This document provides an overview of trends in the North American adhesive and sealant industry. It discusses the size and growth rates of the overall market and various market segments. It also summarizes key trends the industry is monitoring such as increased mergers and acquisitions, demands for greater transparency in chemical disclosure, and expanded domestic production of raw materials from shale gas and oil extraction. The document concludes by outlining H.B. Fuller's views on trends in several growth markets they serve and trends occurring in Chinese manufacturing.

1. An Overview of the
North American
Adhesive and Sealant
Industry

2. Content
1. Adhesive and sealant market overview
2. General trends impacting industry
3. H.B. Fuller view on trends

3. Harmonized market definitions
(ASC-CATIA-FEICA)
Detailed definitions can be found at
www.ascouncil.org, under Industry Intelligence – Resources section

4. 2013 market size for adhesives & sealants
$42.5 billion (sales demand) global CAGR 3.2%
$11.8b
$8.7b
$1.6b
2012-2015
CAGR 4.3%
$13.8b
2012-2015
CAGR 5%
$4.5b*
ROW = 2.1b
2012-2015
CAGR 2.3%
2012-2015
CAGR 3%
2012-2015
CAGR 4.4%
2012-2015
*CAGR 3%
Note 2: * = Calculated Average Growth
Rates in % (CAGR) are based upon
lbs. of material sold (Demand) – not
revenue
Source: 2013 ASC/DPNA North America Market Report

5. Adhesives market segment definitions
1. Paper, Board, Related Products
• Converting/packaging
• Dry and wet lamination
• High-gloss laminating for graphic arts
• Bookbinding, graphic arts industry
• Nonwoven fabrics
• Pressure sensitive products
2. Transportation
• Passenger cars/light trucks
• Repair, maintenance (aftermarket)
• Trucks, buses
• Bicycles, motorcycles and RVs
• Aircraft/aerospace
• Railway
• Shipbuilding and offshore
3. Footwear and Leather
• Footwear
• Leather goods
4. Consumer/Do-It-Yourself (Retail)
5. Building/Construction/Civil Engineering
• On-site applications
• Civil engineering
• Factory assembled parts
• Prefabricated houses
• Thermal insulation materials, curtain
wall panels, etc.
6. Woodworking and Joinery
• Cabinet making
• Furniture manufacture
• Window frames, door manufacture
• Upholstery
7. Assembly Operations
• Sandwich panels
• Appliances and electrical/electronic
• HVAC
• Fabric/apparel
• Medical applications
• Sports equipment and toys
• Abrasives, filters
Source: ASC Market Report

6. 6
North America
(Percent Share of Adhesive and Sealant Demand)
Value: $11.86 Billion
Formulated Product Demand: 7.9 Billion Lbs. 3.6 Million MT
2012-2015 AGR: 2.3%
Source: ASC/DPNA International Inc.

7. 7
North America market statistics
2013 estimated
Source: ASC/DPNA International Inc.

8. 8
North America adhesive market: 2013 est.
Value: $10.13 Billion
Formulated Product Demand: 7.20 Billion Lbs. 3.3 Million MT
2012-2015 AGR: 2.2%
Woodworking
8.3%
Bldg. &
Const. 14.1%
Consumer
2.8%
Source: ASC/DPNA International Inc.
Paper, etc.,
58.8%
Transportation
5.3%
Footwear
0.5%
Assembly
10.2%

9. 9
North America outlook: 2014 adhesive market growth
forecast estimates
Paper, Board and Related Products 2.0%
Consumer/DIY 3.0%
Woodworking/Joinery 2.7%
Assembly 1.8%
Footwear and Leather 2.2%
Building and Construction 2.4%
Transportation 3.1 %
(Annual growth in pounds of consumption)
Source: ASC/DPNA International Inc.

10. 10
Sealants market segment definitions
1. Transportation
• Passenger cars/light trucks
• Trucks, buses, trailers
• Repair and maintenance (Aftermarket)
• Commercial, recreational watercraft
• Aircraft/aerospace
• Railway
• Ships
2. Consumer/Do-It-Yourself (Retail)
• Household
3. Construction
• Construction/renovation
• OEM, maintenance
• Insulating glass/glazing
• Civil engineering, infrastructure
4. Assembly Operations
• Appliances
• Electronic equipment
• Metal cabinets and housing
Source: ASC/DPNA International Inc.

11. 11
North America sealant market: 2013 est.
Value: $1.734 Billion
Formulated Product Demand: 716 Million Lbs. 325 K MT
2012-2015 AGR: 2.3%
Source: ASC/DPNA International Inc.

12. 12
North America outlook: 2014 sealant market growth
forecasts
Assembly/Other 2.7%
Consumer/DIY 1.4%
Transportation 2.4%
Building & Construction 1.8%
(Annual growth in pounds of consumption)
Source: ASC/DPNA International Inc.

13. 13
Trends the Adhesives and Sealants Council (ASC) is
monitoring
• Growth of mergers and acquisitions
• Transparency in chemical formulations
• U.S. shale oil and gas production

14. 14
Trends ASC is monitoring
Mergers and acquisitions continue to drive value within
North America – and the world
Forbo and Tonsan
ADCO, APS and Clifton
ISP and Hercules
$5.5 billion in cash

15. 15
Trends ASC is monitoring
Expecting more transparency in chemical disclosure
• NGO and regulatory agencies are increasingly adopting hazard-based
tools and requiring companies to disclose chemical make-up/
footprint
• ASC collaborating with industry to ensure risk models are
included for more accuracy

16. 16
U.S. oil and gas production provides raw material
capacity
Fracking oil rich shale deposits + natural gas availability is providing
United States with strong capacity for major raw material feedstocks

17. 17
After 30 years of production decline, the U.S. is
producing crude at 20-year highs

18. 18
Fracking is allowing for growth
Source: North Dakota Department of Mineral Resources

19. 19
And it’s not just oil…
Rising Shale Gas Production:
Marcellus: 11.5 BCFD
Barnett: 4.4 BCFD
Eagle Ford: 3.9 BCFD
Fayetteville: 2.9 BCFD
Woodford: 1.6 BCFD
Bakken: 0.6 BCFD
Rese of US: 3.6 BCFD
Peaked:
Haynesville
Peaked November 2011
Antrim
Declining Since 2000

20. 20
Ethylene impacts key raw material supply
Heavy feeds
100/160
Ethylene
By-products
Steam
Cracking
Process
Ethylene
Butadiene
Isoprene
Resin Oils
Aromatics
Gas
Feed
(Light)
Liquid
Feed
(Heavy)
Light feeds
100/25
Ethylene
By-products
Critical to
Adhesive
Polymers
By-products
propylene
crude C4s
pygas
Polypropylene
(film grade)
Economic
Driver

21. 21
Benefits to U.S. adhesive and sealant formulators
• Raw materials sourced from light feeds more supply stable
• Formulations based on light feed expected to provide most price stability
• Solid competitive framework for industry

22. H.B. Fuller View on
Trends in Key Growth
Markets

23. The markets H.B. Fuller serves
Packaging Building and Automotive
Construction
Hygiene
General
Assembly
Paper
Converting
Woodworking Emulsion
Consumer
Products
Polymers
Electronic
and Assembly
Materials

24. Targeted growth in key markets
Better accountability Stronger teamwork Global vision
Hygiene
Baby diapers, Feminine products, Adult incontinence
Packaging
Consumer Packaging, Labeling,
Flexible Packaging, Packaging Integrity
Durable Assembly
Automotive, Water Filters, Panel Assembly, Electronic &
Assembly Materials, Engineered Textiles, Insulating Glass
Construction Products
Residential, Remodel, Commercial and Industrial
Construction, including Ceramic Tile and Flooring Installation

25. Hygiene industry market trends
Healthy
Comfortable
Safe
Convenient
Premiumisation
• Low odor
• Breathable
• Natural materials (pure cotton or cotton containing top
sheets)
• Soft hand feel
• Moisture management
• Thinner is better
• Leak-proof
• Stretchable waistband or ears for baby diapers
• Wetness indicator becoming the norm
• Easy to wear and change
• Online shopping more and more popular
• Consumers demanding higher quality
• Looking for value-added features

26. Packaging industry market trends
• Packaging integrity through supply chain
• Wider operating temperature window
• Adhesion to a variety of substrates
• Hassle-free adhesives for ease of use
• Improved mileage
• Down-time reduction
• Lower total cost in use
• Food safety
• Use of bio-degradable and recyclable materials
• Reduce dependency on volatile natural raw materials
Durable
Adaptive
Efficient
Economic
Sustainable
• Reduce non-value added manual labor
• Faster line speeds
• Clean machining

27. Durable assembly market trends
• Consistent performance
• Proactive problem solving - FMEA
• Leaner
• Faster
• Thinner
• Implementation of industry standards
• Bluesign / Ecopassport for textile
• NSF for drinking water elements
• UL for air filtration
• VOC reduction
• Commitment to environmentally-friendly solutions from
manufacturer to consumer
• Sustainable materials
Reliable
Innovative
Standardized
Sustainable

28. Electronics industry market trends
• Smaller, thinner devices
• Lighter weight devices
• Wearable, portable devices
• Flexible, touchable and reliable devices
• Functionality in watch, shirts and shoes
• Fashion forward, trendy
• Challenging substrates
• Appearance
• More functionality while devices get smaller
• High performance under extreme conditions
• Ability to function in today’s active lifestyle
• Durable and long lasting
28
Compact
Wearable
Fashion
Multifunctional
Reliable

29. China manufacturing trends
• Labor costs increasing in mainland China
• Shift from low cost to high quality mentality
• VOC reduction
• Industry standards developing
• Greener solutions desired
• Employee safety a priority
• Business ethics becoming more important
• Conversion from solvent-based technology to
environmentally-friendly solutions
• Manufacturing excellence
• Process improvement to drive efficiencies
• Shift from price per unit to total cost of ownership
focus
• Moving from coastal provinces to lower cost inland
provinces is encouraged by Chinese government
policies
• Some labor intensive manufacturing moving to lower
cost countries such as textile and footwear industries
Automation
Green
Safe
Cost Effective
Relocation

30. Thank You!