When a customer drops off his car at the local repair shop, he may not think about more than how much his insurance rates will rise and when the vehicle will be back on the road. But behind the scenes, there is a bevy of activity at the auto shop. Employment woes, increased competition, insurance company pressure and environmental regulations are changing the business landscape. Refinish specialists know that time is money, and despite these factors, the bottom line remains getting that car on the road again as soon as possible.
More than ever, paint suppliers are finding that they need to do more than sell and ship products to these customers. Paint manufacturers are actively playing a role in helping the repair industry find solutions to problems that go far beyond primers and topcoats.
"It's not just about selling paint anymore," said Darlene Eilenberger, manager, brand marketing, BASF Automotive Refinish (North America). Some of the major issues the industry is dealing with are stiffer VOC regulations, shop consolidation, reductions in volume, increased competition and pressures from insurance companies to reduce costs at the shop level.
That opinion was echoed by Joel C. Hart, vice president, automotive, at Valspar. "Market compression, consolidation, insurance changes and eroding margins are some of the problems facing the industry. More and more, a professionally run shop-whether it is a three-man shop or a mega collision center-has found it tougher to survive in today's refinish world."
Of the issues affecting shop owners, one of the biggest concerns is hiring qualified personnel. This is an issue owners are dealing with on a daily basis, and paint companies are doing what they can to improve the situation.
"There are difficulties in finding and keeping trained technicians," said Keith Smith, market services manager, DuPont Performance Coatings. "It used to be a market of craftsmen, but now, in addition to being a craftsman, you need working knowledge of computers, mathematical skills, etc." (See side bar).
In addition, shop owners need skills outside of application techniques to successfully run their business. Coatings companies are becoming mentors of sorts, helping smaller shops with different aspects of running their business, including marketing and advertising and front office operations. According to industry insiders, in many cases this has become necessary because smaller shops are often started by a great painter, someone who is more capable with a spray gun than accounting procedures. In fact, some firms are taking a "back-to-school" approach when it comes to training refinish personnel.
BASF offers VisionPLUS University, a professional business management seminar. The company has added new courses (available in the fourth quarter) focused on electronic communication, professional business writing and high-impact presentations in addition to traditional shop productivity, end-user satisfaction and environmental issue-related forums, according to Jay Johnston, manager of training with BASF Automotive Refinish (North America).
|Spray techniques are critical to the refinish process.|
In addition to in-house training offered by paint suppliers, companies like BASF, PPG, Dupont, Martin Senour and Sherwin-Williams also team with industry associations including ICAR, ASA and UTI to help train the industry.
Like every segment of the coatings market, stricter environmental issues continue to be a factor in product usage and development. In the refinish segment, VOCs and HAPs are major areas of contention both in North America and Europe.
"Increasing VOC regulations have been and will continue to be a major force acting on the industry," said Guy Bargnes, director of marketing, for BASF Automotive Refinish (North America). "The disparities in regional regulations contribute to the challenge of developing and distributing compliant products at competitive prices."
Brian Koevenig, lab manager, BASF Automotive Refinish (North America), added, "More areas will look to restrict or eliminate heavy metals, especially chromium."
In Europe, the move to greener products continues. "There is real push towards water-based technology in Europe," said Mr. Smith of Dupont. "We're preparing for the government-stated changeover date of 2007 by focusing on waterborne systems now."
Make It Quick
In addition to environmental issues, substrate changes and more sophisticated coatings technologies used at the OEM level are also shaping technology advancements in the refinish sector. "New substrates and raw materials will also help drive technology changes," said Mr. Hart of Valspar.
While waterborne paints and other low VOC technologies are needed in the marketplace, fast and consistent cycle times are key to many shop owners, especially in the U.S. market. Therefore, R&D development in the refinish market is centered on increasing productivity and speeding up the painting process so shop owners can get vehicles back on the road as quickly as possible.
"We want to help them eliminate bottlenecks and save time," said Mr. Smith.
"The most recent product launches by BASF have focused on reducing the cycle time that it takes to complete a paint job," said Mr. Koevenig. "We have launched a number of clearcoats that are designed to enable a painter to move the vehicle out of the spray booth more quickly, thus getting more vehicles painted, since the spray booth is one of the major bottlenecks in a body shop." Among some of the innovations in this area are BASF's Fast-Drying CTR (Cycle Time Reduction systems), 10 Minute clearcoats and the Small Damage Repair System, which enables painters to make repairs to small scratches without clearcoating the entire panel, another time-saver. "All of the introductions are meant to help the painter complete more vehicles, thus improving productivity and increasing profits," said Mr. Koevenig.
Other new time-saving launches include Sherwin-Williams' ULTRA 7000 CC930 Speed-Plus Performance clearcoat, Martin Senour's 8660 air-dry hardener and 860 short-hardener and Dupont Performance Coatings' Ultra Productive primer and sealer. In addition, UV technology and alternative methods, such as roller applied primers and aerosols, are also quickening the pace. With PPG's UV-Speed Prime, a single spot repair can be prepared and ready for topcoat in less than six minutes.
|As computer technology (like Dupont's VINdicator) becomes a necessity in helping shops more closely match colors, getting personnel up to speed is critical. Paint suppliers are playing a role in this education and training.|
|In 1992 BASF debuted the world's first waterborne basecoats for automotive refinishing, the Glasurit 90 line.|
Occasionally, speeding up the refinish process involves legwork before the paint is applied. DuPont's VINdicator works off a car's VIN number to determine the exact color of that model. The choices are narrowed according to plant statistics for the car on the day it rolled off the paint line at the manufacturing plant. By doing so, if a yellow was running on the dark side that day, the shop can quickly-and more accurately-select the color.
Matching the original color on a classic or vintage car can also be a difficult process. BASF has tried to make the task easier with its new Antique Color Chip CD. The CD contains digital images of more than 5,700 color chips of models from 1936 to 1972, including brands such as DeSoto, Edsel, Nash, Rambler, Pierce Arrow and Studebaker, as well as Chrysler, Dodge, Ford, Cadillac, Oldsmobile and others.
"We know how important authenticity is when you're restoring or repairing a classic car," said Paul Marshall, color lab technical manager, BASF Automotive Refinish. Most formulas are available in Glasurit, R-M and Limco 1-2-3-4 lines, and can be found using the company's SmartColor or SmartTrak electronic formula retrial systems.
Down the Road
Even with advancements in technologies, the health of the automotive refinish market is tied directly to the number of vehicles there are to repair. Industry insiders note that conditions vary in this estimated $5-6 billion market, depending on different regions of world.
In the U.S., the market has been hampered by a drop in the number of units to repair, safety advances such ABS brakes and third brake lights (resulting in fewer accidents), improved OEM coatings that last longer, and of course, improved refinish formulations such as higher solids that provide better coverage.
"The refinish volume continues to drop about two to three percent per year," said Ms. Eilenberger.
Mr. Hart of Valspar also noted softened demand. "Market conditions have been soft for the past two years and continue to shrink in volume due to product efficiency and repair techniques," he said.
Still, some observers contend 2002 will be better. "Sales were below expectations in 2001, however sales have rebounded strongly in 2002," said Mr. Smith of Dupont.
While improved refinish coating technologies in the U.S. and Europe spell mostly flat market conditions ahead, undeveloped areas such as Asia and India-where less sophisticated painting technologies and techniques are used-offer opportunities for higher volumes.
To this end, most major manufacturers have signed accords to expand their operations into these areas, placing themselves at the ready for growth. Among the latest moves are BASF's acquisition of the automotive refinish business of Wattyl (it had been in a JV with the company since 1999), and its distribution accord inked with P.T. Catur Warnaindah Sentosa. Through the latter deal, BASF will sell its R-M brand refinish paint in Indonesia.
Akzo Nobel signed deals to strengthen its refinish operations both on the R&D and distribution sides of the business. The company opened a new research center in Bangalore, India for refinish paint and also acquired Jouanne S.A., a French paint distributor.
Regardless of where the collision repair business is-Boston or Bangalore-or if its a "mom 'n pop" shop or major refinish chain, coatings suppliers remain focused on the bottom line: keeping them in business.
"The market is diverse and changing," said Mr. Hart of Valspar. "However, we believe that all shops have the potential to be successful and profitable."