“The overall industrial coatings market grew by mid-single digits in 2012, but varied widely by sub-segment,” said Roeland Polet, senior vice president, global industrial for Valspar. “The end of 2012 was not as strong. It was marked by economic uncertainty and bumpy demand as macro decisions either on economic stimulus packages or austerity impacted infrastructure and equipment markets that are heavy consumers of industrial coatings. Nevertheless, many segments show strong drivers for growth in the coming quarters.”
“With the exception of the wind power generation industry that still faces a few challenges in U.S., China and Europe, the other segments performed well overall,” said Dimitris Likouressis, protective business director, group marketing, Hempel. “The oil and gas (O&G) segment maintains good growth especially in connection to the massive gas projects that take place currently in South East Asia, the unconventional O&G production in USA, the downstream projects in Saudi Arabia and the offshore activity in the yards of Singapore, Korea and China. Thermal power generation remains the most important energy provider around the world whereas infrastructure, civil construction, water and waste water projects are still on-going in many areas. Mining faced some pressure due to the prices of metals, however the segment is expected to recover. Hempel’s strong global presence and value proposition in the above segments resulted in excellent results during 2012 and a considerable increase of the business and market share in the protective segment.”
The industrial coatings market participates in a wide range of sub-segments, offering a wealth of growth opportunities.
Valspar focuses on a number of key sub-segments in industrial, including coatings for agriculture and construction equipment (ACE), building products including pre-coated metal, oil and gas pipelines, shipping containers, freight rail and transportation, and liquid and powder sold through distribution.
“Going forward, we believe that the industrial coatings market has tremendous growth potential,” said Polet. “One illustrative example is the infrastructure investment required to move hydrocarbons from new production regions to refineries. This will drive growth in the demand for coatings going forward. Another example is rising living standards. There are approximately 150 million people that will enter China’s middle class in the next five to 10 years, demanding more technically advanced products. This is like doubling the entire middle class of the USA. Industrial products that go into the manufacture of consumer products will increase globally and we plan to be well positioned in emerging markets to capture that growth.”
The ACE market, represents a strong growth opportunity for Valspar. Demand for agricultural equipment will remain strong as the demand for food stuffs increases and farmers in developing countries can earn a return on investing in larger farms and the equipment needed to work them productively. The construction market is on the verge of a rebound in many global markets, while the mining market remains impacted by weak economics in mining commodities, and weak demand for additional equipment.
Valspar is also well positioned for the new hydrocarbon economy. As China and other nations starts to implement shale gas drilling and hydraulic fracturing, this represents a big opportunity for Valspar. “Today, the spend on infrastructure has slowed a bit, but the fact that China is trying to move their economy more inland, indicates that infrastructure will pick up again,” said Polet. “Valspar’s pipeclad coatings have increased penetration in this segment due to superior technology, ease of application, and best-in-class service.”
He added that global energy demand and consumption will continue to expand and grow which will drive the need for more oil and gas related structures like pipelines which should provide a positive outlook for the next five to 10 years.
“All segments maintain areas that are very interesting to target thus the importance to stay close to the markets and to understand the current and underlying needs of our customers,” said Likouressis. “Even though new built activities are growing and not only because the yards are looking at offshore to counter balance the difficult market situation in marine, maintenance is becoming more and more important because asset owners want to prolong the life of their assets as much as possible.”
“The asset owners are looking for a complete life cycle solution, including the initial construction cost but also the operation and the maintenance costs afterwards,” added Likouressi. “At the same time the steel fabricators and the yards are looking for solutions that will increase their performance and decrease the total construction. Hempel develops solutions that meet the above needs and remains at the same time very competitive.”
The key to staying competitive in the industrial coatings market, is delivering products with superior performance. Industrial coatings are used on a wide variety of high end items and need to offer the highest level of corrosion prevention.
“In the most basic terms, customers expect coatings to apply well, prevent corrosion, and extend the life and beauty of the products and structures they coat,” said Polet.
The typical cost of a coating represents between two and 10 percent of the cost of the products they coat, but they are the first thing that is seen on the product, and if they fail, the entire product may need repair or replacement.
“Our customers look for us to stretch the useful life of their equipment because it is critical to what they do. For instance, in the Off Road segment, corrosion protection is a top contributor to brand performance. A corrosion-free harvester or backhoe has a greater resale value at the end of a lease,” said Polet. “Additionally, Valspar customers are looking for efficiency in the coating process, which allows them to optimize total cost through their existing production assets. These things will remain important in the future, as well as increased emphasis on environmental impact and improved UV resistance.”
The industrial coatings market continues to move toward water-based coatings and non-heavy-metal-containing coatings, but traditional coatings still have a place in the product portfolio. “What we are seeing is a diversification in the market according to what regulatory conditions prevail,” said Polet.
In Europe, RoHS compliance is driving innovation in coatings systems. In turn, these regulations are working their way to China as it serves the rest of the world through exports. For companies like Valspar that invest in advanced technology, these trends represent a way to capture more market share and stay ahead of regulatory changes.
Low-VOC and waterborne systems continue to drive innovation. The need to reduce pollution and VOCs in more cities and provinces has accelerated the growth of waterborne platforms. While limits on raw materials and emissions increase the challenge of formulating high performance coatings, they also provide stronger opportunities for companies like Valspar to innovate to solve technical challenges.
“Not only the legislation but also quite a few of our customers are very sensitive with regards to the health, safety and environment (HSE) impact of the coatings solutions that they use,” said Likouressis. “Waterborne coatings can offer well performing solutions, they need however to reach scale to become competitive. Solventborne versus waterborne is not however the only dimension in the developments that are taking place in connection to HSE; as an example, the use of chemicals such as isocyanates or lead can also be addressed with equally competitive and performing solutions.”
Valspar targets new product development at increasing performance against regulatory, corrosion and / or applied cost.
For instance, Valspar’s Aquaguard is the first and only technology in many categories— the shipping container market’s first and only low-VOC water-based, zinc-free, two-coat coating system. In a market where containers circle the globe many times over an average in-service life of 14 years, the first containers coated with Aquaguard have more than five years of proven corrosion prevention, and Aquaguard is qualified on more coatings lines than any other water-based coating in the container market, the company reported. Aquaguard provides an alternative to high-VOC, three coat, solvent-based, zinc rich coatings, and has shown to be equal or better for corrosion prevention.
Another recent Valspar launch is a new line of high operating temperature FBE coatings for the oil and gas market under the Pipeclad Brand. As the exploration for oil and gas has moved further and further offshore into deeper areas, wellheads closer to the Earth’s core pump hotter oil into pipes in colder waters. This puts a higher demand on the pipeline coating. Valspar has developed new coatings that meet these new temperature requirements while still delivering high performance protection.
Finally, Valspar has also launched the Valde Edge Coverage Powder (ECP) which is a revolutionary powder coating that cures two coats in one pass through an oven, all while delivering best in class edge corrosion protection. This saves customers time and money in application and corrosion prevention, as most powder coatings must pass through an oven after applying both the primer and the topcoat, and do a poor job protecting sharp edges of parts.
Hempel recently launched a DTM (direct to metal) product based on the latest polyaspartic technology giving very high productivity especially in line productions such as wind tower manufacturing, rail cars and other. This is the solution that is currently used by one of the biggest wind turbine manufacturers based in Denmark who, together with a specialized steel fabricator, designed and developed a unique tower design revolutionizing the way wind towers are built these days.
Hempel has recently launched its cutting-edge technology to prevent corrosion under insulation. “Having studied the market requirements and the current challenges namely the high performance but difficult and expensive use of TSA and the insufficiency of the other liquid coatings solutions, Hempel used its own technology platforms to develop a solution that can provide true protection against corrosion under insulation and – at the same time – ease of application,” said Likouressis.