Methylene diphenyl diisocyanate (MDI) is used to produce spray polyurethane foam (SPF) used in range of industries including building & construction where it can be found in insulation and roofing products. The technical capabilities, capital intensity and intellectual property required within these applications limit manufacturing to large chemical companies. These chemical manufacturers provide the MDI for the A-side component in the two drum system, and the B-side as well.
Independent systems houses that are not basic in MDI purchase the A-side and focus on bringing value through in-house formulation and tailored performance of the B-side in the total SPF system, and moreover providing high-touch market support for competitive advantage.
Different Groups of SPF Suppliers
The SPF industry is served by a relatively large number of vertically-integrated and independent producers. Over 25 companies participate with no single supplier having greater than a 20% share. Continued consolidation is likely from both strategic participants from the chemicals and building materials industry as well as financial sponsors who are attracted to this growth segment of the insulation and roofing industry.
The four integrated companies: BASF, Covestro (former Bayer MaterialScience), Dow Chemical and Huntsman. Independent companies include Accella Corp. (which has quickly grown through recent acquisitions of Burtin Labs, Quadrant’s Spray Foam division, Premium Spray Products) Demilec, Henry, Icynene, Lapolla and NCFI, among others. Even some of the fiberglass insulation suppliers have expanded their product offering to include SPF, specifically CertainTeed and Johns Manville. The supply side can be characterized by four different groups of suppliers.
Delivering a Value-Driven Message
While having an integrated supply position can lead to low cost and increased pricing power in the market, it’s not just a simple formulated chemicals business for suppliers. Both integrated and independent SPF systems houses need to drive share gains in insulation and roofing markets through share of mind initiatives by focusing on the critical customer-facing aspects of the business, including:
- Educate architects, builders and property owners on the overall benefits that SPF offers by taking a holistic approach as opposed to just focusing on R-values
- Initiate education programs to make contractors aware of the code updates and modifications, and provide proper installation training and certification
- Introduce products with improved yields and installation efficiency to cost-effectively compete with other insulation types
- Develop a more accepted and comprehensive measurement of the real world effective insulation value for SPF in building & construction