OEM and Industrial Coatings Market

By Kerry Pianoforte | August 16, 2005

Industrial coatings manufacturers must continue to develop value-added products in order to stay ahead in this tough market.

While the industrial and OEM coatings industry continues to operate in a difficult environment, there's been some reason for optimism. Industrial coatings manufacturers Coatings World spoke with indicated that increased focus on environmental compliance and value-added features are driving growth. In addition, despite less than impressive numbers in North America and Western Europe, burgeoning markets are a bright spot for industrial and OEM coatings manufacturers that can supply products in these regions. As industrial opportunities open up in markets with high economic growth rates and OEM manufacturers shift production to lower-cost countries, coatings manufacturers are following suit.

According to industry experts, demand in North America and Western Europe is at best considered "low," however, some areas are faring better than others. Overall, the bright spots for the industrial coatings market are Asia and Eastern Europe.

"The demand in North America is flat to low," said Greg DeCamp, general manager, PPG's TrueFinish industrial coatings and powder coatings. "Most improvement in demand has been in our business in Asia. There has been a fundamental shift from North America to Asia in automotive parts and accessories, consumer electronics and consumer durables. Some of these are for export back here but a lot are for domestic consumption in China."

"Higher growth in Southeast Asia and China results from the shift of manufacturing to that region, both for eventual export of finished products back to North America and Europe and for the growing domestic markets, especially in China," added Thomas Hoenle, director of BASF's industrial coatings business in North America.

John Deere Names BASF Partner Supplier

John Deere Welland Works in Welland, Ontario has recognized BASF as a "Partner Supplier," the highest level in the John Deere "Achieving Excellence" supplier program.

BASF Canada Specialty and Industrial Markets, with support from BASF's Commercial Transportation Solutions (CTS) group based in Southfield, MI, supplies electrocoats and other coating products to the John Deere plant in Welland, which manufactures utility vehicles and attachments for agricultural equipment.

From left, Carl Weber, manager for BASF in the U.S.; Dan Augustine, manager, strategic supply management for John Deere's Welland Works and Robert Horton, CTS business development manager for BASF.

According to a report released by the U.S.-China Security Review Commission/U.S. Trade Deficit Review Commission, in the past decade, U.S. trade and investment with China has increased dramatically. Today China has become the U.S.'s fourth-largest trading partner, following Canada, Mexico and Japan. According to the report, production shifts out of the U.S. into China are concentrated in certain industries that are major users of industrial coatings, including electrical equipment, household goods, toys and wood and paper products.

Although the majority of industrial and OEM growth is taking place in Southeast Asia, there has been modest growth for the industrial coatings market in North America, with some sectors faring better than others.

According to Bill Deckard, national account manager, construction, Krylon Products Group, there's good news coming from his end of the market: companies that had cut back on expenses over the past few years, are now ready to invest in some much-needed maintenance. "Now that there has been a turnaround in the economy, plants and facilities are getting back to maintenance and upkeep," he said.

E.Wood Ltd., a UK-based coatings manufacturer, is also seeing some positive movement. "We are seeing most of the growth in this market from water companies who now see semi-structural spray lining of water distribution pipes as a lower cost, lower disruption alternative to full replacement technologies," said Colin Thackeray of E.Wood. "This is especially the case in urban areas, as the use of this product means that service connections do not need to be added after the lining has been installed, as the product spray around and does not block existing service connections when applied insitu."

"We have seen significant increases in orders this year," said Thomas Valente, president, LuminOre, Inc., which manufactures composite metal coatings. "The increase has been equally balanced between new business and reorders from existing customers. The largest increases are in architectural and building areas," he said.

Improved design, color and styling are key issues for industrial coatings' R&D labs, according to Greg DeCamp, general manger, PPG's TrueFinish industrial and powder coatings.

One factor that continues to drive the industrial coatings market is the push toward environmentally compliant products that deliver more value.

"The coatings industry is and will continue to be a vital and high-performing one, with potential for incremental growth," said Hoenle. "However, coatings companies have to aggressively pursue innovation and new technologies that will not only sell more coatings, but will also offer efficient and ecologically friendly solutions for their customers."

According to Hoenle, it is increasingly important for coatings companies to focus strongly on the added value of their products and their overall offerings. "We have to offer innovative technologies and process concepts that help our customers reduce the total cost of the paint process while maintaining and even enhancing quality levels," he said.

Other areas industrial coatings manufacturers are addressing include the desire for lower energy consumption and higher efficiency. "The energy consumption issue deals with the cost of curing the coating on the substrate in typical coil and extrusion applications," said Hoenle. "On the end-user front, so-called 'cool' coatings that lend themselves to green building and LEED compliance will remain a growth area, whether for residential or commercial construction. In the meantime, mid- to long-term technical investments will be focused on developing UV and EB technologies."

Other areas of development include research into acrylics. "Increasing the durability of acrylics and developing their rust inhibitive qualities are a paramount goal," said Sharon Sammon, product manager, Krylon Industrial Coatings, Krylon Products Group. "We will continue to develop products to be sold into restricted areas. These regulations are likely to become the norm over time."

According to Deckard of Krylon, there is still significant potential for low VOC coatings and products that are user-friendly that have a cross-section of application possibilities. "The maintenance and protection of substrates will always be a concern and top priority for every facility," he added.


In terms of R&D, the next frontier for industrial coatings is developing greater aesthetic value, and delivering improved solutions for difficult to coat substrates such as plastic.

"Fundamentally, over the past 25 years research has been based on performance," said DeCamp. "We have a lot of products that perform very well; the next wave of focus is around design, color and styling." According to DeCamp, PPG's R&D work is focused on developing coatings to decorate alternative substrates.

"There are certain things that continue to get developed, specific niche coatings do a pretty good job of protecting steel; now the focus in on coating different substrates, such as plastic and MDP," said DeCamp. "Inherently plastic isn't easy to paint, it certainly isn't easy to bake. The biggest challenge is getting the desired performance characteristics."

While many industrial and OEM applications are utilitarian in naturewashing machines, filing cabinets or cell phonesmanufacturers of these products are always looking for a way to set their product apart from the competition. Coatings companies have recognized this and are looking to capitalize on the role their products can play in styling that not only catches a consumer's attention, but can lead to a sale.

"You can buy a number of different mp3 players, but people like the Ipod because of its design," said DeCamp. "We have the opportunity to give companies that support in terms of color, texture styling and expertise. Our ability to differentiate our customers' products in the market is our most significant opportunity for growth."

Another goal for industrial coatings manufacturers is to help their customers and sometimes their customers' customers, reduce their costs and increase their profitability. As a result of their R&D efforts industrial and OEM coatings manufacturers have developed a number of new products to meet their customers' needs.

BASF's latest offerings include Ultra-Cool PVDF and Superl SP II ULTRA-Cool siliconized polyester cool coatings. These coatings increase the reflectivity of medium to darker colors used in exterior construction applications, thus reducing the energy needed for cooling. "It has been very well received by the industry and by a broad range of governmental and regulatory bodies as a product that can help mitigate the energy-consuming effects of sunlight including the 'urban heat island effect,'" said Hoenle.

LuminOre has developed a cold-alloying process that allows cold combining of its composite metals. While retaining the qualities of the single metal coatings, users can make a liquid matrix of several individual metals and combine them to achieve an endless array of metal colors. For example, LuminOre brass and aluminum are cold alloyed to produce the look of white gold. In addition, LuminOre's QuiCoat line offers a product that will spray smoother than previous products, cure at an accelerated rate and polish much faster than previous materials, according to Valente.

E.Wood Ltd. has developed Copon Hycote 169HB, a new rapid-set polyurethane system. This spray applied semi-structural lining coating can be applied to cast, ductile, asbestos and previously coated drinking water pipelines from three to 36 inches in diameter for rehabilitation purposes. The product offers an alternative to conventional polyethylene replacement technologies.

"With this semi-structural product, we are ensuring that distribution pipes that may be aged, but do not yet fall into the category of requiring full replacement, can be given a new, minimum 50 year life span without the cost and disruption of replacing these pipes," said Thackeray.

As long as industrial coatings manufacturers continue to rise to the challenge and offer their customers added value, the market will continue to grow.

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RPM's Stonhard Acquires National Building Facilities Services

The StonCor Group Inc./Stonhard division, a wholly owned subsidiary of RPM International, has acquired National Building Facilities Services (NBFS), a regional janitorial and facility care services company operating in the Mid-Atlantic states.

NBFS, based in Philadelphia, PA, offers day-to-day janitorial and facility care services to businesses that require daily upkeep and regularly scheduled facility maintenance, including healthcare facilities, warehouses/distribution centers, retail stores and supermarkets. In addition, they offer post-construction cleanup services to general contractors throughout the Mid-Atlantic regions.

Stonhard, a manufacturer of high-performance polymer systems, provides a wide range of seamless flowing solutions for applications. NBFS, with sales of approximately $10 million, is projected to achieve significant revenue growth in the near term, with synergies between NBFS and Stonhard facilitating strategic future revenue growth, according to the company. "Both companies are now in a position to strengthen their existing core customer relationships with new products and services that add value to their facility care solutions," said David Reif, CEO, The StonCor Group, Inc.

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