Industry veteran warns of potential rubber chemicals supply crisis

FAIRLAWN, Ohio—Industry veteran Joe Walker is on a mission. He wants to convince enough people that the rubber industry is at risk because so little of its rubber chemicals supply is produced domestically.

He fears that another pandemic or backlash from some of the political tensions of the day could lead to a situation where the U.S. is short of a particular chemical that, in turn, could lead to where a certain compound or end product may not be able to be manufactured.

Walker, who has more than 40 years in the rubber industry, recently retired from Freudenberg Sealing Technologies and now is president of his own consultant business, Elastomer Technologies. He pointed to what some have called the "rubber apocalypse"—namely a shortage of natural rubber—doesn't "peel back the onion" to look at the overall risk.

By that, he means that before a rubber good is completed, it needs not only a rubber raw material, it needs a host of other ingredients, including rubber chemicals such as accelerators, vulcanizing agents and antidegradants.

"Rubber Chemicals play an essential role in improving rubber processing technology, saving energy and improving product quality, and they are an indispensable part of the rubber processing industry," Walker told the Rubber in Automotive Conference attendees in Fairlawn.

And if nothing is done, the potential problem will only get worse he said. Walker shared data from Maia Research Analysis that shows total rubber chemicals sales will grow by an annual compounded rate of 6.6 percent a year from 2022-29, going from 1.99 million metric tons last year to 3.12 million tons in 2029.

A number of end markets will be impacted, as automotive usage currently accounts for 53.7 percent of rubber chemical sales, according to his data, followed by consumer goods at nearly 16 percent, belting at just above 10 percent and footwear at 7.5 percent.

Walker called China the "elephant in the room," as the nation's share of rubber chemicals sales was 37.3 percent in 2022, more than double that of the U.S., which was at 17.2 percent and Europe at 15.7 percent.

One problem is that rubber chemical producers never have negotiating leverage over automotive, and is a disturbingly low-margin business. Labor cost is part of the problem, but not as much as raw material costs and other factors, he said.

Looking at the China factor again, Walker said that of the nearly 1.99 million tons sold last year, the Asian giant controlled 850,000 tons, or roughly 43 percent of all rubber chemicals. For the U.S., this meant that 87.6 percent of the cure and protection chemicals is controlled by off-shore production, with 64 percent of that market controlled by China.

And while potential political issues puts supply from areas like China and North Korea at risk—not to mention the impact of the Russian invasion of Ukraine—even Europe's supply has its pitfalls. Walker said BASF in 2022 paid roughly $2.3 billion more for raw materials in Europe than it had a year earlier.

The industry veteran knows there are no easy answers or short-term solutions. But he also realizes that should any of the factors impact the rubber chemicals supply to the U.S., there is no contingency plan available.

Developing more of a rubber chemicals base in the U.S. would be preferable over time, but that would be expensive and require a buy-in from the industry. Ways to push this could include an executive order from the president to require materials be made domestically when doing business with the government, or change materials and production processes to accommodate alternative formulas.

Walker sees this as a potential national crisis that the public doesn't know about, because rubber goods production typically is something that's not in the public spotlight, so they have no idea what is going on. He suggested those in the industry contact their elected officials in Congress and ask them to treat this as seriously as they did the CHIPs act for semiconductors and the nitrile exam glove shortage during the COVID-19 pandemic.