Growth Opportunities for Personal Protective

Equipment Industry in a Recessionary

Economy

Sanjiv Bhaskar, Director, Global Personal

Protective Equipment, Frost & Sullivan
Daniel Shipp, President, ISEA
April 16, 2009
Agenda

• A snapshot of the global economy

• Personal Protective Equipment (PPE) industry

economic impact analysis

• Opportunities for growth

• Best practices for business growth in the current

economy

2
How Fear Drove the Recession – Fear is Now
Bottoming Out

“The only thing we

have to fear is fear
itself.”

-- Franklin Roosevelt

3
Global Response:
Massive Government Stimulus

UK: $340 billion bailout Russia

Germany: $700 billion relief package Support for ruble; $64
Belgium & Switzerland: Capital infusion billion stimulus package
USA:
ECB Interest rate cuts
$700 Billion bailout rapid
France $50 billion stimulus package
interest rate cuts; $23 billion
support for top 3 auto
companies; plan to create 2.5
million jobs by 2011
$819 billion Economic
China: Interest rate cuts and $710
Japan :
Recovery plan focused on Interest rate cuts; 500
infrastructure, energy, billion stimulus (infrastructure, rural)
billion yen stimulus
education and healthcare India: Interest rate cuts $8 billion
package
stimulus package (infrastructure,
exports, textiles)
South Korea:
Interest rate cuts and
efforts to keep currency
stable $11 billion
Brazil stimulus package
Support to currency, infrastructure
development under PDP (more than Australia:
$64billion injected to financial system) $52 billion pledged for
supporting the economy

Global Response
• Governments infusing capital into financial institutions
• Globally coordinated interest rate cuts
• IMF offers bridge loan to meet foreign exchange requirements
• Discussions, coordinated efforts (G20 summit)
• Boosting spending on infrastructure projects

4
Recovery in 2009
It is not a Far-fetched Idea

5
Impact of the Downturn on Specific Industries
The PPE Industry relies on end-user segments for its revenues

The Relative Impact of the Economic Downturn on Specific Industries

The Value of the Industry Today Relative to its Value One Year Ago
100.0% 94.9%

77.8%
80.0%
69.4%
63.5% 62.1% 61.4%
59.8%
60.0%
51.6%
46.8% 45.7%

40.0%

20.0%

0.0%
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Source: Frost & Sullivan/Google Finance

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6
Personal Protective Equipment Industry Economic
Impact Analysis

Workplace Safety Can NOT be

Compromised Despite a Slowdown

7
PPE Market Composition by Product Types
Global PPE Market Composition Estimates, 2008

Head Hearing
Hand Eye
2% 3% Fall
6%
29% 4%
6% Gas
Detection

13%
Footwear
Protective
22% 15%
Clothing
Respiratory

Source: Frost & Sullivan

8
Trends in PPE Industry in 2009

• Adaptability of products
• Comfort without sacrificing safety
• Stylish products
• Innovative products
• Growth in niche markets
• Consolidation
• Outsourcing of manufacturing
• Low-end generic products
creating pricing pressures
• Shift in direct purchase to rental-
Workwear Industry

9
What will Drive Growth in the PPE Industry in
2009 and Beyond

Niche Applications
Offer Increased
Opportunities for Awareness in the
Higher Penetration Workplace

Alternative
Distribution
Channels Offer
Potential for Geographical
Growth into New Market Expansion into
Applications Size and Areas with Low
Growth Compliance and
Penetration
Product
Innovation

Increase in High Impact

Professional, Scientific
and Technical Services Medium Impact
in Healthcare are
Driving the Need for Low Impact
More PPE

10
 What will Restrain Growth in the PPE Industry in
2009 and Beyond
Increased
Price Pressure Automation and
from Generic PPE Outsourcing in
Products Manufacturing
Restricting Growth Facilities Reducing
Demand for PPE

Insufficient Economic
Enforcement by Downturn
OSHA Restrains Reducing
Market
Growth of the PPE Workforce and
Size and the Demand
Industry
Growth for PPE

Cost Conservation High Impact

Measures
Resulting in Lower
Medium Impact
Replacement
Rates
Low Impact

11
What Does this Mean for Your Market?
Economic Impact Analysis of the PPE Industry

12,0

10,0

8,0

6,0

4,0

2,0

0,0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
-2,0

Head, eye and face Hearing Respiratory Hand

Workw ear Fall Footw ear

Source: Frost & Sullivan

12
 Poll Question

Which end-user market do you think has the most potential

to grow in the next 5 years?

1. Automotive and Transportation

2. Construction
3. Manufacturing
4. Mining
5. Oil & gas
6. Utilities
7. Other (Please type in the Q&A Box)

*Please ensure your pop-up blocker is off to take the live poll

13
Where Will The Opportunities Be?
Expected PPE Revenues from Different End-user Segments (2014-2015)

Healthcare Automotive
Metal
10% 12% Fire
Fabrication
8% Services
8%
Mining 5%
7% Transportation

Pulp &
9%
Paper
9% Utilities
4%
Law
Enforcement 11% 7%
10,0% Glass
Food Processing Manufacturing
Construction

Source: Frost & Sullivan

14
 Where Will The Opportunities Be?
Key Product Segments to Focus On

Sectors with highest total growth potential

1 Head, Eye and Face Protection

3
CAGR for Market Segments

High 2 Respiratory Protection

(>6%) 6
3 Hand Protection

7
2 4 Hearing Protection
4 5 1
Medium 5 Protective Apparel
(2-6%)
6 Foot Protection
8

7 Gas Detection

Low 8 Fall Protecion

(0-2%)

Small Medium Large

(<$1,000 million) ($1,000-$2,500 million) (>$2.500 million)

CAGR is calculated from 2008 - 2015

Market Size of Market Segments (2008)
Source: Frost & Sullivan

15
Where Will The Opportunities Be?
Potential end-user segments by regions (2009-2012)

Industries that will benefit from the stimulus

packages are Russia
USA:
Industries that will benefit
Industries that will benefit
UK: - Banking from the stimulus packages
from the stimulus packages
Germany: - Automotive and Banking are:
are
France: - Automotive, Banking, •Banking
Healthcare and Housing •Construction
•Banking
Italy: - Automotive and •Others
•Green Construction
Construction
•Heavy Construction
•Hospitality
China: Industries that will benefit
•Healthcare
Industries that will benefit from the from the stimulus
•Housing
stimulus packages are packages are
•Utilities
•Heavy Construction Japan:
•Manufacturing Automotive/Transportation
•Mining , Construction, Healthcare
Brazil •Oil & Gas and Others
Industries that will benefit from the India: South Korea: Banking,
stimulus packages are Industries that will benefit from the Commercial construction,
•Automotive/transportation stimulus are: Housing and Others
•Construction •Banking Australia: Banking,
•Oil & Gas •Heavy Construction Construction and Others
•Water and Waste Water Treatment •Oil and Gas

Global Opportunities in
• Infrastructure construction- Heavy Construction
• Clean Energy construction
• Healthcare
• Mining
• Oil and Gas
• Utilities Source: Frost & Sullivan

16
Where Will The Opportunities Be?
PPE Used in Different Industries

Automotive & X X X X X
Transportation
Construction X X X X X X X
Fire Fighters X X X X X X
Food Processing X X
Glass Manufacturing X X X X
Healthcare X X X X
Mining X X X X X X X
Oil & Gas X X X X X X X
Pulp & Paper X X
Utilities X X X X X

17
Poll Question

In your opinion, when do you expect the PPE market to

recover from the economic downturn?

1. Q3 2009
2. Q4 2009
3. Q1 2010
4. Q2 2010
5. Q3 2010 or later

*Please ensure your pop-up blocker is off to take the live

poll

18
What Can We Do About It?
Best Practices on How to Grow in a Bottoming Market

Strategic Mergers and

Acquisitions

Preferential Pricing and

Product Differentiation
Product Positioning

Deploying
Coordinated Efforts to Expansion to other Technology and
Increase Compliance End-User Segments, Automation
Geographies across
the
Functions

Source: Frost & Sullivan

19
What Will Catalyze the Turnaround?
Best Practices on How to Grow in a Bottoming Market

New Materials to
Improve Technological
Technical Innovation to Reduce
Features of the Costs
Products

Concentrate on
Industries that are Strategic
receiving help from Mergers and
the Stimulus Turnaround Acquisitions
Package such as Catalysts
Heavy
Construction and
Mining
Increase Efforts in
End-user Segments
that are not impacted
by the economic
Taking Advantage of downturn like
Niche Opportunities Healthcare, Food
Processing and
Hospitality

20
How Can We Get in Front of the Turnaround?
Best Practices on How to Grow in a Bottoming Market

Brand
Reliability Reputation
Quality
Technology
Reach

Price

Short Term Mid Term Long Term

Source: Frost & Sullivan

21
Conclusion

• Global economy has slowed down considerably since August 2008

• Global response to this crisis has been overwhelming
• Personal Protective Equipment (PPE) industry is being impacted by
this global event
• Despite these events Personal Protective Equipment Industry is
showing resilience and is poised for a turnaround
• Increase in infrastructure spending will improve PPE outlook
• Every company has to adopt or improvise Best practices for business
growth in the current economy

22
Next Steps

 Request a proposal for a Growth Partnership Service to support you

and your team to accelerate the growth of your company.
(myfrost@frost.com)
1-877-GoFrost (1-877-463-7678)

 Join us at our annual Growth, Innovation, and Leadership 2009: A

Frost & Sullivan Global Congress on Corporate Growth, September
13-16 2009, Hyatt Scottsdale Resort & Spa at Gainey Ranch,
Scottsdale, AZ
(www.gil-global.com)

 Register for Frost & Sullivan’s Growth Opportunity Newsletter and

keep abreast of innovative growth opportunities
(www.frost.com/news)

23
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24
For Additional Information

Stephanie Ochoa Melinda Meyer

Corporate Communications Sales Director
Frost & Sullivan CMF Practice
(210) 247-2421 (210) 348-1000
Stephanie.Ochoa@frost.com Melinda.Meyer@frost.com

Dan Shipp
Sanjiv Bhaskar President
Director, International Safety Equipment
Global PPE Markets Association
(210) 348-1014 703-525-1695
Sanjiv.Bhaskar@frost.com dshipp@safetyequipment.org

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