As the economy continues to recover, the powder coatings market has slowly begun to improve as well. Chemark Consulting is estimating the North American powder coatings market will post a four percent rise in sales to $940 million in 2004.

"In North America, powder has been improving following the economic recovery over the last few years," said Steven Kiefer, marketing manager North American industrial goods, Rohm and Haas Powder Coatings. According to Kiefer, industrial manufacturing has improved, and powder coatings has improved in response to this. "Over the last several years, there wasn't a lot of capital money allocated for industrial refinishing, replacement and expansion. Now that the economy has begun to improve, companies are beginning to invest in these improvements. There is definitely a pent up demand for refinishes and finishing line expansion and replacement and significant potential for powder to grow in this area."

According to Craig Dietz, national product and marketing manager, DuPont Powder Coatings, there has been back to back quarterly growth. "First quarter showed minor growth of about 0.5%, however we believe the second quarter will show much stronger growth numbers, maybe around five percent," he said.

Although the increase is welcome, Dietz isn't sure the market will meet previously thought expectations. "Earlier market studies predicted growth as high as eight percent per year through 2005, but I am not confident that will be the case."

According to Phil Phillips of Chemark Consulting, powder coatings for consumer goods, general met

als and industrial will all make a comeback in 2004. "General metals is the strongest growth segment with relatively robust growth of five percent and forecasted growth for the industrial market is three percent over 2003," he said. If they reach those numbers, general metals will return to the 1999 levels and industrial to its 2002 level, according to Phillips.

However, while automotive and consumer goods will both increase year-over-year by four percent, neither will get back to their 1999 dollar volume positions.


EMERGING MARKETS OFFER OPPORTUNITY
The outlook for powder coatings is getting a boost from emerging markets that offer powder coatings makers opportunities for growth and expansion.

"Globally there has been tremendous demand for powder coatings in southeast Asia," said Kiefer. "Because of the usual reasons-high application efficiency, thin film cost effective coating performance, low energy usage-powder coating is one of the top choices. When an area such as southeast Asia begins to grow economically, they tend to look at what is cutting edge technology."

Interpon continues to expand its presence in Asia. Recently it bought out its partner (DPI) in Interpon Powder Coatings Korea Ltd., increased its ownership in a second Korean powder company, GL Lucoat, and integrated manufacturing operations into the Shiwa facility.

The company is also expanding in China. "In China, we have built a second factory close to our existing factory at Bao An in Shezhen in the south, bringing the number of our Chinese manufacturing units to five," said Dick Higgins of Akzo Nobel Powder Coatings Ltd. "We have also bought a parcel of land at Langfang in the north and will be moving our powder operations from an old facility at Beijing to a new factory on the Langfang site."

While the Asia-Pacific region is the biggest area for growth in powder coatings, there are other hot spots, most notably in Eastern Europe.

According to Higgins, there is potential for growth, in Greece and Turkey, as well as emerging Eastern European markets. To this end, Interpon has set up a number of dedicated Interpon Powder Coating sales and marketing operations at strategic locations in Eastern Europe, including Russia, Ukraine, Poland, Hungary and the Baltics. "We are currently planning a new manufacturing facility in one of those regions for 2005," he said.


POWDER MAKES GAINS IN AUTOMOTIVE APPLICATIONS
Another bright spot for powder coatings is the automotive market, which Chemark contends will post a five percent rise in North America sales in 2004. Powder coatings have continued to make inroads into automotive applications particularly in the area of topcoats and full-body primers.

"The highest volume opportunities remain with body primers and finishing topcoats," said Dietz. "Automotive powder primers are doing well, but progress with topcoats, specifically clearcoats, are slow in the U.S., but seem to be having success in Europe."

According to Kiefer, there is still tremendous interest in the use of powder coatings for clearcoats. However, he said, "the cost for an automotive plant conversion is staggering."

Powder's use in automotive underhood and underbody applications have experienced continued growth as the automotive industry focuses on longer lasting vehicles, due in part to longer leases and finance periods. "Powder coatings are cost effective, offer longer lasting corrosion and damage resistance," said Kiefer. To this end, Rohm and Haas has developed new dual coat packages for high strength coil springs. "The zinc rich basecoat provides long term corrosion resistance while the various topcoats add stone chip resistance and appearance properties," he added.


GROWTH POTENTIAL IN UNTAPPED MARKETS

This Affinity AC unit from York features a powder coating from DuPont. Powder coatings are used on the company's premium lines, allowing for custom color options.

While powder coatings usage on metallic substrates remains strong, application, cost and performance issues with wood and plastic hinder its widespread use in these markets. Powder coatings manufacturers have been working to develop novel products that will allow them to enter these markets, which for the most part, remain untapped.

"Substrates such as wood and low odor plastics will be continually assessed and coating line systems using curative helpers-UV, radiation, slow bakes, etc.-may assist in some markets economically. However, we see continued slow progress versus other more economical systems," said Phillips of Chemark.

According to Phillips, "break-throughs such as Vedoc Advanced Materials Process (VAMP) and other powder manufacturing processes promised several years ago, although not successful then, remain at a fairly high level of interest at both the formulator and the raw material positions on the supply chain. These manufacturing methods could offer new sets of raw materials capable of very low temperature cures for temperature-sensitive substrates in combination with thinner continuous films, and could open up an over $3 billion dollar market for powders."

Powder coating manufacturers, zeroing in on growth areas, continue to work on coatings that can be applied to wood substrates as well as automotive topcoats that are smooth, durable and meet customers' exacting requirements. "Automotive powder clearcoats, powder for wood and plastic will open up new markets with great potential," said Dietz.

For U.S. producers there is another undeveloped area. "The architectural market, is another good opportunity and is successfully served by powder in Europe," said Dietz. "However, the U.S. architectural market is resistant to powder, in my opinion, because our industry has done a poor job of educating architects, engineers and builders," said Dietz. He contends programs such as Qualicoat in Europe, which certifies coatings and applications for architectural suitable products, would be helpful in opening up opportunities in the U.S. market.


CLOSING THE GAPS
In a push to penetrate these potentially lucrative markets, powder coatings manufacturers are focusing their efforts on improving performance by eliminating application defects, lowering film build for a smoother appearance and offering a wider range of colors.

DuPont Powder Coatings has focused its research and development on a number of areas including particle size management for improved application consistency, increased mar resistance for improved durability, lower temperature cure for energy conservation and application speed and improved adhesion for fusion bond epoxy coatings.

According to industry experts, these types of improvements are necessary if powder is to penetrate liquid's territory. "We look primarily at where conventional coatings are being used and look then for performance gaps for powder versus liquid," said Kiefer. "Closing those gaps creates opportunities for conversion to powder."

According to Kiefer, development trends in powder coatings focus mainly on improving performance-providing products that cure at lower temperatures, 275�-300�F, with a greater range of performance and appearance than is currently available, improving weatherability of the coatings and achieving ever thinner film applications allowing users to coat heavy machinery such as agricultural and construction equipment.

"The focus is also on powder coatings that allow finishers to use less energy," Kiefer added. "And thin films and lower energy requirements for cure provide more cost effective finishing for every user."

Another large gap between powder and liquid is color options, including available shades and speed of color matching and delivery. "Right now there are more color options in liquid particularly with metallic colors and the liquid matching process is still much faster," said Kiefer.

But that's changing. "We're seeing color trend toward a broader variety of powder colors, with effect pigmentation to match the appearance and performance of liquid basecoats," said Vince Fiano of PPG automotive coatings. "We're also seeing more precise application control of powder coatings via equipment improvements. In addition, there is more consolidation of coatings layers and processes-compressed painting systems."


INNOVATIVE PRODUCTS
In response to the needs of their customers, powder coating manufacturers have developed new products with improved performance and expanded color options.

PPG has developed color-keyed and color-specific, full-body powder primers for the automotive industry. The company has also launched the MaX series of powders, including XMR for mar and scratch resistance, XZE high-performance zinc powder and XLC for extreme low cure requirements.

For the automotive market, Rohm and Haas has launched Corvel zinc rich gray 13-7004 and Corvel black 20DG-7001 dual coat system. Corvel 13-7004 is a thermoset epoxy powder coating that provides corrosion resistance, designed for use over ferrous metal substrates. DG-7001 is an elastomeric thermoplastic powder coating for use as a protective topcoat, providing superior chip resistance.

Rohm and Haas has also introduced a ready-to-ship stocking program that covers all coating chemistries, most appearances in a multitude of colors and provides for small and large orders. "We are also developing new color matching and product manufacture and delivery processes that rival liquid color matching," said Kiefer.

Interpon has launched a new generation of fluorocarbon-based "hyper-durable" architectural powder coatings-Interpon D3000 Fluromax. The product is designed to be specified on aluminum curtain wall and other fenestrations for buildings and in particularly challenging climates. The firm has also launched new active-anticorrosion powders, including zinc-based Interpon PZ 770 primer and a unique non-zinc active, anticorrosive primer called Interpon APP120-for steel protection. Also new is Interpon AB, a new generation of anti-bacteriological powders for use in a wide range of applications, according to Higgins.

Blaze Illusion from DuPont Powder Coatings is a new one-coat special effects line that comes in several color choices and is the next generation of the Flare Illusion two- coat system. The key is that the wavelength of the reflected light changes continuously with the viewing angle. "For instance, you will see colors changing from green to blue, gold to bluish green and copper-red to green," said Dietz. He said they can be used on a variety of products such as bicycles, automotive wheels, go-karts, signs and toolboxes. DuPont also introduced a new line of polyesters, Alesta LE, that cure at lower temperatures.


INNOVATIVE OR EXIT?
For the most part, the powder market has experienced only moderate evolutionary changes in technology over the last 20 years, which means manufacturers have been under intense pressure to remain profitable in an increasingly tight market.

Without a major technological breakthrough, "powder suppliers will have to dig into every crevasse of their operations and eliminate costs, bring more systems analysis into play at each customer, create ways to add value at each customer and determine how to work with new technologies such as nano particles, spheres, tubes, etc., to gain even slight advantages over competition," said Phillips.

Those that don't risk being acquired, according to Phillips, who predicts that over the next three years, the number of powder coating formulators could drop 27% due to consolidation, leaving the market with less than 60 players.

"It is equally feasible that another ten to 15 will be consumed in the following two years, leaving just more than 40 formulators by 2009," he added.

These are daunting numbers, and it's clear that powder coatings manufacturers must push hard to innovate and differentiate themselves in this highly competitive market.