Despite a significant downturn in the U.S. construction market and a slowdown in wind energy, the economic stimulus package announced in USA is likely to drive composite market growth. Out of US$787 bln of stimulus package, US$103 bln of ARRA (American Recovery and Relief Act) investment is likely to affect composites related end markets such as construction, wind and mass transportation. In terms of composite products such as bath tub, doors, rebar, and wind blade, Lucintel estimates that the cumulative effect on the composites market is likely to surpass US$1460 mln. Primary segments with potential impact from the ARRA are wind, construction and mass transportation.
With the largest spending ever in road and bridge construction and massive government investment in wind through production and investment tax credits, composite manufacturers are well placed to benefit. The composite market segments most stimulated in the US by ARRA are Renewable Energy: FRP wind blades and nacelles, Housing: FRP bath, doors, and windows, Mass Transit: FRP panels, flooring & cabs and Highway/Bridge: FRP rebar and bridge deck.
Despite the collapse of private demand, companies have been steadily ramping capabilities in anticipation of ARRA led growth. However, based on the available opportunities, some companies are realigning capabilities based on expected growth by segment and expected long lead times that might result through government related opportunities. Companies also need to deliberate on effects of longer sales cycles (6 months to 2 years) and the preference of functionality over brand, both of which are key aspects of government markets.
Siemens, one of 16 companies selected by the U.S. Energy Dept. to overhaul efficiency of federal buildings, has already started aligning competencies and forging new relations. Other leading players such as Philips & Sun Microsystems have also been actively involved in understanding the dynamics of government markets creating deliberate strategies to develop and maintain competitive advantage.
However, while many companies strive to carve out competitive advantages for ARRA funding, Lucintel analysts contacted several composite fabricators and found many are making little effort to take advantage of stimulus funding. Repeated interviews echoed hope that the ARRA would provide stimulative effects to the composites industry although respondents remained skeptical until revenue was generated that could be attributed to the ARRA. Due to the size and scope of the stimulus package and the opportunity it presents for composites, quick and effective positioning can provide direct competitive advantage.