Making sense of the stimulus nonsense

By Tim Wright | June 1, 2009

Paint and coatings makers have been hurt by slumping demand, which has overshadowed an easing of high raw material and energy costs that hurt profits last year. Continued weakness in the housing and manufacturing (particularly automotive) sectors are wreaking havoc on bottom lines across the paint and coatings industry. Double-digit sales declines at major paint firms are all too common these days. As we went to press Valspar reported that its sales plummeted 20% in the second quarter of 2009.

The firm's chairman and chief executive, William Mansfield, said the company doesn't expect industrial demand to improve for the rest of the year. Sales dropped to $668.4 million in the second quarter from $836.4 million in last year's second quarter.

To try and stop the bleeding and prevent the economy from contracting more than it already has, The American Recovery and Reinvestment Act (ARRA), or the Obama Stimulus Bill, was signed into law on February 17, 2009.

If you're like me, you've watched the news and understand that a lot of money is being spent but making sense out of the stimulus spending is like being stuck in a tangled web of confusion.

Well, to assist the paint and coatings industry, Coatings World called upon Chemark Consulting's newly formed "Fast Track Solutions Team" to study this bill and gauge its impact on the paint and coatings industry-from suppliers, formulators, down-stream distributors and end-users. The team did a fantastic job sifting through a tremendous amount of complex information to try and help our industry better understand the impact this bill could have. This month read the team's findings in the first of a two-part series exploring, Stimulus Spending: Where's the Opportunity for Paints and Coatings?

According to the team, key components of the bill that will have a positive impact on the paint and coatings industry include increased investment in the renewable energy; implementation of the largest weatherization program in history; and the largest increase in funding for our nation's roads, bridges and mass transit systems since the creation of the national highway system in the 1950s.

Providing hope that the economy will improve and our industry along with it, the team says the stimulus package will increase demand for architectural, heavy-duty and OEM paints/coatings, adhesives, sealants, composites, plus their basic raw material ingredients.

Next month, in the second article of this two-part series, the team will identify the coatings technologies most likely to benefit from stimulus-related spending and forecast the timing of segment growth.

Be sure to tune in and let us know your thoughts on this topic.

Tim Wright