Down for the aerospace industry is still pretty up. Even with the dramatic slowdown in air travel following the September 11, 2001 attacks in the U.S. and the resulting slide in demand for new planes and coatings, the global coatings market for the aerospace industry was approximately $215 million in 2001 and $110 million in North America, according to PGPhillips & Associates, Southern Pines, NC.
From 1996 to 2001, demand for aerospace paints and coatings grew from seven billion gallons to 8.5 billion gallons, according to the Freedonia Group. By 2006 that number is expected to grow to 10 billion gallons, and to 12.5 billion gallons by 2010. These numbers suggest that even with a slowdown in growth rate since September 11, the industry can still expect modest growth in coming years.
The aerospace industry can be broken down into three main segments: military, commercial and general aviation. According to PGPhillips & Associates, the commercial market in North America represents 62% ($68.2 million) of the total North American aerospace coatings market. Military accounts for 28% ($30.8 million) and general aviation represents the remaining 10% ($11 million).
Phil Phillips, president of PGPhillips & Associates, estimates the commercial market, the one most affected by September 11, will grow at a "lethargic" rate of 1.5%-1.7% this year. Military is expected to grow at a 3.7% annual rate and general aviation is projected at three percent growth, according to Mr. Phillips.
The market can be further broken down into the OEM and refurbishment sectors. According to Mr. Phillips, OEM accounts for 65% of the commercial aerospace market versus 35% for refurbishing. This trend is reversed in the military market, with OEM accounting for only 32% of the coatings supplied while refurbishing accounts for 68%. General aviation is split evenly between the two.
OEM may be the larger market overall, but both are important to success in the business, say major industry suppliers like Akzo Nobel.
"The two markets-OEM and refurbishing-are linked," said Jim Rowbotham, commercial director for Europe and the UK, Akzo Nobel. "Certainly the OEM sector is bigger, but we have a particularly strong presence in the maintenance sector, so we have about an equal business in both OEM and refurbishment."
According to Mr. Rowbotham, more than three quarters of Akzo Nobel's business lies in the commercial sector of the aerospace industry. "Commercial is a much bigger sector for us," he said. "The airlines and the companies that supply the airlines really make up the biggest share of our business."
Akzo Nobel has worked hard in recent years to grow its OEM business, he added. The company recently completed the acquisition of U.S. Paint's aerospace division. Under the terms of the deal, Akzo Nobel acquired the well known Awlgrip and Alumigrip polyurethane topcoats. The company believes this acquisition will improve its position in the corporate jet market as well as its overall position in the aerospace coatings market.
Deft, Inc., on the other hand, is a major player in the military market. Any country that purchases U.S.-built planes for its air force ends up purchasing Deft coatings as well, said Chris Athanasopoulos, marketing director at Deft, Inc. As a result, the company concentrates heavily on the refurbishment side of the market.
"We do quite a bit of refurbishing work for the government," said Mr. Athanasopoulos. "We have government contracts for topcoats and primers, and we provide coatings to most military bases."
Deft is looking to expand its commercial refurbishing activities as well. "We are looking to expand the commercial topcoat and exterior primer business," said Mr. Athanasopoulos.
The Major Issues
All coatings have a similar list of goals and purposes. Looks, protection, adhesion and durability are just a few. While looks are important, with aerospace coatings, protection is paramount.
"The main concern of the military for aerospace coatings is corrosion protection," said Mr. Athanasopoulos. "We develop primers to give the best corrosion protection. And for weatherability and UV resistance, we develop the ultimate in topcoats. That's why we developed our advanced performance coating (APC)."
Jim Stevens, market development director for aerospace and military, Sherwin-Williams Aerospace Coatings, agreed that durability has always been a major focus. Among the durability concerns to aircraft and their coatings are solvents, harsh cleaners, UV exposure, acid rain, and, amazingly, volcanic ash and sand. "When commercial aircraft fly into the Pacific islands, Asia and Hawaii, there is an abrasion issue from volcanic ash," said Mr. Stevens. "If you fly in a commercial jet, you will see many scratches on the windows. That's from the sand and ash. It's one of the big problems with wear on an exterior coating." To combat this, Mr. Stevens said that Sherwin-Williams coatings are 100% polyester, which creates a very durable, yet flexible coating system.
Testing these coatings to ensure that they work-and to ensure that they are better than the competition-is another hurdle that aerospace coatings suppliers must clear. "How do we prove that these new coatings will last over the lifecycle of the aerospace equipment?," asked Mr. Rowbotham. "We've got to prove these things by using accelerated test methods which is very, very difficult to compare versus 30 years of actual exposure."
As important as quality is in coatings, cost is becoming an ever-increasing concern throughout the airline industry and thus, the aerospace coatings industry as well.
|Small planes, like the Piper Meridian, fall into the category of general aviation, which accounts for 10% of the North American aerospace coatings market.
"Cost is becoming more of an issue," said Mr. Rowbotham. Major manufacturers like Boeing and Airbus are trying to rationalize the products and parts they use to drive unit costs down, he said. "So being a best cost producer is going to be a much more important part of our business than it has been. It used to be only engineering which led the industry, but that's starting to change now."
Engineering hasn't completely lost its value though, as evidenced by the trend to manufacture huge commercial aircraft. "The movement towards super large aircraft is an interesting trend," said Mr. Rowbotham. "With Airbus launching the A380, everyone is waiting to see what takes off from that. The aircraft is much bigger and that will make it cheaper to fly for passengers. It's a whole new philosophy in how to build aircraft. It forces us to look at the weight of our coatings, because the bigger the aircraft the more weight becomes an issue and the more we have to reduce the weight of our products."
The events of September 11 have also had an effect on the importance of cost in the airline and aerospace coatings industries.
"It's really brought a lot of focus on airline operators, which have always been marginal in profitability," Mr. Rowbotham said. "Companies were able to justify that previously, but the events of September 11 have really caused everyone to focus on costs."
Another piece of the fallout from September 11 has been a slowing in new aircraft orders, meaning major manufacturers like Boeing and Airbus have cut back production.
"The big programs are down," said Mr. Rowbotham, "and there has been a reduction in confidence in the airlines, and that holds consequence for us. However the underlying trend is for more travel and a strong future for the aerospace industry. We feel this will start to show again by 2003."
He did note that the general aviation sector is holding its own as wealthy people and corporations are starting to use their own aircraft for security reasons. This sector, he believes, is a potential area for future growth.
Sherwin-Williams has also been affected by the slowdown in business, but sees hope on the horizon.
"Since September 11, business has slowed down quite a bit," said Mr. Stevens. "But since February, it has started coming back. Companies are starting to paint more aircraft again."
Deft also saw a reduction in sales after September 11. "The global airlines are not buying new aircraft and have reduced paint use. The military business is also standing still," said Mr. Athanasopoulos. He attributed this reduction in military refurbishing to aircraft being in service out of the country, rather than at a domestic base where repainting would be more feasible.
While the market deals with economic issues, environmental factors continue to drive R&D and reformulation among suppliers. Chromates, which are found in aerospace paints and primers because of their excellent track record for corrosion resistance, are fast becoming taboo in the industry because of their negative health effects.
"Chromate containing primers, which neutralize any corrosion cells, have developed a terrific history of adhesion to the metal and the topcoat to it," said Mr. Phillips.
When a plane is refurbished, blasting materials, fractured ice or cornhusks are used to strip off the coatings without damaging the aluminum. The stripping process generates a great deal of dust in the air. "Dust is the no-no with the chromates. If you ingest the dust it's a problem, since chromates are carcinogenic," Mr. Phillips said. "So moving away from chromate containing primers is a key issue."
Deft has been one of the most active companies in chromate elimination, according to Mr. Phillips.
"Reduction in VOC, reduction or elimination of HAPs and also the reduction and elimination of chromates are all challenges we face," said Mr. Athanasopoulos.
Mr. Rowbotham said that Akzo Nobel is also active in the search to find alternatives to chromium containing coatings. The company recently introduced Aviox CF primer, a non-chromate primer, which is used on the fuselage. "It's a unique technology," said Mr. Rowbotham. "No one else has managed to make this work."
A few months ago, the first jumbo jet painted with Aviox CF, by carrier KLM, was stripped after six-years in service. According to Mr. Rowbotham, the plane shows no signs of corrosion greater than would be found with a chromate system. "So we've now got a technology that could allow airlines to eliminate chromates completely from their planes," he said.
|A painter spraying Sherwin-Williams Aerospace Coatings' Jet Glo as the first coat of topcoat to a business aircraft.
The success of Aviox CF, he said is a result not just of corrosion inhibitors, but also the binder system. Aviox CF employs a unique binder system invented by Akzo Nobel.
In addition to chromates, the elimination of other VOCs is also an important goal in aerospace coatings. The relative infrequency of new coatings development for the aerospace market has made this a difficult goal, according to Mr. Rowbotham. "The situation in aerospace is that for the past 30 years, certainly in Europe, there's been very little change in much of the technology," he said. "Over the past 10 years, however, we have redesigned nearly every coating in our range to allow for VOC reductions and we may have to do this again over the next 10 years."
According to Mr. Athanasopoulos, Deft has recently made a great deal of progress in this area. "There is conversation in the U.S. government about reducing VOCs from 340 g/l and topcoats from 420 g/l to even lower, but it hasn't been decided yet," he said. In anticipation of such a move, Deft has developed a zero VOC primer qualified to MIL-PRF-85582C type I class C2 for military use. According to Mr. Athanasopoulos, the company is also approved to MIL-PRF-85285D type III for a zero VOC topcoat as well.
Sherwin-Williams is also looking to make headway in the quest for an environmentally sound primer. "We're looking into waterborne technology on the primer side to stay ahead of regulations," Mr. Stevens said. "The industry in general is looking towards water-based and low- and zero-VOC coatings."
Improving the environmental friendliness of coatings is important, but manufacturers are also interested in better and faster drying coatings, a demand that coatings makers are working earnestly to meet.
"The industry is always looking for new and innovative ideas," said Mr. Stevens. "Some OEMs are selling 200-300 airplanes a year which makes turnaround times critical. Airplane manufacturers are looking to keep cycle times and days of production down, and so they are looking for coatings that are faster. This forces manufacturers to the limit. It's a great challenge to come up with more user-friendly coatings."
Deft, in order to meet the increasing demands of an ever evolving military market, has developed an advanced performance coating (APC), Defthane ELT. It is a topcoat that provides additional weatherability and is qualified to MIL-PRF-85285D Type I specification. According to Mr. Athanasopoulos, a traditional topcoat normally lasts three years before refurbishment is needed. APC increases the lifetime of the coating to five to seven years. "The military is in the process of converting the entire military and the air force to that product," he said.
Also in the works at Deft are coatings to be applied to the U.S. military's new F-22 fighter and the Joint Strike Fighter (JSF).
Sherwin-Williams Aerospace Coatings, which recently added several new distributors, has also come out with new Jet Glo Express and Jet Flex aerospace coatings. Jet Glo Express is a faster drying coating for overall base application on medium- and large-sized aircraft. Jet Flex is an interior aerospace coating designed for the finishing and refinishing of plastic, metal, and composite surfaces within the cockpit and cabin. It is available in water- and solvent-based formulations.
|New aircraft, like the Airbus A321, provide new challenges for aerospace coatings manufacturers who must formulate coatings that will adhere to a variety of surfaces in addition to aluminum.
Efforts in R&D may be one way to help the aerospace market weather the downturn following September 11, but there are other factors at work that will also help manufacturers and suppliers alike.
The continuing war against terrorism will speed the development in new military technologies, such as the "Predator" unmanned aircraft flying over Afghanistan.
|An Airbus A319, flown by China Eastern Airlines.
And according to Amherst, NH-based consultancy Technology Assessment Associates (TAA), three out of every 10 commercial aircraft, roughly-15,000 aircraft-will need to be replaced over the next 20 years.
These factors suggest that opportunity in the aerospace market will continue to take flight in coming years.
Is DuPont on the Runway?
The skies of the aerospace market may get a bit more crowded in the coming months as another major coatings maker prepares to take off into the aerospace realm. DuPont has voiced its intentions to break into the market.
"DuPont is committed to bringing aerospace specific technology to the market and has put a major effort behind it," said Ed Donnelly, group vice president for coatings colors technologies, DuPont. According to Mr. Donnelly, the company will use extensions of its automotive technology where applicable, but is also in the process of developing "special novel formulations for the aerospace industry."
What does this mean for current players in the aerospace market? According to Phil Phillips, president of PGPhillips and Associates, Inc., DuPont's entry may not mean much right away. Mr. Phillips feels there's a "major uphill climb for DuPont."
"DuPont will not make an immediate (the next 3 years) impact in the commercial or military aerospace coatings markets unless they acquire one of the few suppliers currently in a market challenger or leadership control," Mr. Phillips said. However, he noted that DuPont could advance fairly fast through the careful recruiting of key aerospace supplier individual players for this market.
"With this latter tactic, testing logistics alone will hold out significant market penetration for over four years. However, in the smallest market, the general aviation segment, where automotive aftermarket (AM) urethane systems are sold, DuPont has a strong market challenger position, and could accelerate its penetration quickly from a small general aviation base to a market leader share by pouring resources into it."
DuPont's Performance Coatings Business tallied sales of $3.2 billion in 2001. The vast majority of DuPont Performance Coatings sales come from automotive coatings operations-both on the OEM (35%) and aftermarket (45%) sides of the business. It ranked 6th in Coatings World's 2002 Top Companies Report.