Pressure on the leading global coatings companies to keep up a stream of innovations has been increasing as the competition between them intensifies at a time of growing consolidation at the top.
There is an even greater reliance on good sources of ideas for new products and an effective system for filtering out the ones with the most potential for commercial success.
For companies with worldwide operations, the final stage of market launches can be more difficult in Europe than in North America and Asia Pacific. Despite the existence of the European Union’s single market, Europe remains a relatively fragmented market. Variations between local market conditions have to be taken into account when commercializing new products and technologies.
For PPG, which claims to hold number one global position in coatings with AkzoNobel, Sherwin Williams, Valspar, Axalta and BASF being the other worldwide leaders, the introduction of innovative products can be particularly challenging in Europe, especially in the architectural sector.
The company pursues a marketing policy in Europe based on its numerous local brands now totalling around 30, the majority of which are in architectural coatings. They have been accumulated from a series of acquisitions, including those of SigmaKalon and Johnstone’s.
The introduction of new products have to match the strategies of local brands, although some have an international presence, such as Sigma, Johnstone’s and Seigneurie, which have spread outside Europe, particularly into Africa.
“We’ve inherited a lot of brands and we aim to keep them all alive and well,” Jean-Marie Greindl, president PPG Europe, Middle East and Africa (EMEA) and senior vice president, PPG Architectural Coatings, told European journalists at a briefing in Amsterdam, mostly devoted to R&D and new products.
Over the last 10 years the Pittsburgh-based company has moved out of glass and chemicals to concentrate on building up its core coatings operation into a business with annual sales of $14 billion. Around 45 percent s of these came from the construction sector, with OEM and the car aftermarket accounting for 33 percent, aerospace and marine 8 percent and general industrial 14 percent.
The U.S. and Canada made up 46 percent of sales in 2015, with EMEA accounting for 28 percent, Asia Pacific 16 percent and Latin America.10 percent. In all of its major global segments, the company has a No. 1 or 2 position, with the exception of protective and marine coatings.
“Our leadership positions can be linked to operational excellence and research innovation,” said Greindl.
In Europe the company has nine laboratories for architectural coatings, while protective and marine coatings with its need for more customization has 40 in the whole EMEA area. R&D activities in Europe are supported by central laboratories in Allison Park and East Point in the U.S. and a third in Mexico City.
PPG has gradually built up a system which ensures close co-ordination of the activities of its R&D and technical staff across the world, particularly on both sides of the Atlantic.
The importance of this wide network becomes evident when ideas for potential innovations are sifted and priorities set for which ones will be researched and developed for eventual commercialisation.
In architectural coatings a total of approximately 150 new product ideas is generated each year. These come from a variety of sources – such as marketing surveys, direct suggestions from customers and the need to respond to new regulations and standards. Another fount of ideas is PPG’s own road mapping and benchmarking of technologies and collaborative programmes with universities and raw material suppliers.
“Ideas for further research are selected centrally but only after input from local staff,” said Philippe Hosotte, global technical director for architectural coatings, in an interview separate from the briefing.
“We have strongly embedded technical groups locally who keep themselves up to date with what are the factors driving the local market,” he explained. “There is a regular interaction between the center and local R&D and technical people. We’ve a good global communications system so no one is isolated and we can response quickly to market opportunities, if necessary.”
However, the need to take into account local conditions can result in roll-outs of new products being a relatively slow procedure. A grease and dirt repellent kitchen coatings called Sigma LTA for lipophobic technology for acrylics was, for example, launched in the Netherlands in late 2014 and then neighboring Belgium and Germany last year while its introduction in France is planned for the end of this year.
“A one-and- half-year roll-out in Europe is fairly typical,” said Hosotte. “For more specialist products it would be longer.”
A heat-resistant external coating called Sigma Ultra Cool with a high level of total solar reflectance (TSR) has taken time to be fully commercialised in Europe. It was originally introduced in France in 2011 to help builders and architects use dark external colors to comply with new French building regulations banning coatings with low TSR levels. Its launch in other countries has depended on the availability of the right tinting systems and the degree of need for regulatory compliance.
When an idea for new products is strongly backed by an PPG operation in one European country it will attract support in others in the region. Innovations which are in line with mega trends such as those which promote ease of use, application productivity and energy savings will be endorsed across the Atlantic as well.
Any differences in approach to innovations between European countries tends to depend on the strength and position of brands. Formulations may have to be adjusted to make new products consistent with the characteristics of local brands.
“We have to be careful in everything we do with the positions of our brands in Europe,” said Hosotte. “Often they have been acquired at a high price so that their value needs to be protected.”
The need to focus on the strength of local brands is much greater in Europe than elsewhere. In regions like North America and Asia Pacific there are fewer of them. For PPG in Europe the task of keeping a balance between the global and local, at least in the architectural coatings sector, is far more complex.