Fueled by an international construction boom, the global industrial coatings market has been experiencing healthy growth. According to Akzo Nobel's Global Coatings Report 2006, from 2001 industrial coatings have increased by an annual average of 2.3% and this is expected to increase to 5.9% by 2010. This growth has been almost entirely focused on developing markets, especially Asia and Eastern Europe, as key industries have shifted from traditional manufacturing regions in North America and Western Europe to these lower cost markets that are exhibiting fast paced growth.

"We have experienced a strong migration of the industrial business base to the lower labor cost regions of the world," said Terry Francek, business unit controller, Akzo Nobel's industrial finishes business unit. "Accordingly, we are expecting only modest growth in the mature markets of North America and Western Europe with above average growth opportunities in China, Vietnam, India, Russia and the overall Eastern Europe region."

Demand for industrial coatings is growing the fastest in Asian markets, particularly China and India agreed Shruti Singhal, North American region market manager, industrial finishes and traffic paint, Rohm and Haas. "In more mature markets such as North America, we see lower growth rates, but a significant opportunity to capitalize on the shift to water-based coatings," he added.

U.S. demand for industrial coatings

In the U.S., the industrial coatings market is strongly related to the residential and commercial construction industries, where demand for coatings for industrial wood applications and coil coating applications, as well as wood adhesives applications are important elements. �� ��� �"Residential construction drives demand for building products, cabinetry, flooring, joinery and ultimately furniture," said Francek. "At the same time, demand for coil and extrusion coatings is driven by the construction of commercial/multi-family structures."

Economic trends in the North American housing market industry impacts business globally. "The current correction in the housing market industry in North America has an unfavorable impact on demand in our wood coatings business in Asia as it is largely dependent on furniture applications for the North American market," explained Francek.

According to Mark Thomas, director of marketing, Tnemec Company, the market for industrial coatings in the U.S. is indeed growing due to several factors. "The industrial coatings market is being driven primarily by the growth of non-residential building in the architectural market as well as the replacement and refurbishment of aging infrastructure throughout the U.S.," he said. "Increased activity in the industrial manufacturing market is another area that is having a positive impact on the industrial coatings market."

The specialty plastics business is one such area and is primarily driven by the demand for consumer electronics, according to Francek. "In addition, the increasingly competitive nature of the consumer electronics business has increased the use of color and effect decoration as a differentiation mechanism," he said. "This is obviously a favorable demand driver at the moment."

Environmental legislation drives growth

While the majority of growth in industrial coatings has centered around developing nations, increasingly strict environmental regulations are the impetus for growth in mature markets like North America and Western Europe.

The U.S. market for industrial coatings as a whole is growing at approximately 2-3% per year, according to Singhal. "The biggest growth potential lies in water-based technology," he said. "Regulations such as SCAQMD (South Coast Air Quality Management District), OTC and National AIM are forcing paint formulators, contractors and building and design engineers to look at waterborne technology. Although most industrial coatings are still solvent-based, the market is changing as regulations limit VOC content and coatings suppliers see greater demand for greener and more sustainable materials."

For many decades, industrial coatings have relied on solvent-based materials. Today, approximately 85% of industrial coatings are solvent-based, according to Singhal.

While new regulations limiting VOC content are driving the transition to water-based materials, it's not all smooth sailing for paint and coating manufacturers making the switch.

"The challenge manufacturers face is to change the perception of water-based materials among contractors and end users, who remember older technology that didn't perform up to their standards," said Singhal. "Now that the water-based materials can perform as well as or better than traditional coatings, we see that perceptions are changing and contractors are more open to new technology."

In order to change perceptions about water-based industrial coatings, Rohm and Haas is working with influential organizations in the industrial coatings market to demonstrate the performance, environmental and safety advantages that water-based systems can offer.

"For example, the California Department of Transportation (Caltrans) has written Avanse MV-100 into its sourcing specification because it needs a low VOC coating with high level performance," said Singhal. "By keeping key agencies and personnel informed on the latest developments and capabilities in water-based technology, we can demonstrate that water-based technology can perform as well as, and in some cases better than, solvent-based industrial coatings."

Besides stringent environmental regulations, weakening economies, rising production costs and raw material price increases are also challenges facing the industrial coatings market.

"There are clear indicators of a weakening North American economy," said Francek. "How deep and how long it lasts remains to be seen. The broader impact of course is the impact this will have on the global economy."

At the same time crude oil prices remain volatile and there is no sign that this will change in the future. "In addition, volatile steel prices will certainly produce an apprehensive commercial construction industry and thus a speculating and reluctant buying community for pre-painted steel," Francek said. "While this is occurring in the North American market, there is growing over capacity of steel in India, which may be the genesis of future unhealthy trade behavior."

The piping and cooling stacks at the Texas A&M Power Plant in College Station, TX are protected with Tnemec high performance coatings. The coating system on both the water tank and the pipes used a prime coat of Series 90-97 Tnemec-Zinc, a two-component, moisture-cured zinc-rich aromatic polyurethane which offers superior bonding to SSPC-SP6 prepared exterior steel. An intermediate coat of Series 66 Hi-Build Epoxoline, a polyamide epoxy, and a finish coat of a polyester urethane completed the job. "The original polyester urethane coating that we used on the water tank had been discontinued, so Series 290 CRU replaced the earlier coating," said Pat Barry, Tnemec coating consultant. "Polyesters are known for their extreme hardness and chemical resistance, which is why we chose them for this project."

Meeting customers' demands

In terms of R&D, environmental regulations remain the primary challenge for industrial coatings suppliers. "Coatings manufacturers are challenged with creating new formulations that perform and apply as good or better than the products they replace," said Thomas.

In addition, customers are looking for value added products that will help their bottom line. "Long-term performance and life-cycle value have gained considerable prominence in the customer's decision making process the past few years," Thomas added. "Increasing labor costs create a situation where customers are looking for coating products that will extend the maintenance cycle as far as possible. Tnemec Company's commitment to research and development has been a cornerstone of the company for many years, and with on-going regulations, this dedication to cutting-edge technology is even more important."

Tnemec offers a wide range of industrial coatings for nearly any environment or exposure. The company's product offerings include high-performance acrylic, alkyds, epoxies, polyurethanes and fluropolymers.

Substrate protection, aesthetically pleasing fashion decoration, efficient customer service, employee and environmental safety, speed of application and low costs are some of the performance attributes industrial customers are looking for.

"A core strategy of the industrial finishes business unit is to improve our customer's profitability through value-added products and services," said Francek. "With a broad technology base, an in-depth knowledge of application science, a global reach, a market tuned fashion sense and a customer driven decision process, the industrial finishes business unit is uniquely competitive in the markets we serve."

Akzo Nobel is currently developing new coating and adhesive chemistries building off of existing technology platforms that offer value-added growth or discovering new concepts that meet the future needs of their customers. The company's development efforts include, coatings research, polymer synthesis, exploring new application and curing concepts, and pursuing new accelerated test methods that more closely simulate real world exterior exposure to hasten market introduction.

The key performance features Rohm and Haas are focused on are improved corrosion resistance, higher gloss and gloss retention, and improved durability, in addition to low odor and VOC.

"Our customers absolutely do not want to compromise on any performance aspect," Singhal said. "Although meeting performance expectations with water-based coatings has been a challenge in the past, Avanse MV-100 offers customers excellent performance when compared to solvent-based coatings. Avanse MV-100 gives good pigment dispersion, thereby resulting in an enhanced film structure with better hiding and potential cost savings when compared to other latex-based coatings."