It's Definitely a Bull Market for High-Performance Films

When I was in college, one of my classmates who lived in my dorm tried heating a pot pie on a plastic plate in the oven. Needless to say, the oven and kitchen filled with noxious fumes from the melted plastic. We all thought, "Gee, didn't he know that plastic can't go in the oven?"

Well today, although you still can't put that plate in the oven, there are high-performance plastic films that can not only survive in the oven but also go straight from your freezer to the oven and then to your table without a hitch.

From food packaging and novelty balloons to the membrane switches in our appliances and the printed circuit boards in our computers and electronics, high-performance films surround us in our everyday lives. These plastic films are considered to be "high-performance" because they commonly have high temperature or chemical resistance and good barrier properties. Some of the major high-performance films include those made from polyethylene terephthalate (PET polyester), nylon, polycarbonate (PC), polyimide (PI), and fluoropolymers.

In 1999 Frost & Sullivan estimated the high-performance film market to have reached more than $1.4 billion in revenue. But it's not stopping there. This market is expected to grow at an annual clip of nearly 6% within the next five years. Much of this growth is due to the increasing trend away from rigid materials and toward flexible materials.

The Move to Flexibles
There have been several new product designs in packaging, partly due to trends toward more convenience foods and flexible packaging for waste reduction. Examples are the liquid-dispensing microwave pouch designed by Maxie-Mixes and the Canadian A-Pak stand-up pouch designed by Arkmount Systems.

Packaging is currently the largest end-user market for both polyester and nylon films in the US. It is estimated to comprise nearly one-third of the revenues for polyester film and more than 78% of the revenues for nylon film.

Main packaging applications for polyester film include baby food and snack food containers; yogurt pots and candy wrappers; lids for ready-made meals and microwave cooking; and medical and pharmaceutical packaging.

Much of nylon film packaging is used in the food industry for items such as meat, cheese, condiments, bakery items, and coffee. Packaging is forecast to grow between 5% and 8% a year over the next few years.

Flexible Printed Circuits and PI
Traditionally, flexible printed circuits have been used to replace wires in all types of electronic connections. Now, with the growing demand for lighter and smaller electronic products, flexible printed circuits are being viewed increasingly as a viable solution to the size and weight restrictions. They also have the added advantage of being able to adjust for different curvatures or shapes.

Miniaturization has become a fundamental trend in the electronics industry, and this is resulting in the wider acceptance of flexible circuits as an interconnect solution.

In the past, cost has kept designers away from flexible circuits. However, with the increasing maturation of the technology and more stringent portability pressures, flexible printed circuits are showing strong growth. Frost & Sullivan estimates the US flexible printed circuit market will grow sharply at 20% annually through 2004.

Most often manufactured with PI film, flexible printed circuits are the largest and fastest growing end-user application for this film type both in the US and Japan. As a result, PI films also are expected to show strong growth. Flexible printed circuits are used in a number of industries, including computers and peripherals; communications; industrial and instrumentation; automotive; military and aerospace; and consumer electronics.

Speaking of Strong Growth...
The PC film market also is expected to exhibit strong growth in the US for the near future. The film has a wide variety of uses, including instrument panels, signs, nameplates and displays, membrane switches, and cellular phones and pagers.

The current demand for cellular phones and pagers plays a significant part in the increasing PC film sales. US cellular phone and pager revenues had an estimated growth of 10%-11% in 1999. PC film is used in manufacturing the lens in pagers and in the lens, keypad, and body design of cellular phones.

One area of ongoing development seen in manufacturing cellular phones is in film insert molding (FIM) or in-mold decoration (IMD) technology. This allows preprinted decorative films to replace traditional decorating methods in injection molding. Other than the telecommunication industry, FIM also is used for manufacturing parts in sports equipment and the automotive, appliance, and electronics industries.

The Other Side of the Picture
The picture for high-performance films is not completely rosy. Companies that wish to remain competitive in the high-performance film industry must overcome the challenges of increasing price sensitivity and demand for more customization, such as thinner gauges, by customers. They also must work toward more new applications as competing technologies threaten some existing end-user markets.

One example is in polyester film. A major application for polyester film is in magnetic media, such as audio- and videocassettes and floppy disks. Magnetic media applications are forecast to decline slightly in the US. This decline will become more marked in the future due to the growth of digital media. Compact disks are rapidly replacing audiocassettes and floppy disks, especially with recordable compact disks and mini-disks now available. Digital video disks (DVDs) are impacting the videocassette market as well.

The polyester film market is not the only market with some negative potential due to competing technologies. The unoriented cast and blown nylon film market is expected to remain flat or decline slightly in the near future as coextruded films begin to encroach upon its market share. Unoriented cast and blown nylon films often are used in laminated structures where two or more film types are fused together to form a single layer. Coextruded films, where the different film types are extruded together, can blend properties of different film types just as the laminated structures do but at a lower cost.

A Dynamic Marketplace
Major players in the high-performance film market are sustaining a competitive advantage through mergers and acquisitions to broaden their product portfolios.

Examples include DuPont's acquisition of ICI's polyester films business and its joint venture with Teijin in polyester films; Asahi Glass's acquisition of ICI's fluoropolymers businesses; Bayer's acquisition of DSM's global transparent sheet businesses; and the acquisition of Furon by Norton Performance Plastics.

Many companies also are expanding capacities, thereby exhibiting their commitment to growing their markets and being prepared for increasing demand. This is seen, for instance, in the expansion of SKC's Georgia plant production in polyester films.

With all this activity from high-performance film manufacturers, who knows what will be the next thing that will add benefit to our lives and our world? Perhaps these manufacturers do.

Brenda Mar is a senior industry analyst at Frost & Sullivan, an international marketing consulting and training company headquartered in Mountain View, CA, USA. Currently, she monitors markets in the plastics industry. She holds a master's degree in polymer chemistry and has worked as a chemist and a process engineer. for more information, contact Cara Shevlin at cshevlin@frost.com or call 210/348-1018.


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