Why We Invested – Midwest Composites
Intelligent Design Bringing Sustainability and Positive Environmental Impact
Fiberglass materials were developed in the 1940s. Carbon Fiber is an older technology, but higher performance materials did not start until the late 1950s. There have been substantial improvements in the processes to create, the strength and durability, the comparative lightweight, and other technical specifications. These materials have now become common place across a broad range of products from the car you drive, the plane you fly, the windmill powering homes, and so many more. Every day, we use these products in our daily lives.
Globally, composite materials have gained significant traction in demand as automotive, rail and aerospace look towards reducing weight and increasing the efficiency of vehicles by exploiting advanced materials. The quickest way to drive fuel efficiency of vehicles is to reduce weight, and this has been a primary advantage of advanced composite materials. The global composite market was USD 88 billion in 2021 and is projected to grow at a 7.5% CAGR. Demand for high performance materials that are lightweight is driven across several key sectors.
APAC has become a key growth market with cyclically driven factors associated with economic growth driving greater demand in automotive, pipes and tanks, construction, and infrastructure. Much of this demand is driven by China, Japan and India, but is seeing increasing growth more broadly. Advancements in technology, regulatory policies, and government norms are some of the major factors driving the composites market in APAC. However, COVID-19 pandemic reduced the demand for composites in the region.
While growth in the composites market continues, the environmental implications have become of greater concern. Recycling of composite materials is highly difficult and frequently results in a “lifetime in a landfill” designation. This has led towards, what can be perceived as, the beginning of a shift in the market towards bio-composites. Adoption remains nascent more broadly, but bans on non-reusable plastics in Europe, prevalence of environmentalism and corporate ESG, high disposable incomes in developing countries, and greater awareness of bio-composites will drive adoption and growth.
We’ve seen several notable movements in other markets that substantiate a shifting of tides. BMW i Ventures, the carmaker’s venture capital firm, is now investing in Swiss cleantech company Bcomp, a manufacturer of high-performance composites made from natural fibers, typically Flax a dominant product in Europe. Motive Industries, an automotive design firm in Canada, is developing an electric car using impact-resistant bio-composite derived from Canadian grown and manufactured hemp mats.
The building of a successful bio-composites market first depends upon access to a predictable and scalable supply of raw materials. However, to begin replacing existing composite materials in the supply chain, the cost and technical specifications which requires innovative processes and additional research and development. The key demand markets are long cycle markets and may not shift purchasing behavior quickly. However, there are clear tailwinds that support the long-term outlook for bio-composites.
We are happy to partner with Midwest Composites and the wealth of knowledge and experience they bring to Malaysia and the APAC market. The founder’s track record in the composite industry and the leading knowledge in the bio-composite space will be built upon to take advantage of the adoption and shift in demand towards bio-composites. With the abundance of raw materials for bio-composites, Malaysia makes an ideal location to build and develop a key supplier for the APAC market.
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