Is there any relief in sight?

By Tim Wright | October 7, 2008

In this issue of Coatings World we explore several key markets in the coatings industry and how they are being impacted by the current economic crisis. This month's article on the automotive refinish market examines various factors influencing the market. In the U.S., the overall accident rate has decreased. This can be attributed to both increased driver safety awareness and people driving less due to soaring gas prices. Consolidation among body shops is also a major issue and the influence of the insurance industry is another key component to this market. In an increasingly competitive business environment, manufacturers of automotive refinish coatings must not only deliver quality products, but they must also provide value-added services such as training, technical support and tools in order to meet the changing needs of their customers.

Also in this issue we explore how the current economic slowdown has taken its toll on paint makers serving the exterior decorative coatings market. With fewer new homes and buildings under construction, the number of gallons of paint sold in key mature markets has fallen. To make matters more difficult paint makers are also plagued with high raw material costs. While they have stabilized a bit of late, the increases have far outpaced manufacturers ability to pass them along to customers. Increasing energy prices and ever more stringent environmental regulations are also challenges facing suppliers to this market.

For more on the impact of the financial crisis that seems to be impacting all aspects of our lives you'll want to hear Phil Phillips' insights into this dilemma in The Business Corner. He says, "Versus the same 2007 time period, architectural paints are off 18% through June and estimated to continue to be off through August at a 20% rate and, will get worse as paint data for housing lags housing start data."

And it's not just the architectural segment that is suffereing. There have been sharp downturns in sales of automotive OEM coatings and coatings for appliances as well, according to Phillips.

And expect the situation to get worse before it gets better. Phillips says, "...we must face the facts that for the foreseeable minimum of 24 months our businesses will not operate 'as usual.'"

Tim Wright

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