The Tape Market

By Leah Genuario | July 19, 2005

Converters look to the specialty tape market for innovation today.

To the tape layperson, tape already serves many functions. It can fix a torn piece of paper, close a box, even pick the lint off a pair of pants. And for those who are not aspiring to be the next Bob Villa, it can even be used extensively for home repairs.

Indeed, tape brings closure to many of life's little problems. But unbeknownst to many a tape layperson, household tape applications are just the tip of the iceberg.

Tape is used to adhere medical needles to skin. It can monitor blood sugar levels and protect cars during assembly. It can bond a cell phone together or keep a diaper snuggly around a newborn baby. Tape, believe it or not, can even hold trucks intact.

"Traditional fasteners get in the way when you want to use film graphics for identification or advertising messages on any mode of transportation. Trailers, trucks, buses and trains can have seamless, smooth surfaces for graphics when you use 3M VHB tape to eliminate rivets, screws and welds," says Jim Falteisek, business manager for 3M Industrial Adhesives and Tapes in St. Paul, MN.

Tape products, in one form or another, are used by a variety of industries, including packaging, transportation, aerospace, medical, industrial, appliances, consumer products, and electrical. In fact, one might be hard pressed to find an industry that doesn't use tape.

"Just about every business is using it somewhere. If they don't use it in their factory, they'd be using it in their office," says Mike Hart, general manager for Pro-Tapes and Specialties located in Edison, NJ.

The tape market continues to grow. According to The Freedonia Group, a business research company located in Cleveland, OH, the world pressure sensitive tape market is currently valued at $14 billion. By 2006, it is projected to become a $20.8 billion global market. Freedonia expects to see 5.5 percent growth annually through 2006.

Worth noting is that much of this growth is taking place in the world's developing countries.

Freedonia's executive summary of #1569 World Pressure Sensitive Tapes states, "The world's developed areas (the US and Canada, Western Europe, Japan and Australia) generally represent mature markets for self adhesive tapes; per annum growth in the low to mid-single digits is expected, with Japan offering some of the poorest prospects.

"By contrast, healthy gains are expected in developing areas such as Latin America, Eastern Europe, China (especially) and the developing countries of Southeast Asia. These regions feature rapidly expanding personal incomes and largely untapped markets for many tape products," states the report.

In addition, some companies traditionally manufacturing their goods in developed countries have moved their manufacturing elsewhere to reap the benefits of inexpensive labor and lower costs. For this reason, the packaging market in many developing countries has exploded.

"Avery Dennison Specialty Tape Division is very optimistic about growth in Asia. We serve markets for computer hard disk drives. With assembly and manufacturing of electronics and appliances growing in this region, it is an increasingly important market for PSA tapes," says Cynthia Bellian, marketing communications manager for Avery Dennison's specialty tape division in Painesville, OH.

While international companies remain positive about business in developing countries, there is concern about the health of the domestic tape market.

MACtac\'s MACbond® IB-2120, a double-sided tape with acrylic adhesive on one side (shown attached to a printed nameplate) and rubber adhesive on the other (used to bond to low energy substrates).

The US market: commodity tapes
The US tape market is not enjoying significant gains but it is still growing. According to The Freedonia Group, it's plodding ahead at a rate of 2.8 percent.

The specialty tape end of the market is strong, though not large enough to carry the industry. Many believe that the commodity side is to blame for the lackluster growth.

"Commodity tapes account for over 90 percent of carton closure; usually 'plain' clear or tan [tapes] ranging in thickness from 1.6 to 2 mil. The adhesives are usually rubber hot melt or acrylic base," says Bob Stasko, vice president of IR Industries Inc., located in Brewster, NY.

IR Industries manufactures specialty packaging tapes using a process that locks ink between the adhesive and film. Most packaging tapes, however, fall under the commodity category. Other tapes usually considered to be commodities are masking tapes and tapes for household and office use. Commodity tapes make up the majority of tapes used today.

A chart from The Freedonia Group identifying major applications of tape in the United States.

Many agree that these general-use tapes are a mature market. "The commodity segment of the US tape market is mature and allows for minimal growth. Companies are required to gain market share to grow in this segment," says Bob Frazier, marketing manager, MACtac technical products for MACtac in Stow, OH.

There have not been any major innovations for quite some time in packaging tape. The last, in the 1980s, was when "pressure sensitive sealing tape replaced water-activated tape. That was a big advance," says Stephen Wilson, vice president of marketing for Sekisui TA Industries Inc. in Brea, CA. His company produces tape specifically for the carton sealing business. As far as the new technology fueling growth, "that is over now."

With new innovations rare, tape users become more concerned with price. Asian and Latin American countries are quickly infiltrating US markets with inexpensive commodity tape products. "I believe they could slaughter us on a per roll price," says Gary Osman, vice president of sales for Go Tape and Label in Miami, FL.

With this in mind, tape manufacturers and converters within the US are increasingly focusing on value-added specialty tapes.

The US market: specialty tapes
Specialty tapes, often proprietary products created for specific industries or applications, are growing strong. "The specialty tape business is growing two or three times faster than the industry as a whole," says Lew Cohen, president of Venture Tape Corp. in Rockland, MA, "but it's a much smaller part of the business."

Although it represents a smaller portion of overall tape consumption, specialty tape plays a critical role in many industries. Double-sided, foam, glow-in-the-dark, multi-color printed, flame retardant — these are only some of the products under the specialty tape umbrella.

Applications for specialty tapes are also numerous. Tape adheres to a variety of different surfaces for a variety of different reasons — from holding together appliances, to identifying the manufacturer of cable wires, to keeping a bandage over a wound.

Narrow web converters are increasingly expanding into specialty tape. "By simply eliminating the ink, a narrow web printer can laminate and precision diecut films, tapes, foils and other materials to create unique components for shielding, sealing, masking, gasketing and other applications," says Ty Silberhorn, business unit manager, 3M-Emtech Label Materials, for 3M in St. Paul.

Current applications are seemingly endless. More important, there is still room to grow. "Specialty applications in markets such as electronics, appliance, transportation, and medical offer growth potential," says Frazier.

In the medical field, "diagnostic applications are fueling double digit growth in the medical industry. If you consider the number of test strips used daily by diabetics for monitoring blood sugar, you get a glimpse of the growth potential for tapes," says Dave Iverson, business manager for 3M.

It's a similar story in other industries. "For example, electronic products are smaller, more powerful and more portable than ever before. Electronics engineers need materials that are rugged, durable and lightweight. Advances in tapes enable them to bond, seal and absorb shock. They are easy to apply, lightweight and can be diecut to fit even the smallest, most unusual shapes," says Iverson. "We see a real growth opportunity in electronics applications that have historically required mechanical fasteners or welding."

Tamper evidence tape is another growth area. Most printed tape in the United States is one color. It is often used for inspection or product identification purposes. A trend toward tamper evident tape, however, is creating an increasing need for more complex print jobs that incorporate more than one color.

Specialty tape also continues to replace other forms of bonding and sealing. "Tapes have often been able to replace adhesives and fasteners due to advantages such as high strength, fast setting and reduced material costs. Production cost savings can also be achieved by using tapes. For instance, an advantage of double-coated tapes in motor vehicle applications is their immediate setting, which speeds production," says Esther Palevsky, research analyst for The Freedonia Group.

Rolls of tape being coated at IR Industries.

The role of the economy
Despite advancements within the specialty tape sector, both sides of the tape business have felt the impact of a sluggish economy. "At the current time, we're all fighting right now. A lot of things we're seeing right now are at the same [growth level] or down. Commodity is probably worse off," says Diane Carosi, product manager for Tyco Adhesives, Patco Division, located in Bristol, RI.

While overall tape market growth is minimal, unlike many industries battered by the economy, at least there is something to be optimistic about. "As far as consumable goods, we're one of the few industries growing," says Joe Prunier, strategic market manager, print industries, for tesa tape inc. in Charlotte, NC.

A strengthening economy will certainly contribute to the growth. Tape is extremely susceptible to the ebb and flow of the economy because of its use in packaging and manufacturing. If companies are making and shipping less products, tape manufacturers quickly feel the effects.

As the economy improves, the tape industry will see increased growth. Even now, rumblings of economic recovery are being felt. "During the second half of 2002, especially the last few weeks of the year, we saw a general rebound, which was in line with the economy. At this point in time it's hard to say if that rebound is sustainable," says Silberhorn from 3M.

Other companies agree. "2001 was a difficult year for many businesses, but in 2002, we saw signs of some very positive trends," says Bellian.

A push toward specialty tapes is perhaps the largest trend to hit the tape market in recent years. Experts are also focusing in on making products that are more cost effective, environmentally friendly, and can increasingly replace nuts and bolts in manufacturing processes.

In the United States in particular, the industry is clawing for ways to make products less expensive. A challenge for tape converters in the future is, "increasing performance and doing so at a more cost effective level. End users are continuously raising the bar," says Cohen.

This becomes all the more challenging as environmental pressures push companies toward safer, and sometimes more expensive, processes and materials. The tape industry is a highly regulated industry, and environmental concerns are one of the biggest pressure points. "There's pressure on adhesive companies to come up with alternate, consumer safe chemicals within the adhesives," says Carosi.

California has adopted a law titled The Safe Drinking Water and Toxic Enforcement Act of 1986, or Proposition 65, that impacts adhesive makers. The law requires the state to produce a list of chemicals that cause cancer or reproductive toxicity. Businesses exposing individuals to one or more of those chemicals must provide a warning.

The use of dangerous chemicals is a hot topic in political circles today. Consequently, tape manufacturers and converters are starting to move away from solvent based adhesives. "Our industry is going toward more water based adhesives and 100 percent solids, hot melt or UV cured adhesives," says Cohen. While they are more environmentally friendly, the materials present "some technical and economic barriers," he says.

Manufacturers feel the squeeze of creating environmentally friendly, cost effective products, but there is a positive trend also emerging. Tape will continue to replace nuts and bolts, especially as products evolve. "Any applications that rely on mechanical fasteners or performance adhesives will represent further opportunities for high performance tapes, especially industrial assembly applications for a wide range of products.

Major users of high performance tapes include electronics, telecommunications equipment, motor vehicles, aerospace, construction, health care, appliances, signs/displays and flexographic printing," says Palevsky.
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