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Sanjiv Bhaskar, Director, Global Personal Protective Equipment, Frost & Sullivan Daniel Shipp, President, ISEA April 16, 2009
A snapshot of the global economy Personal Protective Equipment (PPE) industry economic impact analysis Opportunities for growth Best practices for business growth in the current economy
How Fear Drove the Recession – Fear is Now Bottoming Out “The only thing we have to fear is fear itself.” -.Franklin Roosevelt 3 .
Global Response: Massive Government Stimulus UK: Germany: Belgium & Switzerland: ECB France $340 billion bailout $700 billion relief package Capital infusion Interest rate cuts $50 billion stimulus package USA: $700 Billion bailout rapid interest rate cuts. coordinated efforts (G20 summit) Boosting spending on infrastructure projects Global Response 4 . $64 billion stimulus package China: Interest rate cuts and $710 billion stimulus (infrastructure.5 million jobs by 2011 $819 billion Economic Recovery plan focused on infrastructure. infrastructure development under PDP (more than $64billion injected to financial system) • • • • • Governments infusing capital into financial institutions Globally coordinated interest rate cuts IMF offers bridge loan to meet foreign exchange requirements Discussions. $23 billion support for top 3 auto companies. plan to create 2. textiles) Japan Interest rate cuts. energy. rural) India: Interest rate cuts $8 billion stimulus package (infrastructure. education and healthcare Russia Support for ruble. 500 billion yen stimulus package South Korea: Interest rate cuts and efforts to keep currency stable $11 billion stimulus package Australia: $52 billion pledged for supporting the economy : Brazil Support to currency. exports.
Recovery in 2009 It is not a Far-fetched Idea 5 .
5% 62.6% 46.4% 59.8% 51.0% 80.0% 0.4% 63.8% 69.8% 45.0% 40.0% 77.0% 20.9% 100.Impact of the Downturn on Specific Industries The PPE Industry relies on end-user segments for its revenues The Relative Impact of the Economic Downturn on Specific Industries The Value of the Industry Today Relative to its Value One Year Ago 94.1% 61.0% ls ar e n se y e ar k ss en C ru c la s ot iv lo g tio ic a no m D ef lth om ce C he M st Te ch P Pr o H ea C on (T ot nd Au t al & Fo od Ba s 50 0 os Ae r P R ub be ra pa c S& Source: Frost & Sullivan/Google Finance Ir o n ic e an d S te el in g ) et ti c s 6 .7% 60.
Personal Protective Equipment Industry Economic Impact Analysis Workplace Safety Can NOT be Compromised Despite a Slowdown 7 .
2008 Hand 29% Head Hearing Eye 2% 3% 6% Fall 4% 6% Gas Detection 13% Footwear Protective 22% Clothing 15% Respiratory Source: Frost & Sullivan 8 .PPE Market Composition by Product Types Global PPE Market Composition Estimates.
Trends in PPE Industry in 2009 • Adaptability of products • Comfort without sacrificing safety • Stylish products • Innovative products • Growth in niche markets • Consolidation • Outsourcing of manufacturing • Low-end generic products creating pricing pressures • Shift in direct purchase to rentalWorkwear Industry 9 .
Scientific and Technical Services in Healthcare are Driving the Need for More PPE Increased Awareness in the Workplace Market Size and Growth Geographical Expansion into Areas with Low Compliance and Penetration High Impact Medium Impact Low Impact 10 .What will Drive Growth in the PPE Industry in 2009 and Beyond Niche Applications Offer Opportunities for Higher Penetration Alternative Distribution Channels Offer Potential for Growth into New Applications Product Innovation Increase in Professional.
What will Restrain Growth in the PPE Industry in 2009 and Beyond Price Pressure from Generic PPE Products Restricting Growth Increased Automation and Outsourcing in Manufacturing Facilities Reducing Demand for PPE Economic Downturn Reducing Workforce and the Demand for PPE Insufficient Enforcement by OSHA Restrains Growth of the PPE Industry Market Size and Growth Cost Conservation Measures Resulting in Lower Replacement Rates High Impact Medium Impact Low Impact 11 .
0 4.0 2006 -2.0 Head.0 8.0 6.What Does this Mean for Your Market? Economic Impact Analysis of the PPE Industry 12. eye and face Workw ear Hearing Fall Respiratory Footw ear Source: Frost & Sullivan 2007 2008 2009 2010 2011 2012 2013 2014 2015 Hand 12 .0 10.0 0.0 2.
4. 7. 3. 6.Poll Question Which end-user market do you think has the most potential to grow in the next 5 years? 1. 5. 2. Automotive and Transportation Construction Manufacturing Mining Oil & gas Utilities Other (Please type in the Q&A Box) *Please ensure your pop-up blocker is off to take the live poll 13 .
Where Will The Opportunities Be? Expected PPE Revenues from Different End-user Segments (2014-2015) Healthcare Metal Fabrication 8% Mining 5% 10% Automotive 12% 8% Fire Services 7% Transportation Pulp & 9% Paper Law Enforcement 4% 11% 7% 9% 10.0% Utilities Food Processing Construction Glass Manufacturing Source: Frost & Sullivan 14 .
Where Will The Opportunities Be? Key Product Segments to Focus On Sectors with highest total growth potential 3 1 2 3 Head.2015 Source: Frost & Sullivan 15 Market Size of Market Segments (2008) .000 million) Medium ($1.000-$2.500 million) CAGR is calculated from 2008 . Eye and Face Protection Respiratory Protection Hand Protection Hearing Protection Protective Apparel Foot Protection Gas Detection Fall Protecion CAGR for Market Segments High (>6%) 6 7 Medium (2-6%) 4 2 4 5 5 1 8 6 7 Low (0-2%) 8 Small (<$1.500 million) Large (>$2.
Where Will The Opportunities Be? Industries that will benefit from the stimulus packages are UK: Germany: France: Italy: Potential end-user segments by regions (2009-2012) USA: Industries that will benefit from the stimulus packages are •Banking •Green Construction •Heavy Construction •Hospitality •Healthcare •Housing •Utilities Russia Industries that will benefit from the stimulus packages are: •Banking •Construction •Others Industries that will benefit from the stimulus packages are Japan: Automotive/Transportation .Automotive and Construction China: Industries that will benefit from the stimulus packages are •Heavy Construction •Manufacturing •Mining •Oil & Gas India: Industries that will benefit from the stimulus are: •Banking •Heavy Construction •Oil and Gas Brazil Industries that will benefit from the stimulus packages are •Automotive/transportation •Construction •Oil & Gas •Water and Waste Water Treatment • • • • • • Infrastructure construction.Automotive. Healthcare and Housing . Banking.Banking . Construction and Others .Heavy Construction Clean Energy construction Healthcare Mining Oil and Gas Utilities Global Opportunities in Source: Frost & Sullivan 16 .Automotive and Banking . Healthcare and Others South Korea: Banking. Commercial construction. Construction. Housing and Others Australia: Banking.
Where Will The Opportunities Be? PPE Used in Different Industries Automotive & Transportation Construction Fire Fighters Food Processing Glass Manufacturing Healthcare Mining Oil & Gas Pulp & Paper Utilities X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 17 X X X X X X X X X .
3.Poll Question In your opinion. when do you expect the PPE market to recover from the economic downturn? 1. 2. 4. 5. Q3 Q4 Q1 Q2 Q3 2009 2009 2010 2010 2010 or later *Please ensure your pop-up blocker is off to take the live poll 18 .
What Can We Do About It? Best Practices on How to Grow in a Bottoming Market Strategic Mergers and Acquisitions Product Differentiation Preferential Pricing and Product Positioning Coordinated Efforts to Increase Compliance Expansion to other End-User Segments. Geographies Deploying Technology and Automation across the Functions Source: Frost & Sullivan 19 .
Food Processing and Hospitality 20 .What Will Catalyze the Turnaround? Best Practices on How to Grow in a Bottoming Market New Materials to Improve Technical Features of the Products Technological Innovation to Reduce Costs Concentrate on Industries that are receiving help from the Stimulus Package such as Heavy Construction and Mining Turnaround Catalysts Strategic Mergers and Acquisitions Taking Advantage of Niche Opportunities Increase Efforts in End-user Segments that are not impacted by the economic downturn like Healthcare.
How Can We Get in Front of the Turnaround? Best Practices on How to Grow in a Bottoming Market Reliability Quality Technology Reach Price Brand Reputation Short Term Mid Term Long Term Source: Frost & Sullivan 21 .
Conclusion • • • • • • Global economy has slowed down considerably since August 2008 Global response to this crisis has been overwhelming Personal Protective Equipment (PPE) industry is being impacted by this global event Despite these events Personal Protective Equipment Industry is showing resilience and is poised for a turnaround Increase in infrastructure spending will improve PPE outlook Every company has to adopt or improvise Best practices for business growth in the current economy 22 .
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Meyer@frost.org 25 .Bhaskar@frost.com Melinda Meyer Sales Director CMF Practice (210) 348-1000 Melinda. Global PPE Markets (210) 348-1014 Sanjiv.com Dan Shipp President International Safety Equipment Association 703-525-1695 dshipp@safetyequipment.Ochoa@frost.For Additional Information Stephanie Ochoa Corporate Communications Frost & Sullivan (210) 247-2421 Stephanie.com Sanjiv Bhaskar Director.