As was the case with most areas in coatings, the powder coatings market was not immune to the effects of the economic downturn over the past couple of years.

"We have had two pretty lean years in terms of growth: 2000 was a record year, 2001 we were down by about 11.5 percent and 2002 we were up slightly," Greg Bocchi, executive director, The Powder Coating Institute, said about the status of the North American market. "The market is extremely competitive. There has been significant price erosion for both raw materials and powder coatings."

However, the outlook for next year is not quite as dismal, Mr. Bocchi said. "We are seeing a little light at the end of the tunnel," said Mr. Bocchi. "I am hoping to see growth in the 2.5% range in the pounds of powder sold in North America in 2003."

Powder Vs. Liquid
Although powder coatings represents just seven percent of the worldwide coatings market, by most industry estimates this $3.6 billion industry has been quite successful in replacing liquid coatings in a number of key markets including appliances, wood and metal coatings. And the good news, there is still room for growth. Powder coatings currently dominate the architectural metal finish market in Europe, but have yet to completely replace liquid coatings in the same market in North America.

"Powder coatings are dominating the architectural metal finish market in Europe, where they account for approaching 80% of all finishes used, and where they have virtually totally replaced wet paint," said Richard J. Higgins, manager human resource and communications, Akzo Nobel Powder Coatings Ltd., worldwide powder group. Dr. Higgins noted that the same trend is developing in Asia, particularly China, where powder is the preferred finish for architectural aluminum. "In the U.S., wet paint is still a dominant finish, but as the wet paint plants mature and the pressure on VOCs continues to grow, powder will eventually win out," Dr. Higgins predicted.

"I think that the powder coating market has been very successful in its efforts to convert liquid to powder," said Larry Bauer, marketing manager, DuPont Powder Coatings. "I believe that the conversions have now matured and levelled off due to our economic situation. Not as many manufacturers and applicators have capital to invest in the conversion process."

According to Mr. Bocchi, powder coatings dominate the North American appliance market using 14% of total powder produced.

"The domestic appliance market-refrigeration, washers, dryers, cookers, microwaves, heating, air conditioning-has long been highly substituted by powder coatings and that is pretty much the case across all regions of the Americas, Europe and Asia Pacific, although coil coating, and more recently plastics, also have a significant share," said Dr. Higgins.

According to Dr. Higgins, metal furniture is another market that powder dominates. "Asia Pacific is a vast supply source for Europe and the U.S. and virtually all of the metal furniture coming from that region is powder coated," he said.

Powder coatings are also now being widely used in the IT industry. "Computer server cabinets is one of the more recent markets to move away from wet paint to powder coatings," said Dr. Higgins. "Most of the large IT OEMs now specify powders for their decorative finishes on their larger metal components."

Growth in Automotive, Wood
Although widely used in automotive components, powder must still compete with wet spray and electro-paint processes and has yet to make a significant mark on the automotive clearcoat market. According to industry experts, this potential market is huge, but large-scale conversion would require additional improvements in powder's performance.

"Powder continues to grow in the automotive market and general industrial markets," said Kevin Biller, vice president general manager, Jamestown Powder Coatings. "We still await the day that powder will conquer the auto clearcoat market. At this time only BMW in Germany and Mercedes are using powder clear topcoats."

"In automotive components, powder plays an important part, but other finishes like wet spray and electro-paint, are also important," said Dr. Higgins. "In wood finishing, powder has yet to make significant inroads, although new-generation powder have begun to be adopted on MDF and other wood composites for furniture applications."

The development of low temperature and UV-cured products continues to increase powder's use on wood, medium density fiberboards and other heat sensitive substrates such as plastics. According to Mr. Bocchi, there has been a lot of R&D activity in the area of powder coating heat sensitive substrates. "Coatings are being cured below 220oF without compromising durability or quality," he said. (For a look at the latest powder coatings products, see sidebar on p. 32)

The Environmental Factor
The environmental advantages of powder coatings are well known�no VOCs and any excess or overspray can be reused, reducing both waste and cost.

"This is one of the most common reasons for conversion, where the fact that powder is free from solvents means that local authority or governmental targets related clean-air acts can be permanently met by a coatings applicator using powder," said Dr, Higgins.

Environmental regulations that continue to restrict VOCs will certainly lead more companies to switch from liquid to powder. "Environmental regulations continue to force companies to reduce VOC emissions," said Gregory Stanek, business manager, marketing development, powder coatings, BASF. "Many of these companies are choosing powder coatings to replace VOC-containing liquid coatings."

"Environmental regulations have helped and continue to augment the growth of the powder coatings industry," agreed Mr. Biller. "It mainly impacts the pocketbook of the coatings user in hazardous waste costs and abatement technologies. Powder avoids these."

A powder operation presents a cleaner working environment, according to Dr. Higgins. "Powder is used straight from the box, there is no mixing or pre-preparation," he said. "There are no issues to deal with related to solvents, like safe storage or special fire insurances."

"You can recycle and reuse the powder so you have much less waste, along with no VOCs to deal with," said Mr. Bocchi. "There are less volatiles coming from the oven during the curing process. It's also easier to use; it's a much neater and cleaner operation."

Environmental factors are certainly important, but the bottom line is cost and efficiency. Powder coatings meet both these needs.

"The industry has recognized and still supports the reduction of VOCs, but trends in the late 90s and early 2000s are have been around energy reduction and improved application efficiency, which translates into cost effective finishing," said M. Reginald Horne, vice president and business director, Rohm and Haas Powder Coatings.

According to Mr. Bauer, the cost of conversion from liquid to powder is lower now than in previous years and transfer efficiency can increase from 30% for liquid to 90% or higher for powder coatings. Another advantage is hazardous waste reduction. Waste disposal costs can be lowered dramatically, up to 80%, he said.

"A one-coat thermosetting powder applied in one step on an automated powder application line, in which any over-spray powder is collected for recycle and reuse, will give very high application efficiencies and low applied cost," said Dr. Higgins. "Also, automation is easy, and therefore labor cost can be low."

Improved Appearance and Performance
R&D efforts in powder coatings have been focused on improving appearance and performance. Color options in powder are virtually limitless, and multicolor powders, such as hammer tones, gold, silver and distressed looks, are available to many markets.

"As is the general trend in coatings as a whole, powder is also seeing a surge in the use of metallics and other special effect finishes, said Dr. Higgins. "Powder is much more capable of responding to that trend than it was 10 years ago, and therefore in areas of growth like auto alloy wheels, where silver metallics dominate, powder is getting the lion's share of growth in coatings use in that area." Dr. Higgins said developments in Interpon Express and Express Line mixing technologies and the Interpon AS application stabilizing technologies have had an important impact in ensuring that "powder can deliver not only the decorative but also the process economic requirements of that market."

According to Mr. Bocchi, "the biggest growth area for powder coatings is clearcoats" for the automotive market, however companies are looking to improve clear powder performance elsewhere. "Better clearcoats are being developed for use on solid brass products such as doorknobs, hinges, lamps and plumbing fixtures. Powder is also being used as a replacement for chrome and brass plating."

H.B. Fuller has focused its efforts on improving the performance of metallic powder coatings so that they are easier to apply, developing new trendy metallic colors that the market was incapable of delivering a few years ago and improving the appearance of metallics in terms of color uniformity and glossiness. "Essentially, we are closing the gap between liquid and powder performance," said Tony Khosla, division marketing manager H.B. Fuller, global coatings division.

R&D efforts focused on powder coatings for heat sensitive substrates continues, as do products for other materials. According to Mr. Biller, new areas of development for powders include improved application to non-conductive substrates, low temperature cure, automotive clearcoats and powder for containers.

"We continue to invest in new technologies to access a broader share of the market," said Mr. Horne. "Lower temperature cures, thinner films, and brighter metallic effects are but a few examples of research thrusts that will drive additional conversion."

Market Consolidation
As the powder coatings market continues to make advances in performance and gain acceptance into a variety of new markets, the business side has experienced significant changes as well. The powder coatings market has experienced quite a bit of consolidations in the past year. Ferro, one of the top suppliers of powder coatings, was acquired by two other market leaders. The 2002 acquisition of Ferro Corporation's European division by Rohm and Haas and its Americas and Asia Pacific divisions by Akzo Nobel added considerably to the two companies' already impressive portfolios.

The acquisition by Rohm and Haas added four operating sites for a total of seven. Rohm and Haas is also building an additional site in China, which should be completed by early 2004.

Akzo Nobel has integrated Ferro's U.S operations into International Paint Inc. The Korean operations is known as LG Lucoat Powder Coatings Ltd, a JV with LG Chemicals, and the PRC operations have been integrated into Akzo's existing JV with Chang Cheng Securities, Akzo Nobel Chang Cheng (Ningbo) Coatings Ltd.

Ferro wasn't Akzo Nobel's only powder purchase in 2002. The company bought a 50% stake in leading Mexican powder producer INDA, to form a new JV company, Akzo Nobel INDA.

Akzo Nobel is continuing to branch out with new facilities in Turkey and Vietnam, as well.

"Our new Turkish powder operation which started a little over a year ago is now operating very successfully at Izmire," said Dr. Higgins. "We formally opened a new powder factory in Ho Chi Minh City during 2003, and have successfully switched the servicing of all our Vietnamese customers from that facility during the year."