- Introduction
- Structure and performance of the industry
- Trade
- Technology
- Environmental issues
- Canada–U.S. comparison
- Prospects for the future
- Trade associations
- Major firms
- Statistical tables
Introduction
The rubber products industry comprises three sub-industries: tire and tube, hose and belting, and other rubber products. Industrial rubber products includes hose and belting, and other rubber products, but excludes tires and tubes.
While industrial rubber products are used by virtually all industries, the dominant market is automotive (for example, hoses, belts, gaskets, weatherstripping, glass encapsulation, air dams and deflectors, and door, window and closure seals). Other important markets include conveyor belts for mining and forestry operations, roll flooring, and consumer products.
All natural rubber used in Canada is imported; it can be extracted from a variety of vegetation, but the most significant source is the rubber tree (Hevea brasiliensis). Synthetic rubbers are produced chemically from petrochemical feedstocks. Lanxess is the sole Canadian-based manufacturer of synthetic rubber. The principal synthetic rubbers include styrene-butadiene, butyl, nitrile, isoprene, chloroprene, urethane, polysulfide, silicone and ethylene propylene diene terpolymer ( EPDM ).
The first step in the production of a rubber product is to blend one or more types of rubber with additives such as carbon black, oil, anti-oxidant, catalyst, plasticizer, pigment, accelerator and filler. The compounded rubber is processed into the desired shape by extrusion, compression moulding, or calendering (which coats a substrate like glass fibre or textile with rubber). Up to this stage, the rubber can be permanently deformed by an applied force.The rubber is then transformed into an elastomer, or material that recovers its original shape once the deforming stress is relieved, through a process known as vulcanization. Vulcanization results in the formation of new chemical bonds that crosslink individual polymer chains and impart the elasticity commonly associated with rubber. In some cases, the moulding and vulcanizing operations are combined in a single step.
Structure and performance of the industry
The industrial rubber products industry in Canada is composed of 298 establishments, which employed 9 260 people and produced shipments worth $2.3 billion in 2010 (see detailed industry statistics). Following a decline in output caused by the recession, the industry showed good growth in 2010.
Based on 2009 Statistics Canada data, 50 percent of establishments were in Ontario, 31 percent in Quebec, 9 percent in British Columbia, 9 percent in the Prairies, and 1 percent in Atlantic Canada.
Figure 1 compares average salaries, and Figure 2 compares shipments per employee, for industrial rubber products and total manufacturing. Shipments per employee remain well below the all manufacturing average, reflecting that the industrial rubber products industry remains labour intensive.
Figure 1: Average salaries
Source: Statistics Canada
Figure 2: Shipments per employee
Source: Statistics Canada
Trade
Trends in trade orientation are shown in Figure 3. In 2010, exports totalled $1.0 billion and imports were valued at $1.8 billion. Canadian exports grew from 23 percent of shipments in 1990 to 45 percent of shipments in 2010. Imports have also increased significantly during this period and by 2010 accounted for 58 percent of total domestic consumption. Trade with the United States predominates with 93 percent of exports going there and 55 percent of imports originating there in 2010.
Figure 3: Trade orientation
Source: Statistics Canada
This industry is now essentially fully rationalized on a North American basis. Companies with plants in both Canada and the United States have shifted manufacturing mandates so that individual plants produce a narrower range of products, but in higher volumes so as to satisfy demand within a larger geographic market.
As of January 1, 1998, the tariffs on all rubber products imported into Canada from the United States had been eliminated. Under the North American Free Trade Agreement ( NAFTA ), tariffs on rubber products shipped between Canada and Mexico all dropped to zero by January 1, 2003.
Technology
The industry has ready access to new raw materials and generally uses modern equipment. Limited research and development ( R&D ) is performed in Canada, partly because some of the larger Canadian companies supplying the automotive industry have located their R&D centres in Detroit where the Big Three and the Japanese transplants have their platform design centres. Despite the low level of domestic R&D , new technology is available to Canadian subsidiaries through the corporate network. Many of the smaller rubber products manufacturers rely heavily on raw material suppliers, intermediate compounders, or machinery suppliers for technical assistance related to new product development. Manufacturers of specialty products must spend more than the industry average on R&D in order to retain the performance advantage that differentiates their products in the market.
Developments in thermoplastic elastomer technology offer the potential for significant improvements in productivity and product quality. Thermoplastic elastomers exhibit the elasticity associated with rubber, but under appropriate conditions, can be processed like plastics. This characteristic permits the use of plastics processing technology to produce elastomeric products, offering significant cost and efficiency advantages over traditional rubber processing methods. These materials are based either on block copolymers that possess distinct elastomeric and thermoplastic regions (domains), or on blends of separate elastomeric and thermoplastic polymers. The use of thermoplastic elastomers is expected to grow much faster than the market for industrial rubber products overall. Applications for which thermoplastic elastomers are replacing thermoset rubbers include seals, gaskets, hoses, flexible tubing, coated fabrics, boots on steering columns, sheeting, weatherstripping, conveyor belting, and air ducts in automobiles.
Environmental issues
Management of post-consumer rubber waste continues to be an important issue for the rubber industry. While most of the attention has focussed on scrap tires, all large-volume rubber products will ultimately face the problem of dealing with waste and discarded material. Rubber products are more difficult to recycle than plastics because they cannot be reprocessed by the simple application of heat and pressure. Recycling processes are based on mechanical disaggregation of the article, separation and recovery of the rubber component, and incorporation of the resultant "crumb" rubber into another manufacturing process. Some of these processes are designed to operate at ambient temperature, and others are designed to function at very low (cryogenic) temperatures at which the rubber becomes brittle and fractures. Some of the uses of recycled rubber include:
- a modifier in asphalt for road paving and roofing applications
- other rubber products like mats, carpet underlay, sport surfaces, soil conditioners, leachate liners.
Another large consumer of scrap tires, more so in the United States, is tire-derived fuel ( TDF ). Tires have a calorific value similar to coal, and thus can partially replace coal in high energy consuming applications such as cement kilns and power plant boilers. The use of TDF in incineration applications has not been as common in Canada, largely due to environmental policies that have tended to limit its use as a fuel substitute.
Pyrolysis is another form of high temperature conversion. In pyrolysis, the rubber is decomposed at high temperatures in the absence of oxygen. This leads to the formation of a broad range of chemical components which can then be refined and used a chemical feedstocks for other processes. Pyrolysis processes are still experimental for the most part, and have not yet proven themselves to be commercially viable.
Canada–U.S. comparison
The value of shipments per employee (adjusted to constant Canadian dollars) has traditionally been higher in the U.S. industry than in the Canadian industry (Figure 4), although this gap has reversed recently.
Figure 4: Shipments per employee
Source: Statistics Canada and U.S. Department of Commerce
Average salaries in the United States (converted to constant Canadian dollars) have generally been higher than those in Canada (Figure 5). That trend has also reversed recently.
Figure 5: Average salaries
Source: Statistics Canada and U.S. Department of Commerce
Gross margins defined as (value added - production wages)/shipments are used as a crude measure of profitability for the industry in the two countries in Figure 6. The U.S. industry has performed better than the Canadian industry in recent years.
Figure 6: Gross margins
Source: Statistics Canada and U.S. Department of Commerce
Prospects for the future
The Canadian industry consists of a mixture of subsidiaries of multinational companies and Canadian owned and operated firms.
The challenges for subsidiaries are to continue to secure product mandates that will allow Canadian plants to utilize their capacity to supply North American or world markets from a Canadian base, and to convince parent companies to continue to make the investments in Canada that are necessary in order to keep pace with evolving technology.
For Canadian-owned firms, which often tend to be in the small and medium-sized category, the challenge is to continue to manufacture products which derive their competitiveness from a performance advantage, or which target niche markets. These companies must continue to invest in R&D related to product and process technology in order to sustain their competitive advantage, and also must continue to expand into export markets in order to grow.
Trade associations
Tire and Rubber Association of Canada
Company | Head Office Location | Location of Plants |
---|---|---|
AirBoss Rubber Compounding | Canada | Kitchener, Ontario Acton Vale, Quebec |
American Biltrite (Canada) Ltd. | United States | Sherbrooke, Quebec |
Cooper Standard Automotive | United States | Georgetown, Ontario Mitchell, Ontario Stratford, Ontario |
Garlock of Canada Ltd. | United States | Oakville, Ontario |
GDX Automotive | Germany | Welland, Ontario |
Hamilton Kent | Canada | Weston, Ontario |
National Rubber | United States | Toronto, Ontario |
Parker Hannefin | United States | Orillia, Ontario |
PPD Rubtech | Canada | Waterville, Quebec |
Soucy International | Canada | Drummondville, Quebec |
Royal Mat | Canada | Beauceville, Quebec |
Veyance Technologies Inc. | United States | Bowmanville, Ontario Owen Sound, Ontario Quebec City, Quebec |
Waterville TG Inc. | Japan | Coaticook, Quebec Waterville, Quebec Petrolia, Ontario |