719
106/200
999/1556

Establishments
(%)
3.5
-2.4
-5.0
2.3
0.2
-0.9
3.5
1.2
1.7
1.6
1.8
0.9
1.6
1.0
39/200
666/1556

Exports
Enterprises Employment
($m)
454
34,825
1,047.9
467
33,283
1,028.3
450
26,985
831.7
431
25,977
1,013.5
451
27,086
1,164.7
446
28,814
1,215.1
444
28,437
1,223.9
458
29,456
1,334.3
461
31,329
1,285.4
469
32,024
1,310.9
477
32,591
1,345.5
484
33,199
1,373.2
489
33,470
1,399.2
495
34,080
1,427.4
500
34,425
1,453.7
116/200
109/200
123/188
990/1556
733/1556 178/524

Enterprises Employment
(%)
(%)
2.9
-4.4
-3.6
-18.9
-4.2
-3.7
4.6
4.3
-1.1
6.4
-0.4
-1.3
3.2
3.6
0.7
6.4
1.7
2.2
1.7
1.8
1.5
1.9
1.0
0.8
1.2
1.8
1.0
1.0
38/200
29/200
587/1556
611/1556

Exports/
Revenue
(%)
9.36
9.44
10.53
11.71
12.67
12.10
11.83
12.36
11.74
11.66
11.61
11.58
11.55
11.53
11.50
120/188
321/524

Figures are in inflation-adjusted 2016 dollars. Rank refers to 2016 data.

Revenue per
Employee
($000)
321.38
327.32
292.66
333.25
339.46
348.55
363.90
366.56
349.48
351.12
355.63
357.18
361.80
363.30
367.08
129/200
623/1556

Exports
(%)
-1.9
-19.1
21.9
14.9
4.3
0.7
9.0
-3.7
2.0
2.6
2.1
1.9
2.0
1.8
53/188
249/524

Imports
($m)
389.3
384.9
304.2
413.3
445.3
481.8
494.9
581.1
547.9
565.1
584.0
598.3
611.9
626.5
640.2
172/188
301/523

Imports
(%)
-1.1
-21.0
35.9
7.7
8.2
2.7
17.4
-5.7
3.1
3.3
2.4
2.3
2.4
2.2
109/188
326/523

Wages/Revenue
(%)
13.01
12.46
14.55
13.27
12.92
12.83
12.31
12.55
13.00
12.99
12.90
12.88
12.77
12.76
12.68
104/200
1053/1556

Wages
($m)
1,455.6
1,357.4
1,148.9
1,148.4
1,188.4
1,288.1
1,274.0
1,354.7
1,423.7
1,460.4
1,494.6
1,527.2
1,546.9
1,579.9
1,602.5
116/200
719/1556

Demand from furniDomestic ture manufacturing


Demand
($m)
10,533.6
98,583.4
10,250.9
91,475.7
7,369.8
67,949.0
8,056.6
65,859.1
8,475.3
67,535.1
9,309.9
71,618.9
9,619.2
73,169.4
10,044.3
72,401.1
10,211.5
74,493.7
10,498.5
75,709.7
10,828.9
77,186.8
11,083.0
78,645.1
11,322.2
79,532.1
11,580.4
80,709.6
11,823.3
81,788.7
138/188
N/A
180/523
N/A

Wages
(%)
-6.7
-15.4
0.0
3.5
8.4
-1.1
6.3
5.1
2.6
2.3
2.2
1.3
2.1
1.4
36/200
655/1556

Domestic Demand from furniDemand ture manufacturing


(%)
(%)
-2.7
-7.2
-28.1
-25.7
9.3
-3.1
5.2
2.5
9.8
6.0
3.3
2.2
4.4
-1.1
1.7
2.9
2.8
1.6
3.1
2.0
2.3
1.9
2.2
1.1
2.3
1.5
2.1
1.3
73/188
N/A
249/523
N/A

Employees
per Est.
53.74
49.60
41.20
41.76
42.59
45.23
45.07
45.11
47.40
47.65
47.72
47.77
47.75
47.87
47.88
98/200
322/1556

Average Wage
($)
41,797.56
40,783.58
42,575.50
44,208.34
43,875.06
44,703.96
44,800.79
45,990.63
45,443.52
45,603.30
45,859.29
46,001.39
46,217.51
46,358.57
46,550.47
157/200
886/1556

Share of the
Economy
(%)
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
130/200
748/1556

SOURCE: WWW.IBISWORLD.COM

Urethane Foam Manufacturing in the USMay 2016 35

WWW.IBISWORLD.COM

Jargon & Glossary

Industry Jargon

DIISOCYANATEAny compound containing two


isocyanate anions or functional groups, especially an
organic compound used in the preparation of
polyurethane.

POLYURETHANE FOAMA solid or spongy cellular


material produced by adding water to polyurethane
plastics and is used for thermal insulation,
soundproofing and padding.

POLYOLSAlcohols containing multiple hydroxyl groups


that are key chemicals in foam, which helps produce the
reaction that causes flexible polyurethane foam to form.

IBISWorld Glossary

BARRIERS TO ENTRYHigh barriers to entry mean that


new companies struggle to enter an industry, while low
barriers mean it is easy for new companies to enter an
industry.
CAPITAL INTENSITY Compares the amount of money
spent on capital (plant, machinery and equipment) with
that spent on labor. IBISWorld uses the ratio of
depreciation to wages as a proxy for capital intensity.
High capital intensity is more than $0.333 of capital to
$1 of labor; medium is $0.125 to $0.333 of capital to $1
of labor; low is less than $0.125 of capital for every $1 of
labor.
CONSTANT PRICESThe dollar figures in the Key
Statistics table, including forecasts, are adjusted for
inflation using the current year (i.e. year published) as
the base year. This removes the impact of changes in
the purchasing power of the dollar, leaving only the
real growth or decline in industry metrics. The inflation
adjustments in IBISWorlds reports are made using the
US Bureau of Economic Analysis implicit GDP price
deflator.
DOMESTIC DEMANDSpending on industry goods and
services within the United States, regardless of their
country of origin. It is derived by adding imports to
industry revenue, and then subtracting exports.
EMPLOYMENTThe number of permanent, part-time,
temporary and seasonal employees, working proprietors,
partners, managers and executives within the industry.
ENTERPRISE A division that is separately managed
and keeps management accounts. Each enterprise
consists of one or more establishments that are under
common ownership or control.
ESTABLISHMENTThe smallest type of accounting unit
within an enterprise, an establishment is a single
physical location where business is conducted or where
services or industrial operations are performed. Multiple
establishments under common control make up an
enterprise.
EXPORTSTotal value of industry goods and services sold
by US companies to customers abroad.
IMPORTS Total value of industry goods and services
brought in from foreign countries to be sold in the
United States.

INDUSTRY CONCENTRATIONAn indicator of the


dominance of the top four players in an industry.
Concentration is considered high if the top players
account for more than 70% of industry revenue.
Medium is 40% to 70% of industry revenue. Low is less
than 40%.
INDUSTRY REVENUEThe total sales of industry goods
and services (exclusive of excise and sales tax); subsidies
on production; all other operating income from outside
the firm (such as commission income, repair and service
income, and rent, leasing and hiring income); and
capital work done by rental or lease. Receipts from
interest royalties, dividends and the sale of fixed
tangible assets are excluded.
INDUSTRY VALUE ADDED (IVA)The market value of
goods and services produced by the industry minus the
cost of goods and services used in production. IVA is
also described as the industrys contribution to GDP, or
profit plus wages and depreciation.
INTERNATIONAL TRADEThe level of international
trade is determined by ratios of exports to revenue and
imports to domestic demand. For exports/revenue: low is
less than 5%, medium is 5% to 20%, and high is more
than 20%. Imports/domestic demand: low is less than
5%, medium is 5% to 35%, and high is more than
35%.
LIFE CYCLEAll industries go through periods of growth,
maturity and decline. IBISWorld determines an
industrys life cycle by considering its growth rate
(measured by IVA) compared with GDP; the growth rate
of the number of establishments; the amount of change
the industrys products are undergoing; the rate of
technological change; and the level of customer
acceptance of industry products and services.
NONEMPLOYING ESTABLISHMENT Businesses with
no paid employment or payroll, also known as
nonemployers. These are mostly set up by self-employed
individuals.
PROFITIBISWorld uses earnings before interest and tax
(EBIT) as an indicator of a companys profitability. It is
calculated as revenue minus expenses, excluding
interest and tax.

Urethane Foam Manufacturing in the USMay 2016 36

WWW.IBISWORLD.COM

Jargon & Glossary

IBISWorld Glossary
continued

VOLATILITYThe level of volatility is determined by


averaging the absolute change in revenue in each of the
past five years. Volatility levels: very high is more than
20%; high volatility is 10% to 20%; moderate
volatility is 3% to 10%; and low volatility is less than
3%.

WAGESThe gross total wages and salaries of all


employees in the industry. The cost of benefits is also
included in this figure.

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