Color Management Trends

International coatings companies are becoming color experts.

By Sean Milmo
European Correspondent

A global deal between Royal Dutch Shell and Akzo Nobel and DuPont for the supply of coatings for the Anglo-Dutch oil company’s global network of service stations has highlighted the increasing demand for color management services in coatings.

The two coatings producers will be the only two approved coatings suppliers in a five-year project by Shell to redesign approximately 45,000 service stations and several thousand business sites, including offices and manufacturing plants, in 130 countries.

The redesign requires exact color matching on a range of objects and surfaces, such as signage, metal and plastic facades and sidings, roofs, steel construction and internal doors and windows.

The project demonstrates how expertise in color management as well as a worldwide presence is increasingly helping coatings companies win large international contracts.

The trend is likely to favor companies with experience of meeting stringent standards of color consistency, such as those needed by the automotive sector, particularly in the car refinishing market. Both Akzo Nobel and DuPont have long established businesses in automotive coatings.

The need for greater color uniformity is also opening up opportunities for pigment manufacturers to use color management systems as an added value to their products.

The necessity for more color consistency in the visual designs and signage of corporate offices, plants, sales and promotional outlets and transportation across the world has come in the wake of globalization. The biggest requirement for more uniformity has tended to be among multinationals, which have a direct interface with consumers worldwide.

“International companies are becoming much more aware of the differences in the appearance of their corporate colors across the world,” said Peter Langford, a business development manager at Akzo Nobel’s car refinishes operation and team leader on the project with Shell.

“Companies are realizing that they need to pay more attention to the quality of the coatings they use on the signage, facades and siding of their premises across the world,” he added.

Multinationals are beginning to set up organizational structures in which executives are given responsibility for ensuring global uniformity of colors and designs. Shell has a unit in London whose job is to set and maintain standards for the company’s global brand.

International companies are also creating their own data bases on colors and designs in order to enable suppliers and customers to comply with consistency standards.

“There is a clear trend for large companies with subsidiaries around the world to rely on one central database for storing all their digital color assets, connecting with an Enterprise Resource Planning (ERP) system and sometimes allowing selected customers to access their colors and production processes,” said Sonia Megert Marshall, global head of color managements services at Ciba Specialty Chemicals, a leading pigments producer.

She believes that the impetus towards more efficient color managements is coming more from the necessity to cut costs than the desire for uniformity.

“Companies are generally not willing to invest in [color management] systems solely for the sake of color consistency,” she explained. “The primary driver in implementing a global color management system is cost saving.”

A global approach to the issue of color matching cuts costs by avoiding unnecessary duplication of data and hence work, while it helps to achieve more accurate and faster communication between remote sites about color matters, according to Megert Marshall.

Coatings companies active in the automotive sector are in strong position to exploit the demand for color matching services because of their skills in achieving conformity of colors between batches and production lines. Suppliers of OEM coatings are now, for example, having to guarantee compatibility between the colors on the bodywork of cars and those on automobile parts which are made by outside suppliers.

“Color management is a crucial tool in our operations in the automotive sector,” said an official at BASF Coatings. Its Glasurit division, whose automotive refinishing brand is celebrating its 100th anniversary in 2008, has just introduced the third generation of its Color-Profi management system, which can now handle 1252 colors arranged in 20 color sections. A key objective of the upgraded system is to make sure that colors of parts of vehicles produced and painted in different locations match the overall color harmony of the finished automobile.

Akzo Nobel has built up considerable expertise not only in color management in automotive refinishing but also in matching of colors in fleets of trucks and commercial vehicles which can often necessitate constancy in colors on different substrates.

The materials being used by Shell in the redesign of its filling stations and other buildings are predominantly metals such as aluminum and steel and composites comprising polymers and metals.

“The coatings on these different materials have to maintain their consistency in different climates over a reasonable period of time,” said Langford. “The preponderance of metal substrates will help with color matching because metals like aluminum will tend to have a consistency of quality.”

Also the color managing is made easier by Shell having agreements with regional manufacturers to be responsible for the supply of much of the signage and other sections of buildings in the Americas, Europe, Asia, Africa and elsewhere. The rest of the work will be mainly in the hands of local contractors.

“We have been doing a lot of working on the specifications for contractors,” explained Langford. “We are also putting a lot of effort into the training of contractors so they can comply with the quality requirements.”

Akzo Nobel’s color management strategy with the project has been to concentrate first on perfecting a color for the most difficult substrate or process and then matching it with the rest. Consistency in the yellow of the well-known yellow and red coloring of Shell’s filling stations can be, for example, difficulty to obtain with coil coatings.

“It’s a clean, warm yellow with a mix of organic pigments and obviously it has been a top priority to ensure its consistency across the world,” said Langford. “On a coil coating the yellow can be a challenge so once we got that right we used it as the match for yellow in the other processes and substrates.”

Canada

Commercial Construction Buoys Western Canada

Cloverdale is capitalizing on Western Canada’s commercial construction boom.

By Charles W. Thurston

Western Canada is undergoing a boom in commercial construction, propping up sales for paint and coatings manufacturers there which also are experiencing negative impacts from the housing market, foreign exchange and inflation.

“From a Western Canada perspective, we expect commercial construction to continue at current record levels through 2009, although architectural markets are flat overall year-to-date for 2007,” said Al Mordy, president of Cloverdale Paint, Surry, British Columbia. According to Statistics Canada, the national demand for commercial building permits was up 9.9% through July 2007, “led almost exclusively by the need in the three westernmost provinces for buildings such as hotels, office buildings and shopping malls.”

The residential market is expected to be less robust. “Residential construction is still running at a very strong pace, slightly off 2006 levels, but we expect residential construction to be down approximately 10% in 2008,” Mordy explained. The company’s product mix is approximately 55% architectural and 45% industrial.

The outlook for industrial paints and coatings in the region is less optimistic. “Industrial markets have slowed dramatically in the second half of 2007 from the record levels experienced in 2006,” Mordy said. “A number of factors will continue to negatively impact our industrial markets. These include the downturn in the U.S. housing market and the resultant impact on the export of lumber and related construction products. Another factor is the recently announced and substantial increases in the Province of Alberta’s oil and gas royalties, which is reducing exploration activities and plant construction. Finally, the dramatic strengthening of the Canadian dollar is impacting the competitiveness of our exporting manufacturers.”

Exchange rates have been a focal point of Canadian paint sales forecasting since the U.S. Federal Reserve cut U.S. overnight interest rates in November, resulting in a 130-year low for the U.S. dollar relative to the Canadian dollar; the U.S. dollar fell to CND$0.94 and the Canadian dollar climbed to $1.06.

“We are hopeful the Canadian dollar will settle at or slightly below parity and remain there through 2008,” said Mordy. “But the fact that we have a portion of our raw material purchase contracts denominated in U.S. dollars has helped mitigate, to some degree, the raw material cost inflation the industry has faced this year.”

Inflation of both prices and wages is negatively impacting the sector in several ways. “In the western Canadian market, we are experiencing an escalation of our distribution costs,” said Mordy. “The labor shortage in Western Canada is driving up wage levels and impacting employee retention. And in the urban markets we have seen examples of store rents doubling over five years. We expect these challenges to continue for some time and expect to see some regional profit compression as a result.”

Cloverdale manufactures approximately nine million U.S. gallons per year at its five production facilities, including the Rodda plant in Portland, OR, acquired two years ago. “Due to capacity issues in Canada, we are utilizing the Portland plant to manufacture a number of speciality industrial products for the Canadian market,” said Mordy. “Both companies are selling a limited number of each other’s architectural products in their respective markets.”

Europe