The Powder Coatings Market

By Christine Canning Esposito | September 19, 2005

With “easy” conversions and double-digit growth gone from the U.S. and Western Europe, powder coatings manufacturers are eyeing Asia for growth. But will spiraling raw materials prices and the inability to promote the value of their products hamper their efforts to remain profitable?

Powder coatings manufacturers would love to turn back the hands of time to when there was an abundance of companies considered "easy" targets to make the switch from liquid, when powder seemed to be the most viable alternative and when double-digit growth was the norm in the U.S. and Europe. It was the best of times.

And while today isn't necessarily the worst of times, things aren't nearly as rosy as they were a decade ago. The allure of double-digit growth caused a flood of entrants into the powder coatings market, and as a result, there are now too many players with too much capacity. And, some critics charge they are selling products that appear to be too much alike.

Some insiders say companies aren't selling the value of their products, and purchasing managers at end users-whose job it is to buy products at the lowest possible price-were having success at driving down costs. Also, the excitement of Internet-based selling further fueled a price-per-pound mentality in the marketplace. Add to that rising costs of raw materials, a shifting manufacturing base and a steady gain in the performance of competing technologies such as waterborne and radiation-cure as viable options for coating needs. It hasn't been easy for powder coatings manufacturers, and some say it's time for the industry as a whole to take a good look in the mirror.

"Frankly, the powder industry is not facing reality; it's like an ostrich with its head in the sand," said Alan Barton, vice president, business group executive, coatings at Rohm and Haas. "Most players are pretending the issues will go away. Slow down in conversions, migration to regions with lower manufacturing costs, forever changed raw material costs-these are realities. I don't think anyone is happy with the profitability of their powder business."

The market has changed, and it continues to do so, especially on a geographical basis.  According to statistics from Irfab Chemical Consultants, the Brussels-based marketing research group, growth in Europe over the past decade was approximately three to four percent. In North America, sales have been similarly sluggish.

All eyes are now on Asia, specifically China, as well as Eastern European countries such as Poland, Russia and former CIS countries, which are also showing promising growth projections.

While growth rates for Asia vary between the low- to mid-teens and the high 20s, all sources agree China is the hot spot. Demand is being fueled by the country's own needs and the shift of manufacturing away from mature marketplaces that have higher production costs.

Naturally, growth to Asia and elsewhere hasn't gone unnoticed by powder companies that have seen their margins in the U.S. and Europe slide as the marketplace matured and became too crowded. Powder makers have been forced to rethink their efforts. Some are opening up new facilities and moving production to mirror the market's growth pattern.

In April, Rohm and Haas opened its first powder coatings facility in Shanghai. A month later, it announced that it would consolidate its North American powder coatings operations into two sites, closing its Wytheville, VA plant by the first quarter of 2006. Rohm and Haas is transferring U.S. production of powder to its Warsaw, IN and Reading, PA facilities.

"It's not a go-go market. You can't keep excess capacity waiting for an order," Barton said about the rationalization effort, adding that the Shanghai plant will aim at Rohm and Haas' "power alleys," such as automotive wheels, suspension parts and architectural aluminum.

Still, the North American market does offer opportunities for growth, as proven by companies such as Hentzen Coatings. "From our standpoint, while the overall market is growing three to five percent or less, to us the market is wide open. We have been aggressive in going after certain markets. We have seen an increase in sales," said Fred Wells, sales manager for the general industrial group at Hentzen, which is based in Milwaukee, WI.  

Hentzen entered the market when it realized many of its liquid customers were converting to powder technology. "The bottom-line was, if we wanted to keep those customers, we had to manufacture powder," Wells said.

Today, Hentzen considers itself more of an "engineering" company. "Most of our products are made for specific customers. We have to get creative in engineering design, and maybe for us that's easier," Wells said.

As a considerably smaller player in the powder coatings market, Wells contends Hentzen's size has enabled it to gain momentum in an otherwise slowing market. "We go after mid-size, mid-range operations that are small enough that the big guys overlook them but are large enough to warrant the certain type of products and services that we provide."

How much has Hentzen grown? Wells wouldn't reveal specifics, stating only that over the last few years, the firm increased its overall staff 50% and has grown sales even higher. With a stronger powder business, Hentzen is now looking to expand, evidenced by its December 2004 acquisition of BASF Coatings' Batavia, IL manufacturing site, including its drum and pipe coating business. Although Batavia doesn't currently handle powder production, Wells said it does provide the company with another warehouse that puts it closer to its customers.

In addition, Hentzen has been working on a color card, which it plans to introduce by the end of the year. The 50-shade card targets custom job coaters, and is the company's first real step toward offering more of a stock product.

As Hentzen thinks bigger, its larger competitors are in many ways thinking smaller, hoping to become more agile to answer the changing demands of  the U.S. market.

"Large volume business has gone overseas or outside the country," said Dave Heflin, market manager, architectural and furniture at Interpon, which is part of Akzo Nobel.  The U.S. marketplace is moving to smaller batches, with faster turnaround time and more niche applications. "We have to be prepared for that," Heflin said, noting that Interpon has invested heavily in positioning for smaller batch sizes, scheduling that allows for more flexibility and innovative equipment for powder manufacturing.

Although powder has been around for a while, it is still a young technology.  For the most part, powder coating users still demand a lot of "hand holding," say industry insiders.

"In flat to shrinking powder consumption, our market strategy has to be around gaining share," said Stephen Houston, vice president of sales and marketing for DuPont Powder Coatings Americas, which according to industry sources, has gained share in recent years by focusing in on hands-on selling tactics when its competitors were working to build e-business operations.  

One of DuPont's tactics is its Star Coater program. Through it, DuPont has formed so-called "20 groups," a pool of non-competing users of powder coatings that team up to learn from each other's operations, going so far as auditing each other's lines.

DuPont also provides help to Star Coaters away from the line, offering assistance in areas such as human resources, insurance, customer service and marketing. In addition, the company takes Star Coaters on a powder pilgrimage. This October, the group will visit custom coatings shops in Europe, France, Italy and Belgium over a weeklong period. Last year, eight Star Coaters came along; this year DuPont will escort more than 20 participants, according to Houston.

One goal of the European excursion is to spur powder use in the architectural market in the U.S. Europe's use of powder in architectural applications is extensive. In the U.S., the technology has yet to gain a foothold, but major U.S.-based producers see potential.

"There is a tremendous opportunity in the architectural market in the U.S. Performance technology and market acceptance is the missing link here," Houston said.

"The U.S. is now at a turning point for powder" for architectural applications, said Heflin, who is serving as the president of the Powder Coating Institute (PCI). He contends that as the powder business has become more global, the confidence level has grown, and U.S. users could become more accepting of powder in the architectural domain.

Some already are. Two new vertical powder coating systems for coating aluminum extrusions are starting operation in the U.S. The first vertical line was scheduled to begin operation last month at Extruders Texas, the Wylie, TX-based division of the Atrium Group, a large producer of aluminum windows. The line will provide a complete range of standard colors, including metallics, textures and the Effecta process, a proprietary automated process, which gives aluminum products the look and feel of wood. The installation is being handled by Trevisan Cometal North America, a unit of Trevisan Cometal, the Italian organization that created the Effecta process.

Trevisan considers the line a significant milestone. "The contract signed today not only confirms the technological and market leadership of our group in vertical powder plants but represents the fruit of many years of technical and commercial efforts aimed at introducing powder coating to the difficult U.S. market," Silvio Maria Trevisan, chairman of Trevisan Cometal, said in announcing the deal last spring. "This order therefore has a specific value in terms of future prospects, both in the engineering and coating divisions… penetrating the American market was one of our principal objectives, and today we have taken a very important step in this direction."

This fall, Indalex of Gainesville, GA, will begin production on its vertical powder coating line. Indalex is a supplier of extruded aluminum components and services for the building and construction, information technology, machinery and equipment, consumer durables, transportation, electrical and automotive industries, among other sectors.

"I am excited that these new vertical extrusion powder coating lines will soon begin operating in the U.S. as they will help give powder coating the influence to better penetrate the U.S. market," said  Greg Bocchi, executive director of PCI.       

"Un-commoditizing" The Market

But even as companies make headway with powder technology in the architectural sector, critics contend the market has suffered from per-pound-based selling tactics, which has driven down prices.   

According to Chemark, a Southern Pines, NC-based coatings consultancy, the average price per pound for powder has dropped four percent over the past four years in the Americas. In Europe, there was a €0.07 drop in average euros/kg over the same period.

"There is only so much a coating supplier can do to take cost out of the formulation," noted Tom Frauman, global marketing director, powder coatings, at Rohm and Haas.

In addition, a lack of differentiation among offerings hasn't helped the industry communicate the value of their products. This begs the question: have powder coatings become a commodity?

"Absolutely not," answered Frauman. "We are not selling a basic chemical. The value a customer derives from our product depends heavily on our tailoring the powder formula to fit the customer's specific application, plus spraying, curing and recovering the powder overspray in a way that results in the highest quality at the lowest cost."

"You will always have this discussion," said Heflin of Interpon. "There is more emphasis on powder producers to differentiate to have different technologies and service. There is a difference in technology."

"The industry needs to 'un-commoditize' this market. We need to help customers understand all the elements in the applied cost, not just the per-pound cost," said Houston. "We need to reference the different values we can bring customers. Through those values propositions, cost per pound can become an insignificant piece when it comes to selection of a vendor."

As OEMs move to other regions to capitalize on lower costs of production, destination markets are showing interest in sophisticated powder technologies, not just lower cost products. According to Frauman, Rohm and Haas' powder business is doing well with "premium technologies" in China and Latin America. He said demand for these technologies is present in emerging technologies, but customers find their current choices limited by suppliers offering "plain vanilla" products.

That's promising news for companies that are ready and able to do business there. "There are huge growth numbers in Asia. You have to gear up-once business moves from the U.S. to China-to supply it there," said Houston.  "But," he continued, "there's a difference between having global facilities and being a global supplier. Can you formulate in one part of the world and produce it in another part of the world?"

Being able to supply products wherever a customer needs it is imperative in any business today, and powder companies are as pressed to operate globally as their liquid counterparts. Firms are always looking to better position themselves to gain share or at best maintain their current customer base. And with a glut of powder suppliers, the marketplace appears ripe for consolidation.

DuPont is expanding in Eastern Europe as well as in Asia, according to Houston, the company is also looking closer to home in the Americas. "We are aggressively looking to expand our reach in Canada," Houston said. In addition, DuPont recently took complete ownership of DuPont Mexico, which since 1997 had been operating as a joint venture with then Herberts-O'Brien (DuPont acquired Herberts GmbH in 1998).

Akzo Nobel has aggressively expanded its reach through several acquisitions over the past few years, including the 2002 purchase of Ferro's powder business in the Americas and the Asia-Pacific region. "We have now streamlined operations systems, and you will begin to hear a lot from us," said Heflin.

Keeping Their Eyes on the Prize

Whether through manufacturing, marketing, sales tactics, service or acquisition, companies need to be smart about the paths they choose if they want to capitalize on growth offerings in the global powder coatings market. After all, powder professionals know liquid still dominates the market.

The major coatings companies Coatings World spoke with all agreed that moving into new segments-such as architectural-is critical, especially in mature markets. But they recognize that new technologies and chemistries will give powder the power to make the next big leap forward.

"The path forward will be technology-led; specifically, innovative product platforms opening new applications for powder coatings," said  Frauman.  "We must not lose sight of the fact that powder coatings represents only roughly 12% of total OEM product finishing in Europe and North America, with nearly endless headroom for technology-led growth."

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Powder Coating Resolves

High Purity Water Vessel Requirements

By Ted Hutton, Technical Polymers, Arkema Inc.

With its reputation as a pioneer in semiconductor technology and its position as a market leader in embedded processors, Freescale  Semiconductor does not take chances when selecting contractors to do work in their facilities.  So, when a capacity expansion of their manufacturing line at their Austin, Texas facility necessitated the refurbishment of the rubber lining of a large vacuum degassifier tower, Lead Ultrapure Water Engineer Jeff Covington chose a reliable, responsive contractor to install a new liner. Covington was searching for a superior protective inner barrier for a tower with a straight shell length of 34 feet and a diameter of 7 feet. 

The barrier coating needed to provide reliable long lasting service in contact with 150°F deionized water at pressures ranging from full vacuum to 100 psi.  "It wasn't difficult for me to specify Kynar PVDF as the high purity contact surface.  Many of our piping systems in the plant are already made of Kynar PVDF and we have always been extremely satisfied with its performance," says Covington.  He then called a trusted leading applicator of dependable high purity coatings-The Fisher Company.  "We have had Fisher Company in to the plants several times to install various high purity linings and to add nozzles, etc. to work they had done previously.  They are very responsive, flexible and professional."

"We were very excited to be contacted for this project," states George Fisher, founder and president of Fisher Company, "It is the largest Kynar PVDF powder coating project completed to date.  We recommended Kynar Flex 2850 PC grade powder coating due to the level of high purity required for this application. This also was a great opportunity to address negative perceptions people have about powder coatings for semiconductor applications.  Nine times out of ten, powder coating is the best option, particularly when complex internal shapes are involved.  Sure this job was tough, but we knew that a Kynar Flex 2850 PC powder coating was the best solution we could offer our customer."

While the dimensions of integrated circuits continue to diminish, demands for cleaner processing equipment are continually increasing. Kynar Flex 2850 PC continues to meet the stringent daily requirements of Freescale Semiconductor's high purity process. Kynar Flex 2850 PC powder coating provides a thick continuous surface, preventing the formation of regions which could promote microbial growth and result in contamination.  In addition, the seamless uniform thickness of the coating prevents the formation of failure points, which can become vulnerable during the contraction and expansion of the vessel due to pressure and temperature fluctuations.  The strong bond that Kynar Flex 2850 PC forms with the metal surface prevents disbonding and permeation.

The powder coating process offered an advantage in the application process because it allows complex internal shapes to be coated consistently.  The degassifier removes unwanted gasses such as oxygen and carbon dioxide before they enter the high purity manufacturing line.  The clamps for the electropolished packing support screen and internal dip tubes were problem areas for the rubber lining that was in the vessel. Because the Kynar Flex 2850 PC PC is applied electrostatically these areas presented no problem for this coating process.   An electrostatic charge is applied to the powder and a ground potential to the vessel. This helps to distribute the powder more evenly on the surface, actually allowing the powder to wrap around surfaces that are not always in the applicator's direct line of sight.  "We estimate that the electrostatic powder coating method reduces the consumption of powder by as much as 40% compared to a hot flocking approach," states Fisher.

Kynar Flex 2850 PC is extremely easy to use in the powder coating process.  Using a typical powder coating would require reheating the part numerous times.  Ken Johnson, quality assurance inspector at Fisher Company, explains "…unlike other fluoropolymer coating we have experienced, Kynar Flex 2850 PC builds thickness quicker.  Fewer coats are required to obtain the desired thickness and baking temperatures are lower than other fluoropolymers, making the Kynar Flex 2850 PC coating very applicator friendly."  Below a specific temperature, other fluoropolymer powders are no longer able to conduct the electrostatic charge, in fact, they become insulators, making further coating impossible without reheating the metal part. Depending on the size of the part, some fluoropolymer materials require eight or ten cycles in and out of the oven.  Considering the need to heat the part to approximately 500°F, and the fact that this vessel was nearly 40 feet long, that would require a lot of labor to move such a large vessel in and out of the oven plus a lot of energy to heat the oven. Kynar Flex 2850 PC does not require the applicator to continually reheat the part to be coated.  It builds onto the substrate regardless of temperature. This property of Kynar Flex 2850 PC allows us to produce a thicker fluoropolymer coating. The ability to apply Kynar Flex 2850 PC powder in thicker layers has significant economic advantages, since powder coatings utilize gas or electrically heated ovens.  A more rapid build means less oven time is required to produce a specific thickness.

The clean up procedure following a Kynar Flex 2850 PC  powder coating also presents an advantage to customers like Freescale, where the cost of down time is extremely high. The powder coating process requires no handling during fabrication. The need for operators to frequently enter the powder coated vessel is eliminated, this results in a vessel that is shipped clean and ready for process installation on its day of arrival at the plant.

"It was great.  It arrived onsite and we had it installed the next day.  We are very satisfied," says Covington.  When Bryan Howell, General Manager of Fisher Company, visited Austin, TX during the installation procedure he described a typical reaction from workers which he frequently encounters, "no one is prepared for the result of the Kynar Flex 2850 PC powder coated surface.  They have lived with this tank and have seen its ugly rubber lining every time they open it up for inspection.  Now the rubber is gone and in its place is a beautiful smooth and seamless lining."

World Thermoset Powder Coating Consumption

Metric Tons 000's
205 Estimates
Most Recent
US & Canada 116 164 166 3.7% 0.2%
Europe 290 340 370 2.5% 1.7%
Asia ** 125 215 360 11.2% 10.9%
Row 84 118 165 7% 6.9%
Total 615 837 1061 5.6% 4.9%

** China growth rate significantly higher
Source: Rohm and Haas internal estimates, Aug. 2005

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