I. Industry Context

Industry Overview

Industry Summary and Outlook

Ceramics Engineering-- the industry that Materials Technology Corporation, or "MTC" is a part of-- is a multi-billion dollar a year industry. Because ceramics can be manufactured to have unique combinations of strength, weight, thermal and magnetic conductivity, and deformability, they have countless uses in industries such as aerospace, biomedical, automotive, and electrical. With an unlimited number of such combinations, it is possible to create a material that exactly suits a given situation.

Because of the following combination of factors, there is generally "high demand and low supply" for engineered ceramics:

• low cost (once developed) and high quality • An infinite number of potential materials combinations • Applicability of a specific unique ceramic to each use (i.e., increased demand for closely-specified material).

Similarly, several factors indicate that the ceramics market is essentially still an emerging market:

• the relative newness of the industry; • the need for MTC and other such companies to create the market for their products; and • the unlimited number of potential applications indicate the ceramics industry

However, one source1 indicated a few trends that evidence a more mature market:

• increased pricing pressures on ceramics manufacturers; • improvements in process engineering; • increasing focus on customers in core businesses; • a number of mergers and acquisitions; • increasing environmental pressures; and • a trend toward the purchase of more complex blends of processed materials.

It should be noted that although the ceramics industry is still emerging, its high degree of specialization and cost of research is a barrier to entry. Additionally, per the same source the industry is