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Market Entry Feasibility Project for Next Generation Rubber

Periodic Reporting for period 1 - Project NGR M (Market Entry Feasibility Project for Next Generation Rubber)

Reporting period: 2015-05-01 to 2015-08-31

The SME instrument Phase 1 project has enabled Rubber Products Ltd continue the work on the development of the innovative rubber recycling and devulcanization technology of making high value-added raw material from used rubber (especially focusing on the tires)- Next Generation Rubber (NGR®), and design a unique product that will revolutionize the rubber industry. The NGR products will largely substitute natural and synthetic rubber in the automotive industry and beyond.
The objective of the Phase 1 project was to develop a market entry feasibility study for NGR technology and NGR products commercialization that would include a thorough analysis of market needs, including tailored rubber mix recipes, and a business plan with an extensive sales strategy. The feasibility study: (1) identified customer needs in terms of quality and tailored the NGR recipes to suit those needs. And, as a result a new product has been introduced – next generation rubber blocks (NGR- B) which provide better handling, transporting and processing. (2) defined target market and its size and mapped potential customers. And, as a result 3 segments are targeted: recyclers, compound producers, producers of end rubber products. Eastern and Central Europe region is chosen as region for market entry. (3) defined NGR® products sales strategy and developed detailed business models for market uptake. And, as a result three distinctive business lines have been designed: sale of NGR- B, licencing and R&D services.
Overall, the Phase 1 has confirmed that in an industry that has seen sustained growth, and is predicted to further grow by 3.5% per year until 2018, the use of NGR® in the production of rubber products will diminish the need for other resources, namely natural and synthetic rubber, allow for recycled rubber to be used in high value added rubber products, and reduce the negative environmental impact related to the production of natural and synthetic rubber. Increased demand for rubber will fuel the demand for recycling technology which provides both cheaper inputs and larger ecological benefit which is in line with EU directives on decreasing rubber waste piles. Subsequently, the ambition of Project NGR is threefold: to decrease the environmental impact of rubber waste; to reduce the costs of rubber manufacturers in making high-quality rubber goods; and, to grow a business based on the validated NGR technology.
During the Phase 1 of the SME Instrument Rubber Products has completed the activities set out in the work packages, and achieved a clear understanding on how to move forward with business development and up-scale the use of NGR® technology on a global level. Following activities have been completed:
1. A detailed market analysis. It helped to clearly define the target market for NGR® technology and resulting products, estimate its size, map potential customers in the region and the products they produce, identify their needs for rubber that could be substituted with NGR® products. Main findings:
- Increased demand for rubber goods and lack of an optimal substitute for natural and synthetic rubber benefits the market entry of NGR® technology.
- Given the innovative characteristics, the NGR products create a category of their own – a breakthrough alternative to natural and synthetic rubber.
- By partially substituting natural and synthetic rubber with NGR products, companies will become more competitive in the rubber industry (regardless of the position in the value chain).
2. Product tailoring to fit market needs and launch of a pilot program. Based on the select potential clients’ needs, Rubber Products team in collaboration with IMPIB institute in Poland and other partners, has worked on product development. The Phase 1 pilot program was based on the results of preliminary product tailoring, and it began with delivering new type of NGR® products to select clients in order to test and validate if the new NGR® products can easily be integrated into the current production process.
As a result, the use of NGR - M and NGR - C products has been tested in automotive industry, tire production, renewal of worn-out tires and production of various rubber elements, such as pipes. Positive test results showed that by substituting natural and synthetic rubber with NGR®, producers can significantly reduce their cost of materials and the side benefit is that waste tires and other rubber goods are not ending up as waste product. However, based on the initial talks and trials with 30 potential clients, it has been identified that it is difficult for them to integrate NGR® - C and NGR® - M directly into their production processes. Through additional R&D activities and market tests, it was found that the best alternative to NGR® -C and NGR® -M is Next Generation Rubber Blocks (NGR® -B). Following, Rubber Products team has analysed the capacity of the production plant in Riga, and has developed a plan on how to build the required capacity for production of NGR® -B and also ensure competitive manufacturing.
3. Elaboration of the Business Plan. Rubber Products team, with the help of external experts, developed and added depth to the overall business model and built the financial prognosis for further implementation of the project.
In order to scale up the use of NGR technology, Rubber Products should unfold simultaneously three distinctive business lines that are interrelated and interdependent. The first business line, sales of NGR products, will be tested in the market first, in order to validate the new physical features of the improved product created by Rubber Products. This will ensure successful commercialization of the second, and most critical, business line – licensing of NGR technology. The R&D business line encompasses the first two business lines as it provides R&D services to companies who have purchased either the NGR products or the license for NGR technology.
The company’s overall objective is to revolutionize the used rubber market by providing New Generation Rubber products through a patented process of making high value-added raw material from used rubber (especially focusing on the tires) that would largely substitute natural and synthetic rubber in the automotive industry and beyond. The devulcanization process is environmentally friendly, it was tested and validated in the market and with users during Phase 1 of Project NGR. Numerous tests have proven that NGR® technology leads to the degree of devulcanization above 80% as determined by ASTM D 6814 standard.
The expected outcome of the project will be a revolution of the rubber products industry, whilst the ambition of Project NGR is threefold: to decrease the environmental impact of rubber waste and waste tires; to reduce the costs of rubber manufacturers in making high-quality rubber goods; and to grow a business based on the validated NGR product. Most important, NGR technology helps to solve the environmental problem by:
1. Recycling the world’s stock of rubber & tire waste
2. Reusing recycled rubber in production of new products without sacrificing quality
3. Reducing world consumption of oil and rubber trees
In addition to that, the patented solution ensures that Rubber Products will have competitive edge in the future and will offer an innovative solution for recycling and re-using rubber.
Rubber recycling process: conventional and with NGR technology