The silicone industry is a successful, specialist sector of the European economy. Silicones are a broad and diverse family of products prized for their ability to enhance performance in many different sectors. To facilitate analysis, this study concentrates on six main areas – construction, electrical and electronics, industrial, personal and lifestyle, transportation and special systems applications. All of these depend on the production of basic silicones, which is concentrated in a small number of international companies. Downstream, there is a rapid and progressive increase in the number of enterprises working with silicones, increasing employment and adding value along the industry chain to the benefit of ultimate consumers.
Volume and user-sector data
Basic silicones are produced by CES members. Final products are those made by the user sectors of this study for
ultimate sale to end-users, including consumers and industries. Basic silicones may be used directly in final products but in the majority of cases they are a component that is modest in volume but high in value. Construction is by far the largest user sector.
The industry rests ultimately on six silicone producers. Directly, and via a network of distributors, these support many thousands of firms further down the industry chain that transform the basic materials into an extended and diverse range of final products for sale. Although there are some major firms among these, the majority are Small and Medium-Sized Enterprises (SMEs). Likewise the number of ‘indirect’ companies is significant. These firms do not work with silicones directly but provide complementary manufacturing or services.
European producers of basic silicones are capital intensive international firms and have significant work forces in research, production, marketing and sales. However, the next stages of the industry chain – formulators, distributors, end-use sales and indirect companies – provide much larger total employment, predominantly in SMEs. Employment is substantial in each sector but especially significant in personal care and lifestyle, reflecting the wide use and importance of silicones in providing desirable product benefits in these applications. Firms using silicones in this sector also tend to be larger than those of the other areas and have a strong emphasis on innovation and product development, where silicones play a central role.
Financial value data
The graphs show the value of products for each stage of the value chain – basic silicones, formulated and distributed products. The sum of the values represents the total value of the financial transactions or total economic value taking place in the supply chain. These are shown in the ‘Total value of products’ graph. Products at each stage, however, contain silicones and other materials. The study therefore also models how much value may be attributed to silicones at the final point of sale. This is based on estimated percentages of silicones that differ per application. These values are shown in the ‘Value of silicones in final products’ graph.
Overall, the data show increases in value moving up the chain to final applications for all sectors, with the most significant being for construction and special systems.
Added value data
It is rare that materials provide high added value in their initial state. Almost always, value is added by transforming them into new ones, or by using them in combination with other materials or by transporting them to another place or places.
Typically, the process of adding value takes place in stages. A simplified view of the stages of the value chain for silicones, from basic chemicals to finished products, is explained on The Silicones Value Chain page.
Added value at each stage is the difference between the input price and the output price. Each successive stage adds value in varying amounts, depending on the application. However, it cannot be derived directly from the financial value charts on the preceding financial value data section because these are simplifications of the modelled data. The Silicones Value Chain page provides a hypothetical example of added value for one silicone application.
The total added value is the sum of the individual stages and the added value of silicones in final products is based on the proportion of silicones in the final application, which varies by final use.