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    Features

    Powder Powder Everywhere

    As the powder coatings industry experiences a period of heavy growth, coatings companies are seeking out new markets for powder in hopes of finding further growth opportunities.

    Jenn Hess08.09.05

    The powder coatings industry has come a long way since the introduction of powder as an alternative to liquid coatings more than 40 years ago. And as technology improves, better products are introduced and powder coatings become more popular in areas that had been dominated by liquid paint. The industry shows no signs of slowing down anytime soon.

    According to the Powder Coatings Institute (PCI), Alexandria, VA, the powder coatings industry is the fastest growing finishing technology in North America, increasing at a rate of eight percent to 10% per year in pounds of powder. By 2003, the Freedonia Group, Cleveland, OH, predicts the U.S. powder coatings industry will be valued at $1.3 billion. With the increase in demand for powder coatings, companies are seeing an increase in the price per pound for powder coatings from $2.62 in 1998 to $3.17 in 2008, according to the Freedonia Group.

    The global powder coatings market is also very strong. Frost and Sullivan, Mountain View, CA, estimates the powder coatings market to be five to six percent of the worldwide paint and coatings market. Worldwide sales of thermoset powder coatings for 1998 rose 6.4% over 1997, according to PCI. According to the Freedonia Group, by region, Western Europe leads in powder coating demand with 47%; the U.S. follows, accounting for 27%. The Asia/Pacific region, excluding Japan, accounts for 10% and Japan, seven percent (see chart, page 38, print edition). For the forecast period of 1998-2005, Frost and Sullivan estimates Asia/Pacific to have a compound annual growth rate (CAGR) of 10.4%. Latin America's CAGR is estimated at 9.3%, North America's CAGR is 7.2%, Europe's CAGR is 3.3% and the rest-of-the-world is 8.8%.

    Markets such as appliance and automotive have been reaping the benefits of powder coatings for some time. According to PCI, the appliance industry is the largest single market sector for thermosetting powders in North America, accounting for 17% of total powder used. Advances continue to be made in the automotive market, particularly in the application of clear powder coatings. With the competition heating up, powder coatings companies are always looking for new markets. Areas where powder coatings are becoming more and more popular include general metals, protective pipe, lawn and garden and sports equipment (see chart, page 40 of the print edition).

    Not only has the powder coatings industry been very active in terms of product demand and new markets, but there has also been some movement by a few major coatings companies looking to increase their presence in the powder coatings industry.

    Akzo Nobel has moved to the front of the powder coatings industry with its acquisition of Courtaulds in July, 1998. Interpon, Courtauld's powder coatings business, is now the powder coatings business of Akzo Nobel, focusing solely in North America. Despite the change in ownership, Interpon's goal has remained the same. "Interpon's plan has not changed," said Dave Heflin, vice president of sales and marketing, Interpon. "Akzo Nobel is a very strong company with strong global capabilities. We've been able to take advantage of added resources and technologies Akzo Nobel has that might complement our business." For example, although Interpon only deals with powder coatings, Mr. Heflin said it has been able to work with Akzo Nobel's liquid group to help a customer.

    Frost and Sullivan estimated Akzo Nobel's share in the world powder coatings market in 1998 was 17%, followed by Herberts, which commanded 13% of the market. Herberts' position in the powder coatings market made it attractive to DuPont, which acquired the German company this year. Herberts has since been folded into DuPont Performance Coatings. Rohm and Haas also was in on the acquisition action, acquiring Morton Powder Coatings this year. Morton controlled eight percent of the world powder coatings market in 1998, followed by Ferro, which accounted for 10%, according to Frost and Sullivan.

    With powder coatings companies seeking to position themselves as key players as the 21st century approaches, industry personnel predict the competition will only get stiffer.

    "We see the competition to be very fierce," said Paul Macko, marketing director, BASF Industrial Coatings. "In some segments it has become a price war. We expect to see more and more consolidation in the future."

    One reason the powder coatings industry is seeing growth is the constant expansion of its customer base.

    "The industry will continue to grow as customers convert from liquid to powder coatings and the customer base utilizing powder coatings keeps growing," said Cordell Dietz, business manager at Valspar's powder coatings group. "The powder coatings industry is very competitive, we do not see that changing."

     

    A Realm of Possibilities What will powder coatings companies think of next? Or better yet, where will powder coatings show up next? They are on automobiles, appliances, sports equipment, office and lawn furniture, even lamp fixtures. Its hard to even take a guess at what will be the next addition to that list, as many companies are trying to shy away from some of the bigger markets and reach out into niches where they see great potential.

    Though it is a large market, the automobile market still shows a lot of growth potential because of the different types of powder coatings being used, from auto body clear coats to primers to coatings for parts like wheels and tires.

    "The potential for powder coatings in the automobile industry looms large," said Barry Keating, market manager, PPG, Strongville, OH. "There has been an increase in this market over the past five or six years in the area of full body powder primers."

    PPG supplies primers to the North American automobile market and acrylic clear coats to BMW in Germany. At the BMW assembly plant in Dingolfing, Germany, the final finish on 5- and 7- series models is an Enviracryl coating from PPG. A colorless finish applied to protect the car's colored coating, powder clear coats will not drip or run like liquid coatings because they are spray-applied electrostatically to the grounded car bodies, according to PPG. "Most of the world is watching the activity at BMW," Mr. Keating said.

    BASF, Southfield, MI, has also become a player in the automobile market. According to Mr. Macko, BASF supplies a powder primer for Chrysler. BASF also makes a clearcoat for wheels and powder coatings for functional uses, such as under the hood parts.

    The other major area for powder coatings has been the appliance market, and companies are seeing more business here as well.

    "We are beginning to see a second wave of cost saving efforts from appliance manufactures," said Tom Fraumann, marketing manager, Morton International. "During the last 10 years appliance buyers have squeezed every last nickel out of the purchase price. But the need for cost savings continues. The only way of achieving these savings is with higher value coatings and an emphasis on driving improvements in application efficiency. This trend plays to Morton's strengths in technology and application expertise and will open the door for innovative suppliers like Morton, which focus on offering not the cheapest powder coatings, but the lowest overall net applied cost."

    Lilly Industries, North Kansas City, MO, has seen three areas�general metals, appliances and office furniture�represent a substantial part of its powder coatings market, according to Ken Legenza, marketing manager, industrial coatings business unit. "We also focus on transportation, protective coatings for pipe, storage and shelving," Mr. Legenza said. "We see some markets that are emerging, one is the heavy duty machinery market. Five years ago these companies were not considering powder coatings."

    General metals is also the main target of Valspar's Jackson, TN-based powder coatings group. "We offer a full range of general industrial powder coatings, focused on general industrial consumer durables," said Mr. Dietz. With the start-up costs for a powder coatings system looked at as a major investment, Mr. Dietz said Valspar is working on decreasing its customers' operating costs.

    In addition to PPG's automotive coatings business, the company is involved in the appliance and general metals markets. According to Michael Ludlow, vice president, industrial coatings at PPG, the general metals market is growing about 10% per year. "PPG is also working on developing activity in emerging markets," Mr. Keating said. "PPG is working to increase the weatherability/durability of its powder coatings, particularly in the area of automotive trim."

    Though BASF expects its powder coatings business to pick up a bit once its new plant in Morganton, NC is complete next year, BASF has already seen strong gains in the protective pipe and general metal markets. Basepox is BASF's powder coating for protective pipe. "The corrosion protection is amazing," Mr. Macko said. "It is an excellent product, technically specific and available globally." BASF has ample experience in the pipe industry. Its powder coatings have been used to protect 1,200 kilometers of pipeline across the Sudan, as well as on the longest natural gas pipeline in South America.

    "A new area BASF has begun to get involved in is general metals�office furniture, shelving, roofing tiles, light fixtures," said Mr. Macko "These have been areas where we had traditionally supplied liquid paint."

    Morton International's powder coatings business reaches a wide range of areas, from office furniture and shelving to sports, recreation, lawn and garden and general metal. "We continue to look for new market areas to develop and expand into," Mr. Fraumann said.

    The newest product from Morton is Textra, a textured powder coating for metal substrates. "This proprietary formulation provides a uniform appearance even when film thickness varies," Mr. Fraumann said. "In traditional textured powder coatings, variations in film thickness cause dramatic differences in how the finish looks and feels, resulting in negative effects such as 'picture framing' and gloss variations." But according to Mr. Fraumann, Textra is so forgiving that those differences are "almost non-existent" in film thicknesses ranging from 1.5-4.0 mils. "In some circumstances, Textra has successfully delivered a continuous pin-hole free film at thicknesses as low as 1.2 mils," Mr. Fraumann added. The Textra family of products includes five glosses and four textures: pebble, grain, sand and suede. Morton inventories 14 stock Textra products. Seven colors including a metallic silver are available for immediate delivery in both polyester TGIC and epoxy-polyester hybrid chemistries. In addition any custom color can be ordered.

    Morton also has two new products slated for release later this year. A new standard color program offering a palette of 1750 colors in four standard chemistries and two glosses in quantities as low as 220 pounds will be introduced this month. A second generation of the company's high yield polyester product line will be released by mid-December. "HY2K will deliver even greater savings to customers as a result of increased first pass transfer efficiency, film uniformity, reclaimability and ease of application," Mr. Fraumann said.

    According to Mr. Heflin, Interpon's key markets are automotive, appliance, architecture and general industry. Interpon D, the company's architectural brand, offers comprehensive selection of colors and gloss levels, and metallic and special effect finishes.

     

    Branching Out With powder coatings an attractive alternate to liquid coatings for general metals, powder coatings companies are now branching out and seeing how successful powder coatings will be on other materials, such as wood, plastic and coil.

    "As markets like wood, plastics, automotive top-coat and coil embrace powder, we will see significant growth in the market size," said Mr. Fraumann of Morton.

    According to Mr. Legenza, some of the pluses of using powder coatings for wood include the environmental impact, labor and application benefits and durability issues.

    Morton International's Lamineer, one of the first powder coatings for wood on the scene last year, has enjoyed a strong reception, according to the company.

    A new line of low-temperature-curing powders for wood, wood composites and select plastics, Lamineer is a 100% solids finish that produces no volatile organic compounds or hazardous air pollutants. According to Morton, Lamineer will meet or exceed the performance of vinyl laminates and liquid paints. When Lamineer was released last year, the company said it would initially target larger OEM customers and work its way to smaller wood-working operations. Targeted industries include manufacturers of office furniture, cabinets and RTA furniture. It is available in clears, translucents and a wide range of colors, glosses and surface textures.

    Giving the Customer a Choice As powder coatings become more popular and a more viable option to coatings consumers, coatings companies see the need to offer both liquid and powder.

    "Powder is not the answer for all products," said Mr. Ludlow of PPG, which also offers high performance liquid coatings. Mr. Ludlow does not see powder coatings replacing liquid.

    With a full range of both liquid and powder coatings systems, Mr. Legenza said Lilly Industries can discuss the pros and cons of both systems with their customers. "We are not going to push powder coatings if liquid coatings are more appropriate," Mr. Legenza said. "By offering a number of different technologies such as electrocoat, high solids liquid baking systems along with powder and air-dry or force-dry systems, we can help the customer find the best coatings solution."

    According to Mr. Macko of BASF, there have been a lot of inquiries about BASF's powder coatings as the company expands its line of powder products. "With all the technology BASF has, we can come up with the best solution available, whether it be liquid or powder coatings."

    Mr. Legenza said Lilly is at an advantage because of the different types of coatings technologies the company has to offer. "Lilly is not tethered to one type of technology," Mr. Legenza said. "We can sit down with the customer and find out how to best address the customer's needs today and where they want to go in the future."

     

    Pros and Cons Despite all the benefits of powder coatings, coatings companies know that powder is not the always the best answer. But many agree there are a lot of positives to consider when selecting powder over liquid coatings. "Powder coatings technology is superior to liquid," said Mr. Dietz of Valspar. Some of the benefits he sees with powder coatings are superior single coat application, immediate environmental compliance and reduced operating costs.

    Powder technology is still being improved, so there are some areas where powder still doesn't compare to liquid. "There are issues with powder in terms of styling," said Mr. Keating of PPG. "In some cases, it depends on the volume. There can be system issues with color change. Sometimes power coatings might not be easier. There is the issue of film control for liquid vs. powder. Powder coatings require better cleaning methods than with liquid coatings."

    There is also the cost factor to consider since powder coatings equipment does not come cheap. "Switching to powder requires a significant investment in capital, with normal payback in 24-36 months," said Mr. Legenza of Lilly. "Some businesses do not want to spend large sums of money up front redoing their paint lines and paint systems. "

    According to Mr. Fraumann, with strong technical support and proactive customer problem prevention, Morton can show their customers how costs can be kept low with a powder coatings system. "By showing our customers how to use less coating material, they will need less electricity for compressed air, produce less waste, wear out equipment less quickly. All the benefits start stacking up."

     

    What the Future Holds The powder coatings industry is on the move. Just how quickly and to what degree is still to be determined. Technology will be one of the keys to how far powder coatings can go, with the focus being on developing lower temperature cure powder coatings, and expanding into the plastic and wood markets.

    "Powder coatings technology has traditionally focused on metals," said Mr. Legenza of Lilly. "But if we can penetrate into new areas like wood and plastics, there should be tremendous market growth."

    "We are going to see significant future growth around the globe," Mr. Fraumann said. The technical challenges presented by new markets will drive major investments by coatings manufactures in R&D and technology development."

    Though a lot of the major conversions from liquid to powder coatings have already taken place, coatings companies believe there is still a lot of room for market growth.

    "We see the demand for powder coatings increasing at a greater pace than the overall coatings market as the functional base for powder coatings becomes larger," said. Mr. Ludlow of PPG. "We expect the demand to slow down a little, but will still be above the market."

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