As we begin the New Year, I've been thinking about the stories we covered in Coatings World in 2006. When all is said and done, regardless of who we talked to-manufacturers, suppliers or consultants-or what markets they serve, the year was dominated by several key issues including rising raw material costs, pending environmental legislation and the influence of emerging markets in developing parts of the world.
So looking ahead what can we expect? Like it or not, these issues are here to stay and will be constant themes to be discussed and dealt with as the industry moves ahead. There is no place to hide from the reality that the escalation of oil and natual gas costs will continue. While the cost of oil has dropped recently, it is still high in comparison to "normal" levels historically.
Environmental legislation, in particular REACH in the EU, will see a lot of press in the coming months as legislators are set to give final approval to allow it to come into force in June. Coatings World's European correspondent, Sean Milmo, discusses the legislation in "REACH: What does it mean?". Stay tuned for the February issue of Coatings World where Milmo will go into greater detail about REACH legislation and how it will impact all facets of the industry.††† †
At the same time, emerging markets in developing regions of the world including Asia, Eastern Europe and Latin America are forcing the major North American and Western European producers of paint and coatings as well as the suppliers of ingredients that go into them to shift their strategies and take into account the challenges these markets pose and how to take advantage of the opportunities they offer. These issues more than anything else are changing the dynamics of the global coatings industry every day across all sectors.
In terms of mergers and acquisitions, 2006 was another active year. Perhaps a good way of tracking the shifting industry tide is to trace the level of merger and aquisition activity that has taken place over the years. According to The Chemark Consulting Group, 30 years ago there were approximately 2,000 paint and coatings companies in the U.S. Twenty years ago there were 1,600, ten years ago 1,200 and five years ago 970. Contrast those figures to today where there are approximately 850 paint companies in the U.S. We can expect that more consolidation will undoubtedly continue to take place in the years ahead. Around the world there are approximately 4,500 paint and coatings companies. Out of all the domestic and international companies combined, just 10% produce 85% of the total coatings volume. As a result of this market reality, we can also expect the number of small and medium-sized companies to continue dwindling.
Continuing to address these issues will be part of our mission to improve the coverage of the paint and coatings industry. In this issue Coatings World offers a number of staff written articles that highlight several key markets and how these issues are affecting them. From the manufacturing side, our annual Interior Architectural & Decorative Coatings feature provides a look at some of the trends influencing this market domestically and abroad. From the supplier side, we offer staff reports on the new trends in both pigments and additives.