From ceramic armor to electronics to aerospace, many
markets in the advanced ceramics sector are posting double-digit gains, with
further growth expected over the next several years.
Above: A Mack truck cab outfitted with Ceradyne's new
FlexKitTM Armor System. Photos courtesy of Ceradyne,
Inc. and Mack Trucks, Inc.
After regaining some momentum in 2005, the advanced
ceramics industry now appears to be charging full-speed ahead. Companies are
reporting double-digit gains in revenues, increased earnings and higher selling
prices in virtually every advanced sector, from armor to electronics to
aerospace. Following is an overview of some of the fastest-growing segments of
the advanced ceramics industry.
In late September, the U.S. House and Senate passed a
record $532.8 billion defense spending bill for 2007. President Bush signed the
bill into law on October 17.* Among other expenditures, the bill includes $5.9
billion for purchasing "modularity-related equipment," including
armored Humvees, soldier protective armor, trucks, advanced night vision and
communications equipment, light arms, and artillery.
With the proven track record of ceramic armor, a
significant portion of this funding is likely to trickle down into the ceramic
industry. After seeing growth of 46.5% in the first half of 2006 compared with
the same period in 2005, Ceradyne conservatively estimated that its sales for
the year would be up 38 to 40%, with a significant portion of that increase
coming from ceramic armor. While the company continues to diversify its product
line, it projected another double-digit sales increase in 2007 based largely on
receiving additional orders from the U.S. Army for its lightweight ceramic body
armor, particularly its enhanced small arms protective inserts (ESAPI) and
enhanced side ballistic inserts (ESBI).
Calgary, Alberta, Canada-based Ceramic Protection Corp.,
which makes body and vehicle armor for law enforcement and military use, said
that it also expects to benefit from increased defense spending both at home
and abroad, despite the recent cancellation of a supply agreement from Phoenix,
Ariz.-based Armor Works Enterprises, LLC. Other ceramic manufacturers are also
receiving substantial military contracts.
With the overall demand for ceramic armor from both the
military and private security sector unlikely to decline any time soon,
continued innovations will likely provide the best opportunities for new
contracts. For example, Ceradyne recently won an order from Mack Trucks, Inc.
to create a lightweight ceramic truck cab prototype that will provide all the
protection of metal armor at half the weight. The truck cab is outfitted with
Armor System, which is composed of
uniformly designed rectangular "bricks" of armor that are
incorporated into the cab of the truck to allow for maximum flexibility. Unlike
older vehicle armor designs, which can't be repaired on the battlefield, the
FlexKit system can be repaired by one person simply by replacing the damaged
brick(s). The windshield of the truck cab is also manufactured using the
FlexKit armor process. It is made up of uniform rectangular pieces of
bulletproof glass that make on-the-spot repair easier.
Saint-Gobain recently completed delivery of multiple sets
of a new window laminate system based on large sapphire sheets for integration
into armored vehicles for government use. The sapphire is produced at
Saint-Gobain Crystals' Milford,
"Saint-Gobain is the only producer of transparent ceramic material that
offers complete laminated systems to withstand multiple hits by armor-piercing
threats. As a result, we shipped the first commercial order for multiple sets
of our Sapphire Transparent Armor System," said Jeff Rioux, market manager
for Saint-Gobain Crystals. The Sapphire Transparent Armor Systems were
developed in a cooperative effort between Saint-Gobain Crystals and
Saint-Gobain Sully, a manufacturer of laminated glass ballistic windows.
Additional innovations-and opportunities-will undoubtedly
emerge through increased defense spending on research and development.
*Information on the bill, H.R. 5122, can be found at thomas.loc.gov
For many companies serving the electronics sector, 2006
has seen the return of record sales and profits. In February, Morgan Electro
Ceramics announced that it would expand its Bedford, Ohio,
manufacturing facility by 20,000 square feet to support continued growth in the
computer, electronics, medical and defense markets. The expansion was expected
to be complete by the end of 2006.
John Gilbertson, chief executive officer and president of
AVX Corp., noted that the company's results for its 2006 fiscal year, which
ended in March, reflected "the highest revenue and net income since the
end of the tech bubble in fiscal 2001. Overall demand for our products has
improved throughout the year and increased the industry capacity utilization,
which, in turn, has helped stabilize prices. Better pricing, coupled with our
moves to lower the cost of manufacturing, have positively impacted our
These trends have continued through the year, and many
companies are optimistic that demand in 2007 will remain robust. A recent
survey of silicon wafer suppliers revealed that total wafer shipments are
expected to experience robust growth over the next several years, with an
average compound annual growth rate of more than 10% from 2005 to 2009.1
"We are currently seeing unprecedented demand,
driven by the end market electronic applications. The silicon segment that is
experiencing the greatest growth is 300 mm, which is anticipated to be over 30%
of total silicon volumes in 2007," said Tatsuhiko Shigematsu, chairman of
the SEMI Silicon Manufacturers Group (SMG) and technology officer of SUMCO
Corp. It is unclear how the current shortage of polysilicon might affect this
outlook (see the glass market overview), but the high demand for electronics is
likely to translate into higher sales for all component suppliers in this
Despite the optimistic outlook, competition in this
sector remains fierce. As a result, companies continue to focus on reducing
costs to protect their margins. Even those workers in low-manufacturing-cost
countries aren't immune to job cuts. For example, KEMET Corp. announced in
October that it would reduce the headcount at its Monterrey, Mexico,
facilities by approximately 400 people in an effort to reduce costs.
"These plants will remain at full production. This action is not a result
of a loss of market share, but represents an element of our ongoing strategy to
reduce cost and improve our competitive position in the world electronics
market," said Per Loof, chief executive officer.
While the industry as a whole is fairly lean after the
downsizing that occurred over the last few years, companies will continue to
look for ways to streamline their operations in the years ahead.
MLCCs. Photo courtesy of Murata Electronics.
From natural gas and oil to nuclear energy and fuel
cells, the energy sector is providing a wealth of opportunities for advanced
ceramics. Carbo Ceramics, which manufactures ceramic proppants and supplies
fracture diagnostic services for use in the hydraulic fracturing of natural gas
and oil wells, saw a sales increase of 13% in 2005, and an additional 18%
growth in revenues in the first half of 2006. The company noted that the volume
of ceramic proppant sold in North America increased by 14% from the first six
months of 2005, driven primarily by an increase in the U.S. natural
gas rig count and related fracturing activity. The North American increase was
partially offset by a 26% decrease in overseas shipments due principally to
decreased sales volume in Russia.
While proppant sales in Russia
reached their highest level since last year's third quarter, activity in the
region remains slow due to an increase in freight costs and tariffs on imported
products. The company is addressing this situation through the construction of
a manufacturing facility in Kopeysk,
Excluding results in Russia,
sales volume in overseas export markets increased 12% from the previous year,
with strong activity in China,
West Africa and North Africa offsetting a decline in sales in the Middle East.
Exploration associated with ultradeep petroleum wells and
deepwater fields could also open new markets for ceramics. Numerous deepwater
fields are already in operation, and many more are planned for the Gulf of
Mexico, offshore Brazil, West Africa and elsewhere. According to John Barratt of
Natural Carbon LLC, ceramics are already being used in subsea equipment.
"This represents an emerging high-value market for ceramics, particularly
given the high cost of these wells and the myriad problems associated with
repairing corroded components inside a deepwater production system," he
While nuclear energy remains a source of significant
debate, existing nuclear facilities in the U.S. and elsewhere are finding
better ways to encapsulate nuclear waste-and are turning to ceramics and
composites to do the job. Ceradyne received its initial order in September for
boron carbide/aluminum metal matrix composite (MMC) components from
Transnuclear for more than $1.5 million. The MMC components are for dry storage
of spent nuclear fuel and are scheduled for delivery by the end of
second-quarter 2007. Ceradyne's new subsidiary, Ceradyne Canada, in Chicoutimi,
Quebec, will manufacture the
components from MMC ingots, which will be produced by Alcan Inc. using its
patented MMC casting process. The components will be integrated into
Systems, which are used by U.S.
nuclear-powered utilities for spent fuel storage.
According to Voice of America (VOA), the rising price of
petroleum and the growing worldwide demand for energy is fueling a renewed
interest in nuclear power as a source of electricity, especially as new fuel
and reactor technologies are developed that make nuclear energy safer.3
While significant hurdles still need to be overcome, nuclear energy could
provide a significant market for ceramics in the future.
Fuel cells remain another prospective growth market.
While much of the hype surrounding fuel cells has quieted down over the past
year, substantial research and development has continued behind the scenes. The
GE Global Research Center in Niskayuna,
N.Y., recently developed and
delivered a 6 kilowatt prototype of a solid oxide fuel cell (SOFC) system to
the U.S. Department of Energy (DOE)/National Energy Technology Laboratory. The
prototype will be tested as part of a multi-year research program under the
DOE's Solid State Energy Conversion Alliance Coal-Based Systems program. GE said
the delivered prototype exceeded the DOE's key performance specifications for
both efficiency and potential for low cost, and represented a major step
forward in providing the fuel cell technology required for large-scale,
commercially viable products for power generation.
"SOFCs represent one of the most promising fuel cell
technologies for achieving unsurpassed efficiency and environmental performance
in large-scale power generation plants," said Kelly Fletcher, advanced
technology leader of sustainable energy programs at GE Global Research.
"While significant technical challenges remain, the development of this
prototype represents a demonstrable step toward meeting GE's goal of making
SOFC technology commercially viable. GE's long-term objective is to make SOFC
technology viable for large-scale power generation."
Ceramic Fuel Cells Ltd. (CFCL), an SOFC manufacturer
based in Australia,
believes that the market for fuel cell stacks and cells is now "commercial
ready." The company said that the reduction in costs as a result of new
technology has generated a fuel cell that is twice as powerful but much easier
to manufacture. In October, the company began production on 1 kW stacks and was
reportedly confident that the industry has matured enough to provide commercial
Despite the challenges faced by the "Big Three"
automakers in the U.S.,
the automotive market has been lucrative for some ceramic manufacturers. One
reason is the trend toward "clean diesel," which is achieved through
a combination of cleaner fuels and advanced filtration technologies, including
ceramic particulate filters. General Motors Corp., Ford Motor Co. and Daimler
Chrysler have all announced plans to introduce heavy-duty pickup trucks with
clean diesel technologies. While this effort is largely being driven by new
federal emission standards that will go into effect in January 2007, it is also
seen as a way to lure consumers back into the large-vehicle market, which has
been lagging due to high fuel costs. The new generation of diesel engines is
In October, Corning Inc., whose Environmental
Technologies segment offers ceramic technologies and solutions for emissions
and pollution control, received a long-term contract to supply emissions
control products for diesel engine maker Cummins Inc.'s Cummins Emissions
Solutions unit. Corning's
DuraTrap filters and Celcor substrates will be used in the exhaust treatment
system for a range of Cummins medium- and heavy-duty engines.
Light-duty clean diesel engines are also becoming
increasingly popular. Cummins Inc. recently announced that it will begin
manufacturing a new family of light-duty clean diesel engines at its Columbus
Engine Plant (CEP) in Columbus,
Ohio, no later than 2010.
Preparations for the manufacturing lines are scheduled to begin in mid-2007.
DaimlerChrysler will be the major customer for the engine, which will be
designed to power vehicles below 8500 pounds gross vehicle weight for a number
of automotive applications.
The aerospace industry is also providing significant
opportunities. The Aerospace Industries Association (AIA) reported that "a
prolific flurry of orders in the final quarter [of 2005] sent aerospace
industry statistics into record territory last year, shattering old marks for
orders and backlog while also recording the largest number of shipments in
history." Orders, shipments and backlog continued to show significant
gains in the first half of 2006, setting the stage for another record-setting
"The continued strength in aerospace is a good sign
not only for our industry, but the U.S. economy as a whole," said
AIA President and CEO John Douglass.
The automotive and aerospace markets are also strong
worldwide. According to The Freedonia Group, global bearings demand will rise
5.5% annually through 2010 based on higher manufacturing production and rising
aerospace and motor vehicle output. Market advances in the developing world
will significantly outpace demand in the U.S.,
Europe and Japan.
China will register the
largest gains, with growth in India,
Thailand and Brazil
also strong.5 Manufacturers of other ceramic components
also stand to gain from these trends.
Editor's note: The foregoing information
(except where noted) was compiled from publicly available information in annual
reports and news releases.