Tim Wright03.15.06
While automakers continue to trim costs throughout the production process, automotive OEM coatings manufacturers are evolving to meet the demands of the market.
"Overall conditions in today's automotive OEM coatings market are challenging as paint companies face unprecedented raw material increases and price-down expectations from all OEM automotive manufacturers," said Marty McQuade, vice president and general manager, DuPont Automotive Systems.
The increasing lower cost demands of the OEM's fall mostly on the supplier base starting at the tier one level, according to Nicolas Messin, automotive manager, Rohm and Haas Powder Coatings. "Component suppliers are finding ways to automate their processes and eliminate labor from assembly operations," he said. "Painting is one of the operations that is relatively easy to automate with existing technology that is readily available to lower unit costs or increase part through put. Component suppliers are looking for companies that can provide on-going service and products that have a wide process window that are approved to the OEM specifications."
While globalization and consolidation continue to reshape the landscape of the automotive market as well as the suppliers to the market, there is also a movement for cooperation between OEMs.
"It seems that at least once a week you read about collaboration between OEMs to jointly develop or manufacture complete vehicles," said Robert L. White, global director of substrate protection systems, automotive coatings, PPG Industries. "Given the over-capacity of OEM manufacturing in both North America and Europe, I expect that this trend will continue, with one OEM manufacturing and assembling vehicles for one or more other OEMs. This will mean that a coatings supplier must be able to offer coating technologies with a broad color palette as well as a broadworkability and performance range to meet the performance and quality requirements for each OEM involved."
"Overall conditions in today's automotive OEM coatings market are challenging as paint companies face unprecedented raw material increases and price-down expectations from all OEM automotive manufacturers," said Marty McQuade, vice president and general manager, DuPont Automotive Systems.
The increasing lower cost demands of the OEM's fall mostly on the supplier base starting at the tier one level, according to Nicolas Messin, automotive manager, Rohm and Haas Powder Coatings. "Component suppliers are finding ways to automate their processes and eliminate labor from assembly operations," he said. "Painting is one of the operations that is relatively easy to automate with existing technology that is readily available to lower unit costs or increase part through put. Component suppliers are looking for companies that can provide on-going service and products that have a wide process window that are approved to the OEM specifications."
While globalization and consolidation continue to reshape the landscape of the automotive market as well as the suppliers to the market, there is also a movement for cooperation between OEMs.
"It seems that at least once a week you read about collaboration between OEMs to jointly develop or manufacture complete vehicles," said Robert L. White, global director of substrate protection systems, automotive coatings, PPG Industries. "Given the over-capacity of OEM manufacturing in both North America and Europe, I expect that this trend will continue, with one OEM manufacturing and assembling vehicles for one or more other OEMs. This will mean that a coatings supplier must be able to offer coating technologies with a broad color palette as well as a broadworkability and performance range to meet the performance and quality requirements for each OEM involved."
Emerging Markets
While North American and Western Europe still represent approximately two-thirds of the global OEM market, activity in these markets remains relatively flat.
However, as the automotive markets in China, South East Asia, India and Eastern Europe continue to expand production capability and the level of quality grows, these markets are becoming strategic for export production for many global OEMs. As the economies in such developing parts of the world continue to grow, wages are expected to increase, allowing more consumers the opportunity to purchase vehicles.
The Wall Street Journal recently reported that auto sales in China jumped by more than 70% in January, putting the country on track to widen its lead over Japan as the world's second largest vehicle market after the U.S.
When it comes to paint companies considering where to invest their dollars for growth, there is really no choice but to look towards these emerging markets.
"Paint companies must invest in and co-locate an entire infrastructure in these emerging regions if they are going to be successful and profitable," said White. "You cannot profitably supply and compete globally by shipping product and supplying services to these regions from North America or Europe. The smooth transfer of technology and 'Best Practices' is a major key to success in these emerging regions."
On the heels of announcing it will consolidate two of its coatings laboratories in the U.S.-a decision driven by automotive industry conditions and the continued, unprecedented escalation of raw materials costs-DuPont Automotive Systems signed a joint venture agreement with Russkie Kraski Corp. forming DuPont Russian Coatings LLC. The joint venture is aimed at supplying automotive coatings to manufacturers of automobiles and commercial vehicles in Russia and some countries in Eastern Europe, including Belarus and Ukraine.
Although Russian GDP growth is beginning to soften one of the country's major growth markets will be the rapidly growing automotive industry as foreign carmakers invest on Russian soil, according to a new report profiling the Russian paint industry released by Information Research. The report said that car output in Russia is expected to soar from 165,000 units in 2004 to 900,000 units by 2010 and that demand for automotive OEM coatings will multiply rapidly, possibly by as much as 30% per annum from the present level of approximately 40,000 tons.
However, as the automotive markets in China, South East Asia, India and Eastern Europe continue to expand production capability and the level of quality grows, these markets are becoming strategic for export production for many global OEMs. As the economies in such developing parts of the world continue to grow, wages are expected to increase, allowing more consumers the opportunity to purchase vehicles.
The Wall Street Journal recently reported that auto sales in China jumped by more than 70% in January, putting the country on track to widen its lead over Japan as the world's second largest vehicle market after the U.S.
When it comes to paint companies considering where to invest their dollars for growth, there is really no choice but to look towards these emerging markets.
"Paint companies must invest in and co-locate an entire infrastructure in these emerging regions if they are going to be successful and profitable," said White. "You cannot profitably supply and compete globally by shipping product and supplying services to these regions from North America or Europe. The smooth transfer of technology and 'Best Practices' is a major key to success in these emerging regions."
On the heels of announcing it will consolidate two of its coatings laboratories in the U.S.-a decision driven by automotive industry conditions and the continued, unprecedented escalation of raw materials costs-DuPont Automotive Systems signed a joint venture agreement with Russkie Kraski Corp. forming DuPont Russian Coatings LLC. The joint venture is aimed at supplying automotive coatings to manufacturers of automobiles and commercial vehicles in Russia and some countries in Eastern Europe, including Belarus and Ukraine.
Although Russian GDP growth is beginning to soften one of the country's major growth markets will be the rapidly growing automotive industry as foreign carmakers invest on Russian soil, according to a new report profiling the Russian paint industry released by Information Research. The report said that car output in Russia is expected to soar from 165,000 units in 2004 to 900,000 units by 2010 and that demand for automotive OEM coatings will multiply rapidly, possibly by as much as 30% per annum from the present level of approximately 40,000 tons.
Staying Ahead of the Curve
Technology in today's automotive OEM coatings market is focused on two primary areas-reducing automakers' costs and meeting environmental requirements. However, even as paint suppliers continue to experience price down pressure from all OEMs on all coatings products, the cards are not in the OEMs' hands entirely. As OEMs are increasingly in need of new and innovative coatings technology in order to add value and differentiation to their finished products and to meet evolving environmental requirements, the dynamics of the relationship between OEMs and their paint suppliers are shifting.
Historically, the automaker ruled, according to Phil Phillips, president and managing partner, The Chemark Consulting Group. "In the past, whatever the major OEMs demanded, paint suppliers were forced to comply," he said. "This is changing as technology evolves. In the years ahead, OEMs are going to have to rely on the paint supplier that offers the best coatings systems."
These coatings innovations can only come from the continued investment in research and new technology development on the part of coatings suppliers.
However, technology is a double-edged sword. Due to the increased effectiveness in the transfer efficiency of coatings, which has resulted in a reduced amount of coatings used per vehicle, global sales of automotive coatings continue to shrink. As a result, sales of coatings applied to each new automobile are down about 30% over the past five years, according to White.
"To combat these trends, coatings suppliers are focused on reducing the overall cost of an applied gallon of paint on a finished vehicle. This opens up the opportunity for a coatings supplier to bring new and innovative coatings technologies to an OEM customer focused on the reduction of both the direct and indirect cost of coating an automobile," White said. "These new coatings will allow an OEM to reduce or combine the number of steps in the coating process, reduce capital investment requirements for new paint shops, reduce energy, labor and maintenance costs associated with the coating process, and lastly, reduce CO2 emissions to meet current and future air emissions standards."
The brave new world of nanotechnology is another area coming into sharper focus for paint companies. It holds a lot of promise for a number of reasons, according to Phillips. Through nanotechnology paint companies will further be able to eliminate steps in the coating process as well as be able to make thinner coatings, which will reduce the total weight of coatings needed for the average car.
"There is a big race on right now for nanotechnology inclusion in automotive coatings. Paint companies have a chance to reduce coating thickness and increase the cost efficiency of applying them," Phillips said. "However, the question remains, 'Why would paint companies race to provide a product to the automobile business if the price and margin pressures are going to be so great?' The answer is, the first one to the winner's circle with an advantage of nanotechnology in their portfolio of offerings is going to be able to ask for a premium for a period of time."
Historically, the automaker ruled, according to Phil Phillips, president and managing partner, The Chemark Consulting Group. "In the past, whatever the major OEMs demanded, paint suppliers were forced to comply," he said. "This is changing as technology evolves. In the years ahead, OEMs are going to have to rely on the paint supplier that offers the best coatings systems."
These coatings innovations can only come from the continued investment in research and new technology development on the part of coatings suppliers.
However, technology is a double-edged sword. Due to the increased effectiveness in the transfer efficiency of coatings, which has resulted in a reduced amount of coatings used per vehicle, global sales of automotive coatings continue to shrink. As a result, sales of coatings applied to each new automobile are down about 30% over the past five years, according to White.
"To combat these trends, coatings suppliers are focused on reducing the overall cost of an applied gallon of paint on a finished vehicle. This opens up the opportunity for a coatings supplier to bring new and innovative coatings technologies to an OEM customer focused on the reduction of both the direct and indirect cost of coating an automobile," White said. "These new coatings will allow an OEM to reduce or combine the number of steps in the coating process, reduce capital investment requirements for new paint shops, reduce energy, labor and maintenance costs associated with the coating process, and lastly, reduce CO2 emissions to meet current and future air emissions standards."
The brave new world of nanotechnology is another area coming into sharper focus for paint companies. It holds a lot of promise for a number of reasons, according to Phillips. Through nanotechnology paint companies will further be able to eliminate steps in the coating process as well as be able to make thinner coatings, which will reduce the total weight of coatings needed for the average car.
"There is a big race on right now for nanotechnology inclusion in automotive coatings. Paint companies have a chance to reduce coating thickness and increase the cost efficiency of applying them," Phillips said. "However, the question remains, 'Why would paint companies race to provide a product to the automobile business if the price and margin pressures are going to be so great?' The answer is, the first one to the winner's circle with an advantage of nanotechnology in their portfolio of offerings is going to be able to ask for a premium for a period of time."
Offering a Broader Palette
At a time when paint suppliers are devising strategies to maximize function, they are focused too on advancing color technology to meet demands coming from the consumer but also to offer a point of differentiation for their customers in a very crowded market.
In January, Sherwin-Williams Automotive Finishes Corp. launched Planet Color, a collection of optically enhanced coatings. Utilizing state-of-the-art technology in a multi-coat application system, the finishes are easier to apply and faster drying than previous generations, according to the company.
"We've created vibrant coatings with metallic and shimmering tones and other special effects," said Bob Fritz, manager new business development-OEM color specialist. "New technology gives our Planet Color finishes a radically new visual appearance. Additionally, these coatings are based upon OEM-approved technology for proven durability, plus they have brilliant, mirror-like finishes that are easy to apply and repair."
Planet Colors' portfolio was designed to reflect several moods and attitudes including Sinister, Tuner Tones, Bikini Brites, Rugged, Northern Lites, Classic Muscle, Jewel and Alloy.
Silver's six-year reign as the top vehicle color choice worldwide is being challenged by gray, now infused with an array of colors, and a stronger, bolder blue, according to color experts at DuPont Automotive Systems. The company's new 2005 Color Popularity Report shows an increasing trend toward mass personalization as a growing number of vehicle buyers are seeking colors.
"The auto market is further pushing the envelope in color, recognizing that as many as 40% of consumers are likely to switch brands if they can't get the color they want," said Karen A. Surcina, color marketing and technology manager for DuPont Automotive Systems.
DuPont recently developed 100 new colors, including a coating technology that glows in the dark for safety, to present to automotive designers under the theme "Appetite for Color."
In January, Sherwin-Williams Automotive Finishes Corp. launched Planet Color, a collection of optically enhanced coatings. Utilizing state-of-the-art technology in a multi-coat application system, the finishes are easier to apply and faster drying than previous generations, according to the company.
"We've created vibrant coatings with metallic and shimmering tones and other special effects," said Bob Fritz, manager new business development-OEM color specialist. "New technology gives our Planet Color finishes a radically new visual appearance. Additionally, these coatings are based upon OEM-approved technology for proven durability, plus they have brilliant, mirror-like finishes that are easy to apply and repair."
Planet Colors' portfolio was designed to reflect several moods and attitudes including Sinister, Tuner Tones, Bikini Brites, Rugged, Northern Lites, Classic Muscle, Jewel and Alloy.
Silver's six-year reign as the top vehicle color choice worldwide is being challenged by gray, now infused with an array of colors, and a stronger, bolder blue, according to color experts at DuPont Automotive Systems. The company's new 2005 Color Popularity Report shows an increasing trend toward mass personalization as a growing number of vehicle buyers are seeking colors.
"The auto market is further pushing the envelope in color, recognizing that as many as 40% of consumers are likely to switch brands if they can't get the color they want," said Karen A. Surcina, color marketing and technology manager for DuPont Automotive Systems.
DuPont recently developed 100 new colors, including a coating technology that glows in the dark for safety, to present to automotive designers under the theme "Appetite for Color."
