2025 State of the Industry Report

In its annual Blue Chip Economic Indicators survey, Wolters Kluwer asks approximately 50 economic forecasters to provide projections for the year ahead. The consensus for 2025 predicts real gross domestic product to increase 2.1%, the consumer price index inflation rate to cool to 2.4% and the unemployment rate to average 4.3%.

Of course, the economic outlook hinges on so many factors. There’s a new administration in the U.S. and critical elections worldwide, notably in Germany, Canada and Australia. There’s a potential trade war on the horizon between U.S. and countries such as China, continued turmoil in the Middle East, a boom in artificial intelligence – the list goes on and on.

In our annual State of the Industry report, we asked four consultants to narrow the focus and provide insight on three key market segments and two materials that are pivotal to the composites industry. Here’s what they had to say.

The Automotive Market

By Marc Benevento, President

Industrial Market Insight

Demand for composites in light vehicles remained steady in 2024, despite their continuing to gain a larger share of vehicle weight. These materials have expanded their presence in internal combustion engine (ICE) vehicles and, more notably, in battery electric vehicles (BEVs). However, a slight decline in global vehicle production offset the increase in composite usage per vehicle, resulting in flat year-over-year volume. The rising market share of BEVs globally will drive above-market growth for composites, as their weight-saving properties help extend BEV range similarly to how they improve the fuel efficiency of ICE vehicles.

The global market for light vehicle composite materials reached 4.9 billion pounds in 2024, finally eclipsing the pre-pandemic value even though vehicle production volume has not yet returned to the high-water mark. Composite materials have consistently exceeded industry growth due to their ability to reduce weight, complexity and cost from automotive parts and systems. The growth rate is accelerating as the market shifts toward battery electric vehicles, which tend to use more composite material per vehicle than those powered by internal combustion engines.

Last year, light vehicle production growth in most regions flattened significantly compared to the past few years of recovery following the pandemic. Europe was the outlier, where vehicle production fell by mid-single digits compared to 2023 due to weak demand and rising inventory levels. With global supply and demand now balanced, vehicle production growth is expected to be between 1% and 2% per year.

The automobile industry continues to shift toward electrification, with electric vehicles (EVs), including hybrids, gaining another 5% of global market share in 2024. However, ICEs still account for 75% of vehicle sales. China is leading the BEV charge, accounting for almost 60% of global BEV sales, while Europe adds another 20%. The U.S., lagging with EVs at 15% of vehicle sales, faces an uncertain future since changes in government regulations, incentives or investment in charging infrastructure will influence the adoption rate by mainstream consumers. Because the U.S. accounts for more than 80% of annual new vehicle sales for the continent, North America will continue to lag in the global adoption of BEVs.

Despite the uncertainty surrounding regional and global adoption of BEVs, composites continue to win applications in light vehicles due to their ability to reduce weight, improve utility, decrease costs and simplify components, all without compromising safety. The need for weight reduction to improve the efficiency of both ICE and BEVs has resulted in above-market growth for both thermoplastic and thermoset composites.

The design flexibility afforded by composites has allowed OEMs to offer BEV versions of ICE or hybrid vehicles using the same vehicle architecture, offering consumers a wider range choices while avoiding exorbitant costs associated with a dedicated platform. Creative design and manufacturing innovation have allowed composites to be used to increase interior storage in pickup trucks and produce single shot “frunk” liners for BEVs.

In addition, composite materials are increasingly finding use in the components of EV batteries, which help improve the safety and fire resistance of the battery pack. Although the path to vehicle electrification is winding and unclear, composites continue to show consistent growth because the utility they provide is powertrain agnostic.

With global light vehicle production tempering after the recovery from the pandemic and its supply chain issues, growth is difficult to find. (See Figure 1.) However, suppliers of composite materials can expect to outperform production growth, as composites continue to win new applications by delivering substantial value in the form of weight savings, design flexibility, cost and performance. These benefits extend to both ICEs and BEVs, so suppliers can rest assured the market for composite materials will continue to grow regardless of the powertrain type.

The Glass Fiber Market

By Dr. Sanjay Mazumdar, CEO

Lucintel

Overall, the glass fiber market is evolving rapidly, driven by advancements in technology, innovation and a rising emphasis on sustainability. As demand grows – particularly from emerging markets – and as the material finds increased use in industries such as transportation and construction, Lucintel expects the market to undergo continued expansion.

The global glass fiber market increased by approximately 3% in 2024, with demand rising to 16.8 billion pounds compared to 16.3 billion pounds in 2023. There was softer demand in the U.S. for glass fiber in various industries, such as construction, marine and others. Lucintel forecasts that global demand will increase by approximately 4% at a compound annual growth rate (CAGR) in terms of volume from 2024 to 2031. (See Figure 2.)

However, the global glass fiber market faces significant hurdles. Key among them is intense competition, particularly from Chinese manufacturers. China had almost no presence in the glass fiber segment in 1990, while today it dominates the market with 65% of global capacity.

On one hand, China’s market infiltration has helped grow the overall segment thanks to its low-cost fiber. However, that poses substantial challenges to North American, European and Japanese glass fiber suppliers trying to maintain profitability because they are unable to compete with Chinese suppliers on cost.

Many players are losing their market share to Chinese suppliers. Several prominent companies, including PPG, 3B and Owens Corning, have either exited the market or announced plans to do so due to declining profitability. North American, European and Japanese glass fiber suppliers may continue to struggle with profitability in the future and could be forced to cut thousands of jobs unless they can figure out how to compete with Chinese players on cost or improved performance.

The Trump administration has pledged to impose a 25% tariff on all imports from Mexico and Canada and an additional 10% duty on goods from China. This policy would raise the cost of imported glass fiber, shifting the market in favor of U.S.-based glass fiber suppliers.

Another trend in the glass fiber value chain is prioritizing sustainability and circular economy principles. As the industry strives to reduce its environmental footprint, manufacturers are focusing on closed-loop recycling systems to recover and reuse composite materials, minimizing waste and conserving resources. Companies such as Johns Manville and Jushi are investing in innovative recycling technologies and sustainable practices to meet global environmental standards. By 2030, these efforts are expected to significantly reduce the industry’s environmental impact and contribute to a more sustainable future.

OEMs and part fabricators are innovating recycling technologies and setting lofty goals. For instance, Vestas is striving for zero-waste turbines by 2040. (In this case, ‘zero waste’ means preventing all waste and developing a circular economy for all materials, including the carbon cycle.)

In conclusion, the glass fiber market landscape is dynamic. By leveraging advancements in technology and adeptly addressing existing challenges, businesses can unlock the full potential of glass fiber and secure a competitive edge in the market.

The Aerospace Market

By Richard Aboulafia, Managing Director

AeroDynamic Advisory

The aircraft and defense industry continues to be a tale of the best and worst of times. Demand in all segments – jetliners, military systems, business aircraft, rotorcraft, etc. – continues to be extremely strong, with backlogs at or near record highs. Global tensions are fueling demand for defense equipment, while a strong travel recovery and undersupplied markets are driving demand for civil transport aircraft.

However, supply chain delays and other production problems are suppressing output. Production in 2024 was stagnant, despite the continued strength in markets. For a market screaming for equipment, deliveries were flat, as shown in Figure 3.

In fairness, not all of this production disappointment was the result of supply chain problems and production ramp sluggishness. Two of the five biggest programs saw flat or declining output due to unique circumstances – a 53-day strike crippled Boeing 737MAX output, while delays in a mission systems upgrade halted Lockheed Martin F-35 Joint Strike Fighter output. Then again, if these events hadn’t happened, it’s likely that these programs would have only done marginally better, and last year’s topline totals would only increase slightly.

There are hopes for improvement in the coming year, but given past disappointments many in the industry are skeptical of more than single percentage year-over-year output increases. Unfortunately, lower inflation does not seem to be an indicator of an improving supply picture for aviation and other sectors of the economy.

This is also the first aerospace recovery where the first year of the recovery – 2021 – was worse than the starting point. That year’s disappointing output, of course, was attributable to pandemic-related supply chain disruptions, even if demand was higher than in 2020. 

It’s also notable that compared with previous civil market upturns, this time around all industry segments are demanding production resources, particularly labor. Defense in particular is very strong right now, with record U.S. defense budgets and record world levels of spending. That makes this the first combined civil-military uptick since before the end of the Cold War. Defense contracts are often cost-plus, meaning they can pay top dollar for people and material.

Comparing today’s very sluggish recovery with the fast growth seen in previous ones points to a possible silver lining. In most civil segments, market booms have tended to end with market busts.

The reason for these declines is simple; it’s tough to know when to stop increasing production. Whether it’s small and mid-sized business jets in 2007-2008, widebody jetliners in the middle 2010s or large civil helicopters in the first half of the 2010s, manufacturers have tended to keep the good times rolling and ignore warning signals that they should reduce output. The result tends to be overcapacity, followed inevitably by a production drop.

With today’s recovery, if it can be termed that, there is no serious risk of overcapacity. While manufacturers are trying to increase output, and would prefer to reduce their healthy backlogs, supply chain problems will almost certainly hamper the industry for at least the next 18 months – and likely longer.

By then, aerospace market signals might tell a different story. As a result, the rest of the 2020s could see continued relatively slow growth. However, this slower growth will likely prove more sustainable compared to rapid growth in other shorter recoveries because there’s much less risk for overcapacity.

The Carbon Fiber Market

By Dr. Sanjay Mazumdar, CEO

Lucintel

In 2024, global carbon fiber market growth remained stable. The industry maintained a cautious outlook, reflecting ongoing global economic uncertainties driven by factors such as elevated interest rates, geopolitical conflicts, persistent inflation and supply chain issues. There was softer demand in the U.S. for carbon fiber in aerospace, wind energy and sporting goods applications. Demand within aerospace was lower due to production issues with the Boeing 737 MAX and 787 Dreamliner. However, carbon fiber demand grew globally in aerospace aided by steady aircraft deliveries by Airbus and China’s commercial aircraft, such as COMAC.

A significant shift is happening in the competitive landscape, with China becoming the world’s largest consumer and producer of carbon fiber in recent years. Lucintel forecasts that China will account for more than 65% of global carbon fiber capacity by 2030; it has already achieved the same feat in the glass fiber market. China had little presence in 2010 in the carbon fiber market, and today it has reached approximately 45% of worldwide capacity.

A decade ago, Japanese, European and U.S. players such as Toray, Teijin, Zoltek, Hexcel, Mitsubishi and SGL dominated the carbon fiber market. Today, Toray is the top supplier in terms of capacity followed by two Chinese companies – Jilin Chemical Fibre Group Co. and Zhongfu Shenying Carbon Fiber Co. Ltd.

Overall, global demand for carbon fiber reached 300 million pounds (U.S. $ 3.5 billion) in 2024, up from 216 million pounds in 2018. Lucintel forecasts that demand will increase at a compound annual growth rate (CAGR) of approximately 10% from 2024 to 2030 driven by growth in pressure vessels, wind turbines, commercial aircraft, automotive and other markets. (See Figure 4.)

Emerging markets such as air taxis, hydrogen storage and fuel cells will help boost the growth of carbon fiber in the future. The urban air mobility market, including electric vertical take-off and landing (eVTOL) air taxis, is set to increase carbon fiber usage in structural and interior components. As demand for hydrogen vehicles grows, so too will the need for carbon fiber in hydrogen storage tanks, particularly Type IV vessels.

While there is optimism for market growth, the price of carbon fiber remains a significant challenge to widespread adoption, particularly in industries such as automotive, consumer goods and industrial applications. These industries seek carbon fiber at price levels of $4 to $6 per pound. Some Chinese suppliers plan to sell carbon fiber in this range and thus can penetrate new applications with their low-cost carbon fiber. This poses problems for North American, European and Japanese carbon fiber suppliers striving to maintain profitability because they are unable to compete with Chinese suppliers on cost.

Many suppliers are losing market share against Chinese companies in non-aerospace applications. In 2024, SGL Carbon, a European supplier, announced their intent to sell their carbon fiber business. Lucintel forecasts significant price competition in carbon fiber in the coming years, and the price of carbon fiber will fall in numerous applications to protect domestic business.

In addition to pricing concerns, recycling and sustainability of carbon fiber continue to challenge suppliers, who are striving for ways to address the issue.

Despite these and other challenges, Lucintel predicts that innovations in hybrid composites, recycling techniques and automated manufacturing processes will continue to enhance the appeal of carbon fiber. Renowned for its unmatched strength-to-weight ratio and durability, carbon fiber remains a critical material shaping the future of aerospace, transportation, renewable energy, hydrogen vehicles and high-performance consumer goods and industrial applications.

The Construction/Infrastructure Market

By Ken Simonson, Chief Economist

Associated General Contractors of America

The election results have delivered both hope and greater uncertainty to construction contractors. Many contractors welcome the prospect of lower federal taxes and fewer regulations than if Democrats had won control of Congress and the White House. But the industry may also experience unfavorable changes in spending, tariff and immigration policy.

Even regarding taxes there is plenty of uncertainty as to which current tax provisions will be extended, whether construction-friendly tax breaks for renewable energy will be repealed or what other offsets will be enacted to pay for the tax cut extensions. The Trump administration may also try to “pay” for tax cuts by impounding or canceling spending approved under the Infrastructure Investment and Jobs Act (IIJA), the CHIPS and Science Act or the Inflation Reduction Act. These laws collectively contain unprecedented amounts of funding for a wide range of construction projects.

While there may be few new federal regulations, rolling back existing rules can take as much time as adopting them in the first place. And contractors generally favor some federal regulations as a way of providing uniformity and clarity about a law’s intent or to preempt multiple state and local regulations.

Even greater uncertainty and concern on the part of contractors surround the prospect of new and increased tariffs and tougher policies toward foreign-born workers. Tariff increases are likely to raise costs for any product that competes with imports or incorporates imported materials, as well as for directly imported items. Some countries may opt for quotas in lieu of tariffs, a step that could completely choke off access to needed inputs. Another worry is the prospect of retaliatory action by U.S. trading partners, which would be harmful to a wide range of U.S. businesses and workers.

Construction is also vulnerable to actions to restrict or deport foreign-born workers. An analysis of the Census Bureau’s American Community Survey indicates that 34% of construction trade workers in 2023 were immigrants – one of the highest foreign-born shares of any industry. Half or more of the trade workers were immigrants in four states: California, New Jersey, Texas and Maryland. But even contractors in states with small foreign-born shares in construction would feel the impact if competition for workers increased from other industries or states.

Apart from these uncertainties, some of the recent spending trends appear likely to continue. Specifically, overall construction spending growth is likely to remain around 5% (not adjusted for inflation), as in the 12 months from October 2023 to October 2024. (See Figure 5.) Moreover, growth is likely to be closely balanced between residential and nonresidential construction.

But within these broad segments, there will be changes. Spending on the two fastest-growing nonresidential categories – data centers and manufacturing plants – is headed for slower growth for different reasons. Demand for data centers remains torrid but owners are having difficulty finding locations with enough power, skilled workers, materials and little or no opposition from neighboring landowners. In contrast, construction of electric vehicle (EV) plants and EV battery plants has slowed or been halted in the face of weaker-than-expected demand for EVs.

Offsetting slowdowns in these categories, many types of infrastructure and power construction appear poised for more rapid growth. Funding for highways, airports, water, wastewater and rail construction should finally turn into contracts and not merely press releases from federal agencies, as had been the case for much of the past three years. Demand for additional and upgraded power supplies will fuel further investment in solar fields, transmission lines and utility-scale batteries and generators.

Two other markets – office and warehouse construction – appear to be stuck in low gear. There is no sign of a bottom for new office construction and only limited opportunities for conversions or renovations. And warehouse vacancies remain high, at least for the largest structures. However, there may be growth in smaller, inside-metro facilities, cold storage and warehouses near new manufacturing plants.

In short, contractors will have a lot of potential policy and demand shifts to cope with. Some will thrive but others may struggle to survive.

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