Industrial R&D—Chemicals & Advanced Materials
Chemicals and advanced materials comprise a broad sector that includes chemicals, catalysts, polymers, metals, ceramics, and nanomaterials—from products sold by the trainload to those that cost hundreds of dollars per gram. It is an innovation-intensive business: for example, the U.S. chemical industry is responsible for over one tenth of all patents filed in the United States. The industry also has a large economic impact in employment and international trade.
There is a ripple effect as new materials catalyze applications research in other markets like transportation, pharmaceuticals, and energy. For example, progress in battery-based energy storage depends largely on performance improvements in component materials. At the same time, major chemical and metal producers are themselves major consumers of energy and materials, which can create market pull for deployment of new technologies.
R&D activity involves either new production processes or new forms and compositions of matter. De novo and computational design are increasingly common in early stages of advanced materials research. Research objectives can include sales growth from development of higher-performing products, cost reductions through yield improvement, sustainability for cost or customer reasons, and regulatory compliance. Some large companies may undertake R&D or make venture investments and acquisitions in order to forward integrate into value-added products which are based on advanced materials.
Leading U.S. R&D Firms
This examination reflects our segment interest in chemicals, composites, coatings, non-ferrous metals, and other advanced materials. With its 2011 R&D budget growth, DuPont becomes the largest materials R&D spending firm in the U.S. Most of the top ten leading U.S. chemical and advanced materials firms continued to increase their annual investments in R&D, with all except Huntsman on pace to exceed 2011 levels in 2012. These growth rates could range from less than 1.0% in the case of Dow Chemical to 15% or more for Goodyear and Eastman (as it fully integrates the former Solutia R&D portfolio), with most firms’ R&D spending growth rates at least outpacing inflation.
Beyond the top ten, Ashland appears to be pursuing a significant increase in its R&D efforts to build its specialty ingredients portfolio. Through the first three quarters of 2012, it has already exceeded its 2011 totals by nearly $10 million. At this pace it could potentially invest 40% more in 2012 than it did in 2011. If Ashland indeed achieves this growth, they will likely enter the top ten list in next year’s forecast.
U.S. Industry Perspectives
The U.S. chemicals and advanced materials industry respondents are guardedly optimistic in their view of the segment’s R&D future. Only 28% of the respondents reported a negative view of their 2012 budget, with 35% having a positive view. Overall outlook is also improving with 35% of the respondents having grown more positive (the second highest among our segments), while only 30% expressed a more negative outlook (the lowest share among our segments). More than half of the respondents expressed optimism that their R&D budgets would be increasing for 2013, although most respondents expect their budget increases to be very small.
Globalization is the watchword for the U.S. materials industry, as most U.S. firms have had significant market success in existing and emerging global markets—41% of the respondents report their firm’s globalization efforts have affected R&D operations. With this globalization, 63% of the respondents believe U.S. competitiveness is at risk.
U.S. and Global Industry Forecast
The forecast for the U.S. chemicals and advanced materials industry takes into consideration the generally positive outlook among our respondents and the uncertainty facing the U.S. and global economies heading into 2013. As a key supplier industry to all four of our other segments, the outlook for chemical and materials R&D is strongly tied to these and other markets.
U.S. R&D is forecast to increase within this segment by 1.6% over 2012, lower than the 1.9% expected rate of inflation. Many smaller specialty materials firms will likely keep pace with inflation or slightly better, but some of the larger multi-national firms will be more inclined to keep their R&D investments in check until the global economy exhibits a stronger recovery.
Globally, the overall growth in R&D budgets is even lower, forecast to grow by only 0.6% to just under $42.0 billion in 2013. Much of this growth will occur via U.S. firms’ global joint ventures.
Materials Innovation Enables Research in Other Sectors
Among many markets that depend on materials innovation, energy R&D is a good illustration that also involves numerous technology thrusts. Often, a target for performance or cost is known, and materials development is a critical path to achieve it. All of the following energy-related chemistry and materials science examples are expected to continue receiving research attention in 2013.
Metal-organic frameworks (MOFs) represent a platform with multiple applications. Recent breakthroughs have demonstrated utility for hydrogen and CO2 storage, catalysis, and even sequestration of radioactive iodine gas released from spent nuclear fuel. Through R&D on the structural elements of MOF’s, performance can be tuned for each purpose.
Sustainability is often an objective of materials R&D, typically seeking to replace a material in commerce. Examples include developing replacements for embargoed rare earths used in the magnets of electric vehicle motors, and transforming renewable lignin into low-cost carbon fiber for lightweighting and other applications.
Renewable energy and carbon-free transportation relies on battery materials research. For example, the boundaries of scale and safety of lithium ion batteries are continually expanded by advances in electrolyte and electron shuttle chemicals and anode/cathode materials.
Finally, one of the most exotic technologies that will be enabled by materials innovation is “fuel from sunlight.” ARPA-e sponsors extramural R&D into processes and materials which can split water to make hydrogen or reduce carbon dioxide to make sugar. This grand-challenge research seeks to replicate one of the most prevalent chemical processes on Earth: photosynthesis.
Creating A Global Materials Network
The Dow Chemical Company, with corporate headquarters in Midland, Mich., recently announced the opening of its Dow Seoul Technology Center, a global R&D center with a focus on technological advances in display technologies and semiconductor-related applications. The new R&D center is strategically located for serving its semiconductor and display materials customers. With the addition of this center, Dow has invested more than $400 million in South Korea over the past decade to establish advanced manufacturing sites for semiconductor, display and LED technologies. The center’s research focus areas include lithography, organic light-emitting diodes (OLEDs), display materials, and advanced semiconductor chip packaging.
About a year ago, General Motors China opened its Advanced Materials Lab in Shangahi. Part of GM China’s Advanced Technical Center, researchers at the new materials lab work on cutting-edge research for new battery technologies and lightweight automotive materials. This includes the development of innovative technologies for battery cell design and fabrication and the validation of advanced cell materials provided by suppliers. Their goal is to integrate the new battery cells into future battery systems for GM vehicles. Their focus is on the development of lithium-ion battery technologies through enhanced cell chemistry, cell and pack design and optimization of the battery’s thermal management system. The ultimate goal is to make the battery systems smaller, lighter, and less costly than current lithium-ion systems.
BASF recently opened a production facility in Elyria, Ohio, for fabricating nickel-metal-cobalt cathode materials for lithium-ion batteries used in electric vehicles and hybrids. The new materials plant was built with $25 million in federal stimulus grants. The process for producing this material was initially developed at Argonne National Laboratory, Illinois, which BASF researchers at their Beachwood (Ohio) lab scaled up to a viable production process. The BASF researchers said that the Argonne process should be able to eliminate one of the two chemicals now being used in large lithium batteries by making the cathodes entirely out of nickel-manganese-cobalt instead of a blend of that material and another manganese combination. This also should enable the batteries to hold more power and be more durable.