Growth Opportunities for Personal Protective Equipment Industry in a Recessionary Economy


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An analysis of the personal protective equipment (PPE) industry, including growth opportunities and best practices.

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  • All the segments are exhibiting a slowdown or a decrease in 2009.The economic downturn is felt in all the segments. Hearing protection and hand protection are not expected to have severe declines but they are going to suffer as well from the economic downturn. By the end of 2010 the PPE market is expected to recover. Growth is expected for all segments until 2015.
  • The year 2010 is expected to be the turnaround year for global sales recovery – The US is likely to grow from Q4 2009, whereas some countries in Europe have already started sales recovery due to scrappage schemes and incentives Interesting growth in car production some specific countries e.g. Netherlands, Romania and Slovakia.
  • Home healthcare could evolve from a sporadic practice today to a mainstream care delivery model in the next 5-10 years. Outsourcing of Healthcare services is a related trend. Both of these factors will have some impact on who is buying healthcare workwear in the future.
  • Passenger traffic is affected by the recession in the short term with signs of recovery by 2011; Domestic traffic will suffer the most from this recession. Over the next 10 years, revenues from passengers is expected to grow at a CAGR of 3.9%. Airline revenues from passengers expected to show sharp growth already in 2010 (well ahead of passenger numbers or kilometres flown). Possibly because the same number of people fly, but more people choose to fly business class again? This metric is perhaps the best predictor of increasing willingness to invest more again in staff uniforms. Passenger numbers are forecasted to fall in 2009, for the first time since 2002, by 3% in 2009 [F&S forecast made in June 2009]. ASK's (available-seat kilometres) expected to show strong recovery faster than passenger kilometres - this could be another measure of demand for workwear, as it is ASK's that determines how many uniformed staff are needed. Capacity reductions in the period 2008-10 will lead to a short-term improvement in load factors Reduction in ASKs in 2009 was also a result of over 30 airlines going bankrupt between 2008 and 2009. Most of the cuts come from North America, whilst the least capacity cuts occur in the Middle East and APAC Full recovery from the recession is expected by 2012 with surge in passenger traffic in 2013 Global liberalisation efforts, such as open-skies across the Atlantic and common aviation markets in Southeast Asia, will drive growth
  • Of all major industries, Food Processing was least hit by the recession. The Beverage sector slightly more so, and non-alcoholic especially. Alcoholic beverages was only second behind Food Processing in terms of major sectors least hit. Worst-hit sectors at the opposite end of this scale: Automotive, and "Conglomerates" (based on indexed sector share value)
  • Growth Opportunities for Personal Protective Equipment Industry in a Recessionary Economy

    1. 1. Growth Opportunities for Personal Protective Equipment Industry in a Recessionary Economy Sanjiv Bhaskar Global Director, Personal Protective Equipment Frost & Sullivan November, 2009
    2. 2. Agenda <ul><li>A snapshot of the global economy </li></ul><ul><li>Personal Protective Equipment (PPE) industry economic impact analysis </li></ul><ul><li>Opportunities for growth </li></ul><ul><li>Best practices for business growth in the current economy </li></ul>
    3. 3. How Fear Drove the Recession – Fear is Now Bottoming Out “ The only thing we have to fear is fear itself.” -- Franklin Roosevelt
    4. 4. Global Response: Massive Government Stimulus China: Interest rate cuts and $710 billion stimulus (infrastructure, rural) India: Interest rate cuts $8 billion stimulus package (infrastructure, exports, textiles) <ul><li>Global Response </li></ul><ul><ul><ul><ul><ul><li>Governments infusing capital into financial institutions </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Globally coordinated interest rate cuts </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>IMF offers bridge loan to meet foreign exchange requirements </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Discussions, coordinated efforts (G20 summit) </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Boosting spending on infrastructure projects </li></ul></ul></ul></ul></ul>Brazil Support to currency, infrastructure development under PDP (more than $64billion injected to financial system) USA: $700 Billion bailout rapid interest rate cuts; $23 billion support for top 3 auto companies; plan to create 2.5 million jobs by 2011 $819 billion Economic Recovery plan focused on infrastructure, energy, education and healthcare UK: $340 billion bailout Germany: $700 billion relief package Belgium & Switzerland: Capital infusion ECB Interest rate cuts France $50 billion stimulus package Japan : Interest rate cuts; 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 Russia Support for ruble; $64 billion stimulus package
    5. 5. Recovery in 2009-2010 It is not a Far-fetched Idea
    6. 6. Impact of the Downturn on Specific Industries The PPE Industry relies on end-user segments for its revenues Source: Frost & Sullivan/Google Finance The Relative Impact of the Economic Downturn on Specific Industries The Value of the Industry Today Relative to its Value One Year Ago January 2008
    7. 7. Signs of an Economic Recovery The PPE Industry relies on end-user segments for its revenues Source: Frost & Sullivan/Google Finance The Relative Impact of the Economic Downturn and Recovery on Specific Industries The Value of Market in Jan 2009 Relative to its Value in Jan 2008 January 2008
    8. 8. Personal Protective Equipment Industry Economic Impact Analysis Workplace Safety Can NOT be Compromised Despite a Slowdown
    9. 9. PPE Market Composition by Product Types Global PPE Market Composition Estimates, 2008 Gas Detection Fall Hearing Eye Footwear Respiratory Protective Clothing Hand Head Source: Frost & Sullivan
    10. 10. Trends in PPE Industry in 2009 Adaptability of Products Comfort without sacrificing safety Stylish products Innovative products Consolidation Pricing pressures Trending towards rental of workwear
    11. 11. What will Drive Growth in the PPE Industry in 2009 and Beyond Market Size and Growth Increased Awareness in the Workplace Niche Applications Offer Opportunities for Higher Penetration Geographical Expansion into Areas with Low Compliance and Penetration Product Innovation High Impact Medium Impact Low Impact Alternative Distribution Channels Offer Potential for Growth into New Applications Increase in Professional, Scientific and Technical Services in Healthcare are Driving the Need for More PPE.
    12. 12. What will Restrain Growth in the PPE Industry in 2009 and Beyond Market Size and Growth High Impact Medium Impact Low Impact Price Pressure from Generic PPE Products Restricting Growth Insufficient Enforcement by OSHA Restrains Growth of the PPE Industry Cost Conservation Measures Resulting in Lower Replacement Rates Increased Automation and Outsourcing in Manufacturing Facilities Reducing Demand for PPE Economic Downturn Reducing Workforce and the Demand for PPE
    13. 13. What Does this Mean for Your Market? Economic Impact Analysis of the PPE Industry Source: Frost & Sullivan
    14. 14. Where Will The Opportunities Be? Expected PPE Revenues from Different End-user Segments (2014-2015) 11% 8% 9% 7% 7% 10% 9% 8% 21% 10% Source: Frost & Sullivan Automotive Metal Fabrication Pulp & Paper Transportation Construction Oil, Gas & Petrochem Utilities Others Fire Services Healthcare
    15. 15. Automotive Industry Short term production trends Vehicle Scrappage schemes help sales increase / stabilization All figures are rounded; the base year is 2008. Source: JD Power Forecasting; Frost & Sullivan Increasing demand for small cars constituting more than 10% of global sales by 2015 Affordable Low-cost cars to drive sales growth in Emerging markets Automotive Outlook: Light Vehicle Sales and Production – Recession and Recovery (Europe), 2006 - 2016 Units (Million) Production CAGR –10% Production CAGR +6.4% Q2/Q3 2008 EU Enters Recession Sales back to 2007 levels only by 2012 Year
    16. 16. Healthcare If current trends hold, by 2050 Healthcare spending will almost double claiming 20% – 30% of GDP for some economies <ul><li>In almost all countries worldwide, per capita healthcare spending is rising faster than per capita income. </li></ul><ul><li>No country can spend an ever-rising share of its output on health care, indefinitely. Spending growth must eventually fall in line with growth in per capita income. </li></ul>
    17. 17. Aviation - A Key Industry for Career-wear Trends in Passenger Numbers <ul><li>Current economic crisis will impact the travelling public, but passenger traffic will continue to grow from 2011 onwards </li></ul>2008 2018 63.0% 37.0% 38.7% 61.3% 2.3 Bn. 3.5 Bn. Annual passenger numbers, by service type 2008-2018 (Global) Recession restrains growth Expected open-skies in ASEAN region
    18. 18. Food Industry <ul><li>Food industry includes many sub-sectors, all with different specific needs: </li></ul><ul><ul><li>primary food processing e.g. abattoirs </li></ul></ul><ul><ul><li>processed food production </li></ul></ul><ul><ul><li>high-volume, low-price catering (fast-food stores etc.) </li></ul></ul><ul><ul><li>low-volume, high-price catering (restaurants) </li></ul></ul><ul><ul><li>beverage manufacturing </li></ul></ul><ul><li>Everybody needs to eat so, even when one of these sectors of the industry declines, another benefits </li></ul>Lower in price to end-user therefore more favoured during recession Needed for direct sales to end-users and to supply all sectors below Alcoholic beverage sector holding up better during recession
    19. 19. 1 3 5 4 2 Small (<$1,000 million) Large (>$2.500 million) Market Size of Market Segments (2008) Low (0-2%) High (>6%) CAGR for Market Segments Medium ($1,000-$2,500 million) Medium (2-6%) Sectors with highest total growth potential Head, eye and face Protection 1 Hand Protection 2 Respiratory Protection 3 4 5 Hearing Protection CAGR is calculated from 2008 - 2015 Where Will The Opportunities Be? Key Product Segments to Focus On Source: Frost & Sullivan 6 Protective Apparel 6 Foot Protection 7 7 Fall Protecion
    20. 20. <ul><li>China: </li></ul><ul><li>Industries that will benefit from the stimulus packages are </li></ul><ul><li>Heavy Construction </li></ul><ul><li>Manufacturing </li></ul><ul><li>Mining </li></ul><ul><li>Oil & Gas </li></ul><ul><li>India: </li></ul><ul><li>Industries that will benefit from the stimulus are: </li></ul><ul><li>Banking </li></ul><ul><li>Heavy Construction </li></ul><ul><li>Oil and Gas </li></ul><ul><li>Global Opportunities in </li></ul><ul><ul><ul><ul><ul><li>Infrastructure construction- Heavy Construction </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Clean Energy construction </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Healthcare </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Mining </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Oil and Gas </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Utilities </li></ul></ul></ul></ul></ul><ul><li>Brazil </li></ul><ul><li>Industries that will benefit from the stimulus packages are </li></ul><ul><li>Automotive/transportation </li></ul><ul><li>Construction </li></ul><ul><li>Oil & Gas </li></ul><ul><li>Water and Waste Water Treatment </li></ul><ul><li>USA: </li></ul><ul><li>Industries that will benefit from the stimulus packages are </li></ul><ul><li>Banking </li></ul><ul><li>Green Construction </li></ul><ul><li>Heavy Construction </li></ul><ul><li>Hospitality </li></ul><ul><li>Healthcare </li></ul><ul><li>Housing </li></ul><ul><li>Utilities </li></ul>Industries that will benefit from the stimulus packages are UK: - Banking Germany: - Automotive and Banking France: - Automotive, Banking, Healthcare and Housing Italy: - Automotive and Construction Industries that will benefit from the stimulus packages are Japan: Automotive/Transportation, Construction, Healthcare and Others South Korea: Banking, Commercial construction, Housing and Others Australia: Banking, Construction and Others <ul><li>Russia </li></ul><ul><li>Industries that will benefit from the stimulus packages are: </li></ul><ul><li>Banking </li></ul><ul><li>Construction </li></ul><ul><li>Others </li></ul>Where Will The Opportunities Be? Potential end-user segments by regions (2009-2012) Source: Frost & Sullivan
    21. 21. Where Will The Opportunities Be? PPE Used in Different Industries X X X X X Utilities X X Pulp & Paper X X X X X X X X Oil & Gas X X X X X X X Mining X X X X Healthcare X X X X Glass Manufacturing X X Food Processing X X X X X X Fire Fighters X X X X X X X Construction X X X X X Automotive & Transportation
    22. 22. What Can We Do About It? Best Practices on How to Grow in a Bottoming Market Product Differentiation Coordinated Efforts to Increase Compliance Strategic Mergers and Acquisitions Expansion to other End-User Segments, Geographies Preferential Pricing and Product Positioning Deploying Technology and Automation across the Functions Source: Frost & Sullivan
    23. 23. What Will Catalyze the Turnaround? Best Practices on How to Grow in a Bottoming Market Turnaround Catalysts Taking Advantage of Niche Opportunities Technological Innovation to Reduce Costs New Materials to Improve Technical Features of the Products Strategic Mergers and Acquisitions Concentrate on Industries that are receiving help from the Stimulus Package such as Heavy Construction and Mining Increase Efforts in End-user Segments that are not impacted by the economic downturn like Healthcare, Food Processing and Hospitality
    24. 24. How Can We Get in Front of the Turnaround? Best Practices on How to Grow in a Bottoming Market Source: Frost & Sullivan Reach Brand Reputation Reliability Quality Technology Price Short Term Mid Term Long Term
    25. 25. Summarizing <ul><li>Global economy has slowed down considerably since August 2008 </li></ul><ul><li>Global response to this crisis has been overwhelming </li></ul><ul><li>Personal Protective Equipment (PPE) industry is being impacted by this global event </li></ul><ul><li>Despite these events Personal Protective Equipment Industry is showing resilience and is poised for a turnaround </li></ul><ul><li>Increase in infrastructure spending will improve PPE outlook </li></ul><ul><li>Every company has to adopt or improvise Best practices for business growth in the current economy </li></ul>
    26. 26. For Additional Information Beatrice Shepherd Director CEE & CIS P: +48222440865 [email_address] Sanjiv Bhaskar Global Director, Personal Protective Equipment (210) 348-1014 [email_address] Mark Hicks North America Sales Manager 210-247-2490 [email_address] Stephen Taylor European Sales Manager (44) (0) 20 7343 8308 [email_address]