Thursday 30 April 2020

The Rise of B2B Platforms in Plastics Industry: Which One Will Dominate the Market?

Last year, in my blog post on digitalization of the plastics industry, I brought up the example of the plastics machinery producer KraussMaffei stepping with “Polymore” into the material platform economy. In this post, I give you an overview on the current platform systems of the established plastics manufacturers which are rapidly emerging. In addition, we also have a look at new players which are growing exponentially and start dominating the markets as well.

Why do platform business models perform better?
When we look at the FAANG (Facebook, Amazon, Apple, Netflix and Google) stocks, all of them are among the most valuable companies on the NASDAQ stock exchange. Their stock evaluation hits the trillion dollars and stock growth is still ongoing.
All these companies, which are mainly social media networks and platform businesses, are based on certain network laws which are:

1. Sarnoff’s law: Value V = number of users N
2. Metcalfe’s law: Value V = number of users N^2
3. Reed’s law: Value V = 2^N number of users

Platforms bring together consumers and producers in an efficient and informative way. This allows the consumer to have a fast comparison of goods and purchase the most suitable product, both in quality and price.
Traditional companies do not follow an exponential growth path. The old mantra of growth dominates, i.e. my customer sells more and so do I with him. As a plastic manufacturer, selling more plastic means investments in polymerization and compounding capacity which cuts straight into the equity money of the company. Conversely, platform businesses based on the coding of programs are easy to scale exponentially. Implementation costs happen once and are minimal and further business expansion does not depend on large investments to increase output capacity.

What are the established plastic manufacturers doing?
Plastics industry was not sleeping the past years since the rise of Amazon and Alibaba. Things needed to change rapidly. Therefore, the established players started to set up platforms on their own. In this post, I focus mainly on European based platforms.
In Table 1, a list of the current platforms and their mother companies is given. One thing you can notice immediately is that everybody tries to build their own platform. There was once the idea to build a common platform, which would had have made most sense according the laws shown above. However, realty turned in another direction. There are several platform approaches, from offering solutions to run your own B2B webshop (Asellion) to offer platforms for purchasing recycling plastics (PolyMore). In addition, we see steel companies such as Plansee with their platform Matmatch entering the plastics material field offering metals, ceramics and plastics. Their main mission is to provide material data for design engineers and connect them with the suppliers.
Table 1: overview on current material platforms and their mother companies.

New chemical platforms emerging
Apart of the established chemical players, we see also independent platforms emerging. Table 2 shows an overview of the newcomers.
Table 2: overview of the established players as well as independent platforms. 

Interesting is that major European players such as Evonik, BASF, Covestro, Wacker, and Clariant opened a web shop next to each other on to serve the Chinese market. In Europe, they try their luck with their own platforms, however the Chinese market restrictions somehow forces this companies together in a common platform. The app M-Hub includes all participants of the plastic industry and allows networking and the exchange of technical information worldwide.

Quantum computing is capturing momentum too
The company Chemalive aims to calculate accurate data for molecular properties by using computational quantum know-how. Quantum computing will open the doors to understand chemical reactions and create for example new drugs virtually in an enormous fast way. Offering such services on platforms will open this technology to a broad public of chemists and engineers.

Trends and ideas how established companies can change
Many chemical and plastic focused platforms have risen over the last year. However, “winner takes it all” strikes with them too and I expect we will see consolidations of different platforms. In the end, one to two big players are expected to remain. Apart of this, Amazon works already since 2015 on B2B platforms and if the established chemical companies are not speeding up, Amazon may disrupt this segment too. China is already strong with B2B platforms allowing European players to enter their market through here. Subsequently to a consolidation phase, the established remaining players may offer a whole range of add on services. This could include material selection and design support services such as mould filling simulations for example. Artificial intelligence will also help serving the customers on the platforms and offer an improved customer experience.

“The goal is to turn data into information, and information into insight.” – Carly Fiorina, former executive, president, and chair of Hewlett-Packard Co.

When you are a plastics manufacturer and sell plastic compounds, you will not obtain information over sensors like an injection moulding machine does. However, you can learn about why certain grades are used by the customers and re-pack that insight information for market forecasts. The business of selling know-how instead of just pure plastics will emerge (“data is the new plastic”).
Furthermore, it is extremely important to be efficient and effective in commodity plastics. Here, platforms help to make comparisons between materials facilitating decision. This is needed to be profitable on the commodity manufacturer side as well on the purchaser side. For specialty polymers, allover market share is with 0.2% low and the market allows still some inefficiencies. Products which use high performance polymers are used in stringent conditions which need to fulfill high regulatory standards. In this case, time consuming testing and evaluation is more important than to select a material fast. In addition, long-term property data are key in plastics part design and when platforms allow the exchange of all material data (short- and long-term and cyclic data), then customers can dramatically speed up product launches leading to reducing costs as well as gaining a competitive edge.

Thank you for reading!
Till next time!
Herwig Juster

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Tuesday 28 April 2020

Design Properties for Engineers: Coefficient of Linear Thermal Expansion (CLTE) of High Performance Polymers

In this post we discuss the thermal expansion of different high performance polymers. The coefficient of linear thermal expansion (CLTE) is a performance indicator for the dimensional stability of materials when they are exposed to temperature. In general, plastics expand under the influence of temperature. The expansion is big compared to other materials. Length changes of millimeters at a temperature difference of 10 Kelvin are not unusual.

Furthermore, the effect of thermal expansion is different depending which polymer processing technique is used (injection moulding vs. extrusion). Different values are obtained in polymer flow direction and perpendicular to the flow direction. Thermal expansion is lower in flow direction compared to perpendicular to it.

Influencing the thermal expansion of injection moulded parts during the design phase is limited. This gets even more difficult when semi-finished plastics parts are used. The final part geometry will be cut out of the semi-finished block.

In addtion, the thermal expansion in length direction increases with temperature. Therefore I have listed the CLTE values up to 150°C and above 150°C in the chart below. Also, it can be seen that fluoropolymers react to temperature changes with a higher dimensional change compared to the other listed polymers. Important to know is that PTFE has a phase change at 21°C. The phase change results in a 1% volume change combined with a non-linear relative length change. This dimensional changes need to be considered when designing parts with PTFE.

CLTE values up and above 150°C of different high performance polymers

Reduction of CLTE

A good way to reduce the CLTE of all high performance plastics is with filling materials and reinforcements. The use of carbon fibers lowers the thermal expansion in the best way. Additionally, reinforced Polyaryletherketones and Polyamidimides show similar thermal expansion as Aluminum. Some of them have even a lower thermal expansion than Aluminum. Therefore, such materials are especially suitable for overmoulding Aluminum based bushings and other parts.

I hope you found this information on CLTE of high performance polymers useful and can apply it for your next part design.
Thank you for reading and till next time!
Herwig Juster

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Wednesday 8 April 2020

Design Properties for Engineers: Weldline Strength of High Performance Polymers

In this post, I present you the weldline strength of selected high performance polymers. Most injection-moulded products have weldlines and these are unavoidable.

There are cases where the weldline is barely seen. However, every weldline represents a source of weakness in the overall product. In general, a weldline is generated when two separate melt streams initiated through a multigated mould join each other, or when the melt flows around an obstacle and joins after the obstacle. Especially in polymers which are reinforced with fibers or platelets, multiphase polymers and liquid crystal polymers, lower weldline strength should be considered. Therefore, obtaining information on the weldline performance, in comparison to the regular tensile strength, is essential for an engineer.

There are different design techniques to overcome weldlines in a part. Among those techniques are overflow tabs and temperature control in critical areas.

Overview of the weldline strength of high performance polymers
I hope this information can support you in your next plastic part design project.
Thank you for reading!
Till next time,

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