03.19.18
Coatings World: How did the market for paint and coatings fare overall in 2017?
Henrik Andersen: Like we expected at the beginning of last year, the global coatings market remained challenged throughout 2017 and we did not see growth pick up as quickly as expected. This impacted of course our segments and regions. In the marine industry we were faced with hard market conditions like the rest of the market, due to a further decrease in shipbuilding activities, especially in China and Korea. We experience a tendency of steady slow growth in the global market for protective with increasing investment in the energy sector as well as in infrastructure. The oil and gas industry has been affected by low oil prices. Generally, we experienced growth from our large Europe & Africa region, our two regions in the Middle East as well as South America.
With the raw material cost increases of 2016 continued into 2017, we announced price increases of certain products. Raw materials constitute a major part of the cost of manufacturing coatings for the protective, marine and decorative industries – and, while Hempel does everything possible to mitigate these cost increases, there is a limit to how much can be absorbed.
Dirk Bremm: In the field of automotive OEM coatings, globalization and competitiveness are of great importance. Therefore, the increase of efficiency of products and processes is crucial for both business segments.
In 2017, the automotive industry increased globally by 2.5 percent – which is mostly driven by growing production output in Asia and Europe. A further positive development was South America, where the situation of the industry improved after several years of decline.
Surprisingly, the production numbers in North America decreased even though moderate growth was expected in the beginning of the year.
In our business with automotive refinish products, we experienced a further consolidation of the market. This is a development which will continue to influence the industry. Furthermore, the Value-for-Money segment increased and we will continuously cater to this business through respective investments.
Ho-Sheng Chen: It has generally been a good year for the coatings industry although the markets are becoming increasingly volatile. Overall, we have seen growth in the market but also a few segments with challenging conditions. It is worth noting that the real estate industry in China in recent years rapid growth. I’s now encountering the Chinese government’s strong control, forecast in the next five years will be a downward trend even for decorative paints will be a big challenge. TAIHO PAINT will develop the market of southeast Asia in order to reduce the contraction decorates coating probably in China. We will do better for our Global existence and lasting growth. In this way, we can serve continually our customer in the world.
John Falder: Overall a fairly challenging year with big raw material increases and shortages across a range of areas. The massive global takeovers and restructuring were very interesting to observe and certainly the big are now very big! Our ambition is not to be big only to be good. Growth for HMG is a byproduct!
Boris Gorella: Overall, 2017 has been a dynamic year for industrial coatings. The overarching topic was the raw material costs that sky-rocketed and hit the whole industry. Ongoing consolidation, already implemented or proposed, and tighter regulations are shaping the future of paints and coatings as well. Generally – despite these challenging market conditions – I think it has been a good year for the industry.
Michael H. McGarry: Overall, we saw positive growth in the paints and coatings market in 2017. Market growth can be attributed to a variety of factors, including rising demand in the construction industry, an increase in consumer confidence and continued automotive growth in Asia Pacific.
Gilles Nauche: Our operations are mainly in Europe. The market was modestly growing in 2017 mainly in South West Europe but declining in Italy. The main growth driver was volume but not prices.
Donghang Qiu: As a whole, the coatings industry in 2017 witnesses an increase in scale but a decrease in profit.
To be more specific, the weight of products sold amounts to 14.94 million tons by the end of the first three quarters of 2017 with the sales-output ratio being 98.4 percent. The yearly output of 2017 exceeds 20 million tons and the output value reaches 460 billion RMB, growing at a rate of seven percent and six percent, respectively.
At the same period, the number of loss-generating companies and the amount of loss witness a sharp year-on-year growth, which is closely related to the soaring price of raw materials, the integration and reshuffle of the industry and environment protection pressure etc.. For the first half year of 2017, the accumulated profit is 13.63 billion RMB, a 15.1 percent year-on-year dive.
In a word, the coatings industry of 2017 is turning more competitive considering factors like inflating raw material prices, strict environmental supervision and so on. The Chinese coatings industry has reached a common sense that is transformation and development must be achieved through environmental protection.
Abhijit Roy: The overall performance of the market was good and in most of the sectors Berger Paints operates in. We witnessed the implementation of the most wide-ranging reform of the indirect tax regime with the introduction of GST. As expected, there were the initial teething problems one would associate with such a large structural reform. However, on the whole, the government showed itself to be responsive and nimble in addressing such issues and the economy looks to be back on track.
Charles W. Shaver: The overall market for paint and coatings in 2017 was generally positive and we saw good global growth. Axalta also had a good year in 2017 with sales increasing seven percent, primarily from the contributions of the eight successful acquisitions completed during the year.
Last year, many of the major coatings companies worldwide struggled with organic growth as global GDP increased a modest two and three percent. So, while organic growth occurred across the industry, it was not as robust. At Axalta, the strongest growth came from Performance Coatings -- our Aftermarket, Collision, and Industrial Coatings segments, which are more GDP-plus type businesses.
CW: Did your company see an increase in revenue in 2017?
Andersen: Our annual result is first published in April, so I can’t give you a complete answer. What I can say is that we are overall satisfied with 2017, despite the challenging business environment, the development of the coatings market and increasing raw material prices. This did not only affected Hempel, but also the rest of the coatings industry.
Bremm: In 2017 we saw a strong volume growth above market in our OEM business in all regions. Our refinish business grew in line with the market. Overall our revenue went up mainly driven by the acquisition of the Chemetall surface treatment business.
Chen: Basically, TAIHO PAINT (China) this annual revenue did get a little growth that’s compared with the last year. Since the 2017 annual result won’t be published until April. I can’t give you a complete answer. But what I can say is that 2017 was a very bad year for TAIHO PAINT (China). The rising prices of raw materials, environmental protection, increased security supervision, and higher tax revenues pose serious challenges to our profits. We are further adjusting our growth strategy.
Falder: Yes we increased, but below our initial budget. We undertook some significant internal investment and evolutionary changes which put HMG from a very good position going forward.
Gorella: Yes, thanks to our portfolio we saw an increase in revenue, even though we were not able to repeat the record growth of 2016. Both of our segments Coil and Industrial Coatings grew in sales. However, we absorbed a large part of the higher raw material costs.
McGarry: Last year was a solid year for PPG. PPG’s full-year 2017 net sales totaled approximately $14.8 billion, up more than 3 percent compared to the prior year. PPG reported adjusted earnings per diluted share from continuing operations of $5.87, representing an increase of nearly four percent year-over-year. We benefited from sales from businesses acquired during 2016, including MetoKote and Univer as well as the 2017 acquisitions of DEUTEK, Futian, and The Crown Group.
Nauche: Yes. Cromology’s business benefited from a return to growth in France, a solid growth in Southern Europe – except Italy – and from continued double-digit growth in the Rest of the World.
Qiu: Yes, we have achieved our target growth in revenue.
Roy: It was a good year for us and we achieved double digit growth in revenues and profit in spite of the disruption caused by the implementation of GST. We have a strong presence in most segments and almost all of our divisions have posted strong growth this year. This is in part due to our continued focus on our people, R&D and market-led innovation.
Shaver: Axalta’s sales were $4.35 billion in 2017, which were up seven percent and driven by our successful acquisitions. As we enter 2018, we see similar market dynamics. In 2018, we expect to see three to four percent organic growth, up from one to two percent in 2017, as we anticipate that world economies will be a little stronger this year. We plan on growing overall net sales by eight percent in 2018 including acquisitions already completed.
CW: What areas of the paint and coatings market represent the most growth opportunities for your company?
Andersen: In our strategy towards 2020 “Journey to Excellence”, we focus on growing faster than the market in all our segments. We still recognise untapped market opportunities in our Protective segment.
The marine market remains challenging as the newbuilding market decreased. We have managed to maintain our market share in a very difficult, decreasing market. We expect newbuilding order to remain on a very low level the coming years. The same is the case for the market for maintenance.
We recognize a great growth potential within Decorative, but this is still a segment with limited global presence for Hempel.
Bremm: We will continue to push for profitable growth in all our businesses with a clear strategy to focus on emerging markets.
Besides China, markets such as Mexico and ASEAN play an important role. In addition, we see substantial growth opportunities by launching both product and process innovations that serve our customers’ needs for sustainable solutions.
Chen: TAIHO PAINT (China) has gained market share across the latex paint and lacquer decoration furniture market. While the market for latex paint and lacquer decoration furniture is maturing in some regions. There is still significant growth potential in selected emerging regions and in addition. We have identified untapped market opportunities that are currently being investigated. We are actively looking for additional acquisitions to expand our business scope and acquire new technologies and approvals. At the same time, we focus on helping our customers be more competitive by helping lower their operating costs.
We have more and more decorations, but this is part of our limited global reach. We want to change that. So we believe our global influence on decoration will be increasing.
Falder: Many areas, including nanotechnology, graphene developments, high-performance niche business areas, and design and color styling are all areas of significant development and growth.
Gorella: In Coil Coatings, we started in 2017 with the expansion of our domestic appliance business. In some emerging regions, there is also still potential for growth in our architectural coil coatings business. After facing slower growth in Asia in the previous year, we are expecting this market to pick up pace again. Consequently, we will open a new site in Vietnam to enhance our reach of service in the northern part of the country.
One of the highlights in 2017 was the release of the Beckers Sustainability Index app, which demonstrates how coil coatings can enhance the sustainability of customers’ end products. The positive feedback we received for the app showed us that we are on the right track with our commitment to sustainability, and we see the growing market for sustainable solutions as an opportunity.
Furthermore, there are good prospects for our Industrial Coatings business, in particular in Asia. Here, we see the possibility to grow in our business lines for Railway, Consumer Design Finishes, or Automotive Plastics Exterior. For the European market, we are expecting substantial growth in our Agriculture, Construction and Earthmoving equipment (ACE) business.
McGarry: PPG is continuously focused on emerging trends and ensuring that we are providing the paint, coatings and specialty materials our customers need. We’re embracing new ways of thinking as our markets evolve. A prime example is our newly formed mobility and autonomous vehicle team, which is focused on developing and commercializing growth opportunities in this emerging, global market.
As part of our focus on growth opportunities, environmental stewardship has driven our research and development portfolio for more than a century. That rich history has embedded the community to innovate products and processes that provide environmental and other sustainability benefits for our operations and our customers. But, sustainable product innovation is more than a business strategy at PPG. It is a commitment to the environment, our customers and our people, which will continue to be a focal point for years to come.
Nauche: Cromology is a pure player of the decorative paints, expert both in internal and external paintings and also in ETICS.
Customers request environmental-friendly and health harmless products. To answer to that trend, for several years, we are transforming our portfolio of products. In 2017, two out of three of our new products less than three years old meeting the requirements of even the most demanding labels in terms of VOC content (Ecolabel, TÜV) or VOC emissions (A+, TÜV).
In France, for example, we launched products with the German TÜV label, which demands a VOC content of less than 1 g/l for interior paints, which is 30 times lower than the content imposed by European regulations and 10 times lower than the content required by the European Ecolabel.
Qiu: The renovating market. China now develops 3 billion square meters of housing area every year and the current housing area has already reached 50 billion square meters. These considerable increment and stock evolve into a massive need for renovating old buildings.
The personalized decoration market. Customers are becoming increasingly interested in demonstrating their own style in their living environment. The function of paint and coatings is more than decorating and protecting.
The waterborne coatings market. Under stringent environment regulations, the market pays much attention to health, driving waterborne coatings, featured as environment-friendly, safe, energy-conserving and non-toxic a leading trend.
The functional coatings market. For example, architectural energy-saving coatings and other special high performance architectural coatings can be further developed.
Roy: Berger operates in diversified segments from decorative paints, automotive, general industrial, auto refinish, powder coatings, marine paints etc.. The largest growth opportunities for us would be Wall Coatings within Decorative Coatings and Protective Coatings. These are the segments on which R&D and Sales and Marketing focus largely.
Shaver: About 70 percent of Axalta’s business is transportation-related and about 30 percent of that serves the OEM market. While the OEM business closely follows global GDP growth, our Performance Coatings business, which serves the Refinish and Industrial markets, are strong GDP-plus type businesses. We expect our Performance Coatings business to be a strong performer in 2018.
So, for Axalta, we expect growth of low single digits in Transportation, mid-single digits from Refinish, and at least mid-single digits in our Industrial business, which is made up of industrial liquids, powder coatings, wood coatings, and coil coatings.
CW: What is your business strategy for growth in 2018 and beyond?
Andersen: We will continue to execute and accelerate on our 2020-strategy Journey to Excellence even though the market remains challenging in 2018.
A major element of our strategy is to actively participate in the consolidation of the global coatings industry and grow through acquisitions. In 2017 we became virtually a debt-free company, allowing us to accelerate our acquisition ambitions over the coming years. Currently, we are looking at targets to complement our current business, especially within the Decorative and Protective segments. We are looking on targets worldwide. We will continue to expand our acquisition pipeline across regions and segments with interesting candidates in next years.
Another part of our strategy is our increased customer focus globally. We will continue to launch initiatives which makes us understand our customers and their needs better. This customer centricity will be even stronger from now on with our new commercial organisation, which is now complete. This enables us to focus on our global marketing activities, sales excellence and segment strategy capabilities on our growth journey.
Bremm: We expect 2018 to become a stable environment for the automotive industry, mainly driven by growth in Asia and Europe. This is where we will continue to strengthen our position. In addition to our investments in emerging markets, we will also focus on R&D in order to provide our customers with innovative solutions. With our new business unit Surface Treatment, operating under the Chemetall brand, we have further developed our portfolio and became an even more complete solution provider for coatings.
Chen: The market depth of the existing channels should be strengthened in terms of product, service, price and promotion. And TAIHO PAINT do effort to develop the part of new marketing channels about engineering internal and external wall coatings, waterborne UV coatings, cooperate with decoration company professional design channels so that increasing the exposure rate in China. It will expand the market influence of TAIHO PAINT lacquer.
Introduction of imported emulsion coatings and art coatings to be rich our lacquer decoration production line, for high-end business people and high-grade villa decoration market with suitable for products and enhance the brand value of TAIHO PAINT;
Provide incentive measures corresponding to the performance, stimulate the potential and vitality of the work team and customers, and to improve the brand sense and to push up pride of the company.
Falder: Just relentlessly trying to do the best possible job for our customers. Making product we like with suppliers and customers in partnership. It’s a strategy that never changes. We were delighted to win the national award for the supreme champion family business of the year in the U.K. Its Testament to all the staff of HMG and all of our customers and suppliers who’s continue to support us.
Gorella: We do not expect 2018 to be less dynamic than 2017. The market situation will continue to be challenging. However, with our global structure we are well equipped to respond to developments in the different markets. The flexible set up of a mid-sized company enables us to react quickly. Staying ahead of changes through quick adaption and continuous innovation as well as operational improvement is part of our strategy. We will further focus on the needs of our customers by offering individual solutions and continuing to deliver products that are future-oriented and sustainable. We have plans of further strengthening our innovation organization with investments in our R&D labs as well as capacity expansions in several of our sites.
McGarry: We remain focused on organic growth and growth through acquisition. Our goal is to achieve 25 percent of total sales from products introduced in the last four years. To ensure we are developing products that meet the needs of our customers, in 2017, we invested nearly $500 million in research and development to continue innovating our product portfolio. We continue to make earnings-accretive growth a top priority and have committed to deploy a minimum of $2.4 billion of cash in 2018 on acquisitions and share repurchases as part of our previously communicated target to deploy $3.5 billion in 2017 and 2018 combined.
Nauche: To offset the increase in raw material prices, Cromology has adapted its sales & marketing policy and increased the sales price of its products. To improve growth and profitability, Cromology’s management team launched a transformation plan in France and Italy in 2017 to strengthen the company’s sales performance and customer satisfaction.
In an expected better-oriented markets in Europe, Cromology will pioneer an omnichannel approach towards its pro customers and launch a platform of e-commerce services to improve the customer experience.
Qiu:
We will proceed with our brand promotion activities, aiming to increase our brand influence.
We will optimize our product structure, increasing the proportion of popular and hi-tech products.
We will enhance the competitiveness of the present sales network, providing more technical and marketing support to our distributors.
We will ameliorate our informatization management, respond to the market more swiftly, and improve our internal operation efficiency, thus forming a more sound domestic management system.
We will conduct new projects according to fields that have broad market prospect and create new competitive strength in fields like home renovation, waterborne wood coatings, waterborne industrial coatings and architectural energy-saving coatings etc. while maintain our strength of wood coatings and architectural coatings. With the help of our brand influence and our massive distributor networks, we hope to occupy more market shares generated by our new projects. Meanwhile, we hope to elevate our sales volume through mergers, acquisitions and internationalization.
We will expand manufacturing capacity and optimize resource allocation so as to achieve an optimum balance as a whole.
Roy: Our aim is to keep growing faster than the market thereby increasing our market share. To achieve the same we would be focussing on the expansion of our distribution network as well as on establishing the slew of innovative products that were introduced in 2017. We also remain open to exploring inorganic growth through acquisitions and partnerships.
Shaver: There are a couple of levers here. We will continue to drive organic sales growth in our existing segments. And, we will continue to add to our portfolio in our core segments through acquisitions. In 2018, we plan to add to our top line growth through new acquisitions, primarily in our Refinish and Industrial businesses. Coatings is a good marketplace and with global economies improving, we see our core markets only getting better.
We invest about $150 million in CAPEX annually, mainly in high Internal Rate of Return projects on top of a more modest maintenance budget. So, our business strategy will be to continue to invest in our core segments and, longer-term, to maintain a robust R&D portfolio. We invest about four percent of sales in R&D, which we believe is among the leaders in our industry. Customers demand innovation, not necessarily disruptive innovation, but innovation that drives value back to their business. We provide that.
Thierry Vanlancker: AkzoNobel has a strong track record of delivering on commitments to shareholders and other stakeholders. We have laid out a new plan with clear, ambitious goals. With the support of our colleagues across the world and building on our incredible brands, we will create two leading, customer focused businesses which will deliver enhanced value for all stakeholders.
On April 19, 2017, AkzoNobel unveiled a new strategy to create two focused, high-performing businesses with sustainable growth plans within 12 months.
We have consistently delivered on commitments to improve profitability and growth, while building momentum within the company. We have world-class teams and a solid financial and operational foundation.
We have a new strategy to accelerate growth and value creation with two focused, high-performing businesses – Paints and Coatings and Specialty Chemicals – which will lead to a step change in value creation for shareholders and all stakeholders.
Some 2017 highlights
We invested €12.6 million in a new innovation hub in the UK. Located in Felling in the UK, the facility will be home to teams of scientists and technical experts who will work on developing protective coatings for the energy, mining, infrastructure and oil and gas industries.
We added a colorful sparkle to the new McLaren-Honda Formula 1 car. The MCL32’s new Tarocco Orange livery – was developed by AkzoNobel in conjunction with McLaren-Honda.
We announced our commitment to accelerating our sustainability agenda by announcing a new ambition to use 100 percent renewable energy and become carbon neutral by 2050. We also returned to the top of the influential Dow Jones Sustainability Index (DJSI) to lead the rankings again for the fifth time in six years.
We opened a new Performance Coatings facility in Chonburi, Thailand
We partnered up with The Ocean Cleanup for the largest clean-up in history. The partnership involves AkzoNobel providing advanced, biocide-free coatings technology for all the devices and equipment used by The Ocean Cleanup for the next five years.
We made a double acquisition to strengthen our leading global position in Performance Coatings; UK-based Flexcrete Technologies Ltd and an French manufacturer Disa Technology (Disatech). The deals will further strengthen AkzoNobel’s global leadership position in supplying innovative industrial coatings and aerospace and automotive coatings.
We officially opened the world’s most advanced and sustainable paint plant in Ashington, in the UK. The hi-tech facility will become the new center of production for Dulux, the UK’s leading decorative paint brand.
We announced Heart Wood as 2018 Color of the Year.
We agreed to acquire V.Powdertech business to strengthen our leading powder coatings business in South East Asia
Together with peace movement MasterPeace, we completed 100 ‘Let’s Colour Walls of Connection.’
We entered the Volvo Ocean Race with team AkzoNobel. Furthermore all boats competing in this race around the globe have been coated with AkzoNobel products. We also signed a partnership with the Volvo Ocean Race to amplify their Sustainability program.
We revealed new powder coating trends and colors through our Collection Futura.
CW: In what areas are you focusing your R&D efforts?
Andersen: Our goal is to develop innovative and trusted solutions that protect our customers’ assets and add value to their business. This means a constant and increased customer focus, as all innovation starts with the customers. We enter partnerships with our customers to get an even deeper understanding of their needs and the challenges they face. Our strong global set-up with 15 R&D centres worldwide enables to respond quickly to local customer needs, develop specific solutions for local markets and provide technical support.
Our R&D department also focuses on entering into collaborative partnerships that drive value through innovation. It can be partnerships with suppliers, research teams, universities and other institutes.
Bremm: It is our goal to help our customers become more successful. Therefore, we continuously develop new products and processes to ensure the highest quality for our customers. The demand for sustainable and environmentally friendly solutions and products increases. Furthermore, e-mobility and autonomous driving will bring additional requirements in the future such as energy management, special paint systems for radar/lidar and coatings solutions for battery packs. These trends are reflected in our R&D activities.
Chen: TAIHO PAINT (China) has 100 Research specialists, which can form professional technical talents.
Under support of the National Laboratory and Provincial Engineering Technology Research and development center and market development needs, we have research some projects of odorless paint, two components .high open hole waterborne paint, free solvent spray UV transparent paint, waterborne plastic paint, poly-urethane low odorless paint, automotive upholstery, for elder healthy wall topcoat and so on. For environmental protection need our R&D direction is for low solvent and pollution, high characters hardness, weather durability and fast dry paint in the future.
Falder: Even greater customer focus, really getting close to our customers to deliver what they need for their success. We are nothing without our customers (or our staff and suppliers!) We are operating around 30 projects. All are to do with innovation and progression. Of course not all of them will come to fruition. But everything is a learning curve and our ambition is advancement . Probably some of the most exciting areas involve nano materials and some very important development in fire retardant materials.
Gorella: The course of 2017 has brought a number of highly promising technological developments and we continue to invest a significant part of our profits in research and long-term growth projects. Two aspects are always important in this regard: driving the customer-centric innovation, while at the same time fueling the industry agenda for more environmentally viable coatings solutions. The past year has also seen significant progress on new next-generation high-coverage systems, textured topcoats and bio-based paints, as well as new multilayer systems based on alternative chemistries.
McGarry: As a global leader in paints, coatings and specialty materials, PPG remains committed to investing in our R&D efforts in all areas to continue to meet and exceed customer needs. Our commitment to innovation is intertwined with growth and sustainability. It covers a wide range of products and services that provide environmental, safety and other benefits to our customers. Our products contribute to lighter, more fuel-efficient vehicles, airplanes and ships, and they help our customers reduce their energy consumption, conserve water and reduce waste. Our technologies are helping manufacturers protect their assets and products from corrosion, and we are sharing those technologies across our businesses. Examples include PPG’s award-winning waterborne technologies, our compact painting process for vehicles, and new coatings for lithium batteries needed for electric cars. The growing autonomous vehicle space is an exciting opportunity for PPG, and we have a dedicated team working on developing technologies to enable and enhance the future of mobility.
Nauche: Our R&D efforts are concentrated on environmental-friendly and user-friendlyness products.
Qiu: We will increase investment in developing new products to cope with the ever-increasingly strict environmental and energy-saving requirements. For instance, we intend to invest in waterborne coatings (including waterborne wood coatings, waterborne industrial coatings and architectural energy-saving coatings), powder emulsion paint with zero VOC, waterborne adhesive, waterborne printing ink, high solid UV coatings, unsaturated PE coatings, waterproof coatings, auxiliary materials etc. so that we can produce more environment-friendly and cost-effective products for our customers.
At the same time, we will focus on renovation and decoration coatings, as well as functional coatings, like waterborne renovation paint, artistic paint, insulated paint and impact-resistant paint and so on, to satisfy the market demands.
Roy: Consumers in the markets in which we operate demand very high value efficiency and much of our R&D efforts are directed at delivering this to consumers whether they are home owners or industrial buyers. Berger is also the first paint company in India to get all its products and factories Green Certified. Some exemplary work by our R&D has ensured that all our decorative products are Lead-free and nearly VOC-free. We clearly see ourselves as a responsible consumer company and corporate citizen; one who lays a lot of importance on environmental technologies.
Shaver: R&D is being driven by things like environmentally responsible products. In many cases that’s going to be waterborne products, but we see sustainable qualities in solvent borne products as well. We offer coatings that are designed to increase productivity, so customers can use less product per unit, and focus on corrosion to help maintain the longevity of products. We also innovate to develop more vibrant colors, as customers are not just looking for functionality improvements but also ways to make products look great. In 2017, we introduced more than 250 new products designed to meet customer needs and demands.
In the past 18 months, we added 450,000 square feet of new labs around the world - such as in Detroit, Shanghai, and Wuppertal, Germany. Our newest, and largest technology facility, the Global Innovation Center in Philadelphia, will be finished this year. These state-of-the-art facilities house 1,000 employees and represent a significant spend for the Company. Our forward-looking R&D efforts help us to continuously innovate and develop new technologies, including those we’re working on in the autonomous vehicle space. We will continue to invest in R&D to stay ahead of ever evolving demands and technology trends so we can continue to provide leading solutions to our customers and end-markets. We are not affected by change … we lead change.
CW: What is your company’s long-term plans?
Andersen: Our current focus is on accelerating our strategy Journey to Excellence even further. Our goal is to accelerate our growth – both organically and through acquisitions. We will continue to invest in delivering value to our customers through new solutions and increased service offerings, like we have done since 1915.
Bremm: In general, we aim to achieve profitable growth in all regions. Therefore, we actively drive innovation to help our customers be successful. We also continue to invest in emerging regions with a high growth potential. In addition to investing in our manufacturing set-up, we will also increase our research and development activities worldwide.
China remains a key priority for us, where we have grown above the market. We support this growth by having large investments and a complete operation in China, which includes manufacturing, R&D and technical services. We have also invested in other growing markets such as ASEAN and LATAM. Our recently opened production plant in Bangpoo, Thailand, for example complements the facilities at our Coatings Technical Competence Centre ASEAN. The co-location of production and technical facilities enables operational efficiency, best technical service for our customers and speed to market.
Chen: The company will provide long-term kinetic energy in product, service and enterprise innovation, so that the company will move to the centennial enterprise.
Products: we have to effort researching and development of leading-edge and undeveloped products to provide a basis for the continuous leadership of the enterprise.
In service aspect: we have to strengthen technical service team’s professionalism, consciousness of service consciousness and team structure. Continuity to ensure the long-term supremacy of the market services to provide assurance.
Innovation: TAIHO PAINT make it, as possible as we can, we will provide great resources for the enterprise’s structural innovation, system innovation, service innovation and so on, to ensure the vitality of the enterprise.
Falder: To remain a strong independent business, to hold the trust of our customers in doing the best possible job for them. Fair dealing in all things. And as a consequence of doing the job that we do getting what we deserve!
Gorella: The Beckers Group is a global service-oriented provider serving selected coating segments. With our focus on coil coatings and the five Industrial Coatings business lines, we clearly differentiate against a diversified mass producer. Our long-term business model is focused on sustainable growth and the key enablers for our success center on sustainable innovation, exceptional customer service with tailored technical solutions and a strong and highly committed workforce.
McGarry: We are committed to protecting and beautifying the world through innovative paints, coatings and specialty materials. This year marks our 135th year in operation, and the focus on our purpose has never been stronger and extends beyond the economic boundaries of our business to ensure the long-term sustainability of PPG.
We remain dedicated to supporting communities where our employees live, work and play. Since 2015, PPG has completed more than 125 COLORFUL COMMUNITIES projects, which positively impacted 4 million people. Through the Colorful Communities program and the PPG Foundation, we will continue to focus on and grow our community engagement efforts.
PPG also has an unwavering focus on growing long-term value with sustainable business practices. Our culture of continuous improvement underpins our approach and commitment to sustainability.
Whether it is increasing the efficiency of our operations, finding additional eco-friendly product solutions or developing our people, our improvement efforts naturally extend to many areas that impact our sustainability performance. As our paints, coatings and specialty materials portfolio continues to evolve, we strive to find additional sustainable solutions and identify new sustainability goals across the globe. PPG will continue to evaluate new opportunities as they pertain to product development, sustainability and long-term business growth.
Looking forward, PPG is well positioned to benefit from continued global economic growth because of our geographic reach; robust growth strategy; excellent product portfolio, innovation and advanced customer technologies; transformational leadership; and enduring commitments to sustainability, ethics and community engagement.
Nauche: Thanks to a customer experience, a high quality of products and a state-of-the-art multichannel and digital Go-to-Market approach, Cromology aims to increase its market share and to consolidate its leading role building an even stronger position in the Decorative Paint Business, especially in Europe.
Qiu: Our long term plan is to become the leading paint producer in China and a reputable Chinese paint company around the world, excelling in production-sales scale, factory layout, channel competitiveness, technology and brand influence etc.
Roy: We are currently ranked 15th in the world as per Coatings World rankings. We hope to be in the Top-10 in the next five years without eroding profitability. We operate in an economy that is seeing favorable tailwinds and we aim to make the most of it. You will see us investing in developing capabilities in our people, research and development centres and our production facilities. The consumer remains at the centre as always and our plans will include the development of innovative products and services that solve their pain-points.
Shaver: Financially, we will target high single-digit top line growth, including bolt-on acquisition contribution, and double-digit bottom line growth. We will stay focused on our core Transportation and Performance sectors.
At Axalta, people have never been more important. I think every year it’s becoming more and more important to acquire the right people. Obtaining and retaining skilled labor is getting harder to do. Demand is high for everyone – from scientists, to engineers, to talented business professionals. As a company, you must offer opportunities that will satisfy employees and we have that Axalta. Talent is one of the most critical elements going forward for our success.
We will also continue to focus on technology to better serve our customers. Technology is global and customers, from China, India, the U.S. and all over the world, expect the same things, whether that’s the latest in coatings, in innovation, in techniques, or productivity. To meet these needs, companies must be global with their talent and technologies so they can be transferrable around the world. All customers want the best new products and services, so no specific region will ever again lag another in the coatings industry. We have nearly 50 manufacturing sites around the world and are well equipped to produce solutions that meet local market needs.
Henrik Andersen: Like we expected at the beginning of last year, the global coatings market remained challenged throughout 2017 and we did not see growth pick up as quickly as expected. This impacted of course our segments and regions. In the marine industry we were faced with hard market conditions like the rest of the market, due to a further decrease in shipbuilding activities, especially in China and Korea. We experience a tendency of steady slow growth in the global market for protective with increasing investment in the energy sector as well as in infrastructure. The oil and gas industry has been affected by low oil prices. Generally, we experienced growth from our large Europe & Africa region, our two regions in the Middle East as well as South America.
With the raw material cost increases of 2016 continued into 2017, we announced price increases of certain products. Raw materials constitute a major part of the cost of manufacturing coatings for the protective, marine and decorative industries – and, while Hempel does everything possible to mitigate these cost increases, there is a limit to how much can be absorbed.
Dirk Bremm: In the field of automotive OEM coatings, globalization and competitiveness are of great importance. Therefore, the increase of efficiency of products and processes is crucial for both business segments.
In 2017, the automotive industry increased globally by 2.5 percent – which is mostly driven by growing production output in Asia and Europe. A further positive development was South America, where the situation of the industry improved after several years of decline.
Surprisingly, the production numbers in North America decreased even though moderate growth was expected in the beginning of the year.
In our business with automotive refinish products, we experienced a further consolidation of the market. This is a development which will continue to influence the industry. Furthermore, the Value-for-Money segment increased and we will continuously cater to this business through respective investments.
Ho-Sheng Chen: It has generally been a good year for the coatings industry although the markets are becoming increasingly volatile. Overall, we have seen growth in the market but also a few segments with challenging conditions. It is worth noting that the real estate industry in China in recent years rapid growth. I’s now encountering the Chinese government’s strong control, forecast in the next five years will be a downward trend even for decorative paints will be a big challenge. TAIHO PAINT will develop the market of southeast Asia in order to reduce the contraction decorates coating probably in China. We will do better for our Global existence and lasting growth. In this way, we can serve continually our customer in the world.
John Falder: Overall a fairly challenging year with big raw material increases and shortages across a range of areas. The massive global takeovers and restructuring were very interesting to observe and certainly the big are now very big! Our ambition is not to be big only to be good. Growth for HMG is a byproduct!
Boris Gorella: Overall, 2017 has been a dynamic year for industrial coatings. The overarching topic was the raw material costs that sky-rocketed and hit the whole industry. Ongoing consolidation, already implemented or proposed, and tighter regulations are shaping the future of paints and coatings as well. Generally – despite these challenging market conditions – I think it has been a good year for the industry.
Michael H. McGarry: Overall, we saw positive growth in the paints and coatings market in 2017. Market growth can be attributed to a variety of factors, including rising demand in the construction industry, an increase in consumer confidence and continued automotive growth in Asia Pacific.
Gilles Nauche: Our operations are mainly in Europe. The market was modestly growing in 2017 mainly in South West Europe but declining in Italy. The main growth driver was volume but not prices.
Donghang Qiu: As a whole, the coatings industry in 2017 witnesses an increase in scale but a decrease in profit.
To be more specific, the weight of products sold amounts to 14.94 million tons by the end of the first three quarters of 2017 with the sales-output ratio being 98.4 percent. The yearly output of 2017 exceeds 20 million tons and the output value reaches 460 billion RMB, growing at a rate of seven percent and six percent, respectively.
At the same period, the number of loss-generating companies and the amount of loss witness a sharp year-on-year growth, which is closely related to the soaring price of raw materials, the integration and reshuffle of the industry and environment protection pressure etc.. For the first half year of 2017, the accumulated profit is 13.63 billion RMB, a 15.1 percent year-on-year dive.
In a word, the coatings industry of 2017 is turning more competitive considering factors like inflating raw material prices, strict environmental supervision and so on. The Chinese coatings industry has reached a common sense that is transformation and development must be achieved through environmental protection.
Abhijit Roy: The overall performance of the market was good and in most of the sectors Berger Paints operates in. We witnessed the implementation of the most wide-ranging reform of the indirect tax regime with the introduction of GST. As expected, there were the initial teething problems one would associate with such a large structural reform. However, on the whole, the government showed itself to be responsive and nimble in addressing such issues and the economy looks to be back on track.
Charles W. Shaver: The overall market for paint and coatings in 2017 was generally positive and we saw good global growth. Axalta also had a good year in 2017 with sales increasing seven percent, primarily from the contributions of the eight successful acquisitions completed during the year.
Last year, many of the major coatings companies worldwide struggled with organic growth as global GDP increased a modest two and three percent. So, while organic growth occurred across the industry, it was not as robust. At Axalta, the strongest growth came from Performance Coatings -- our Aftermarket, Collision, and Industrial Coatings segments, which are more GDP-plus type businesses.
CW: Did your company see an increase in revenue in 2017?
Andersen: Our annual result is first published in April, so I can’t give you a complete answer. What I can say is that we are overall satisfied with 2017, despite the challenging business environment, the development of the coatings market and increasing raw material prices. This did not only affected Hempel, but also the rest of the coatings industry.
Bremm: In 2017 we saw a strong volume growth above market in our OEM business in all regions. Our refinish business grew in line with the market. Overall our revenue went up mainly driven by the acquisition of the Chemetall surface treatment business.
Chen: Basically, TAIHO PAINT (China) this annual revenue did get a little growth that’s compared with the last year. Since the 2017 annual result won’t be published until April. I can’t give you a complete answer. But what I can say is that 2017 was a very bad year for TAIHO PAINT (China). The rising prices of raw materials, environmental protection, increased security supervision, and higher tax revenues pose serious challenges to our profits. We are further adjusting our growth strategy.
Falder: Yes we increased, but below our initial budget. We undertook some significant internal investment and evolutionary changes which put HMG from a very good position going forward.
Gorella: Yes, thanks to our portfolio we saw an increase in revenue, even though we were not able to repeat the record growth of 2016. Both of our segments Coil and Industrial Coatings grew in sales. However, we absorbed a large part of the higher raw material costs.
McGarry: Last year was a solid year for PPG. PPG’s full-year 2017 net sales totaled approximately $14.8 billion, up more than 3 percent compared to the prior year. PPG reported adjusted earnings per diluted share from continuing operations of $5.87, representing an increase of nearly four percent year-over-year. We benefited from sales from businesses acquired during 2016, including MetoKote and Univer as well as the 2017 acquisitions of DEUTEK, Futian, and The Crown Group.
Nauche: Yes. Cromology’s business benefited from a return to growth in France, a solid growth in Southern Europe – except Italy – and from continued double-digit growth in the Rest of the World.
Qiu: Yes, we have achieved our target growth in revenue.
Roy: It was a good year for us and we achieved double digit growth in revenues and profit in spite of the disruption caused by the implementation of GST. We have a strong presence in most segments and almost all of our divisions have posted strong growth this year. This is in part due to our continued focus on our people, R&D and market-led innovation.
Shaver: Axalta’s sales were $4.35 billion in 2017, which were up seven percent and driven by our successful acquisitions. As we enter 2018, we see similar market dynamics. In 2018, we expect to see three to four percent organic growth, up from one to two percent in 2017, as we anticipate that world economies will be a little stronger this year. We plan on growing overall net sales by eight percent in 2018 including acquisitions already completed.
CW: What areas of the paint and coatings market represent the most growth opportunities for your company?
Andersen: In our strategy towards 2020 “Journey to Excellence”, we focus on growing faster than the market in all our segments. We still recognise untapped market opportunities in our Protective segment.
The marine market remains challenging as the newbuilding market decreased. We have managed to maintain our market share in a very difficult, decreasing market. We expect newbuilding order to remain on a very low level the coming years. The same is the case for the market for maintenance.
We recognize a great growth potential within Decorative, but this is still a segment with limited global presence for Hempel.
Bremm: We will continue to push for profitable growth in all our businesses with a clear strategy to focus on emerging markets.
Besides China, markets such as Mexico and ASEAN play an important role. In addition, we see substantial growth opportunities by launching both product and process innovations that serve our customers’ needs for sustainable solutions.
Chen: TAIHO PAINT (China) has gained market share across the latex paint and lacquer decoration furniture market. While the market for latex paint and lacquer decoration furniture is maturing in some regions. There is still significant growth potential in selected emerging regions and in addition. We have identified untapped market opportunities that are currently being investigated. We are actively looking for additional acquisitions to expand our business scope and acquire new technologies and approvals. At the same time, we focus on helping our customers be more competitive by helping lower their operating costs.
We have more and more decorations, but this is part of our limited global reach. We want to change that. So we believe our global influence on decoration will be increasing.
Falder: Many areas, including nanotechnology, graphene developments, high-performance niche business areas, and design and color styling are all areas of significant development and growth.
Gorella: In Coil Coatings, we started in 2017 with the expansion of our domestic appliance business. In some emerging regions, there is also still potential for growth in our architectural coil coatings business. After facing slower growth in Asia in the previous year, we are expecting this market to pick up pace again. Consequently, we will open a new site in Vietnam to enhance our reach of service in the northern part of the country.
One of the highlights in 2017 was the release of the Beckers Sustainability Index app, which demonstrates how coil coatings can enhance the sustainability of customers’ end products. The positive feedback we received for the app showed us that we are on the right track with our commitment to sustainability, and we see the growing market for sustainable solutions as an opportunity.
Furthermore, there are good prospects for our Industrial Coatings business, in particular in Asia. Here, we see the possibility to grow in our business lines for Railway, Consumer Design Finishes, or Automotive Plastics Exterior. For the European market, we are expecting substantial growth in our Agriculture, Construction and Earthmoving equipment (ACE) business.
McGarry: PPG is continuously focused on emerging trends and ensuring that we are providing the paint, coatings and specialty materials our customers need. We’re embracing new ways of thinking as our markets evolve. A prime example is our newly formed mobility and autonomous vehicle team, which is focused on developing and commercializing growth opportunities in this emerging, global market.
As part of our focus on growth opportunities, environmental stewardship has driven our research and development portfolio for more than a century. That rich history has embedded the community to innovate products and processes that provide environmental and other sustainability benefits for our operations and our customers. But, sustainable product innovation is more than a business strategy at PPG. It is a commitment to the environment, our customers and our people, which will continue to be a focal point for years to come.
Nauche: Cromology is a pure player of the decorative paints, expert both in internal and external paintings and also in ETICS.
Customers request environmental-friendly and health harmless products. To answer to that trend, for several years, we are transforming our portfolio of products. In 2017, two out of three of our new products less than three years old meeting the requirements of even the most demanding labels in terms of VOC content (Ecolabel, TÜV) or VOC emissions (A+, TÜV).
In France, for example, we launched products with the German TÜV label, which demands a VOC content of less than 1 g/l for interior paints, which is 30 times lower than the content imposed by European regulations and 10 times lower than the content required by the European Ecolabel.
Qiu: The renovating market. China now develops 3 billion square meters of housing area every year and the current housing area has already reached 50 billion square meters. These considerable increment and stock evolve into a massive need for renovating old buildings.
The personalized decoration market. Customers are becoming increasingly interested in demonstrating their own style in their living environment. The function of paint and coatings is more than decorating and protecting.
The waterborne coatings market. Under stringent environment regulations, the market pays much attention to health, driving waterborne coatings, featured as environment-friendly, safe, energy-conserving and non-toxic a leading trend.
The functional coatings market. For example, architectural energy-saving coatings and other special high performance architectural coatings can be further developed.
Roy: Berger operates in diversified segments from decorative paints, automotive, general industrial, auto refinish, powder coatings, marine paints etc.. The largest growth opportunities for us would be Wall Coatings within Decorative Coatings and Protective Coatings. These are the segments on which R&D and Sales and Marketing focus largely.
Shaver: About 70 percent of Axalta’s business is transportation-related and about 30 percent of that serves the OEM market. While the OEM business closely follows global GDP growth, our Performance Coatings business, which serves the Refinish and Industrial markets, are strong GDP-plus type businesses. We expect our Performance Coatings business to be a strong performer in 2018.
So, for Axalta, we expect growth of low single digits in Transportation, mid-single digits from Refinish, and at least mid-single digits in our Industrial business, which is made up of industrial liquids, powder coatings, wood coatings, and coil coatings.
CW: What is your business strategy for growth in 2018 and beyond?
Andersen: We will continue to execute and accelerate on our 2020-strategy Journey to Excellence even though the market remains challenging in 2018.
A major element of our strategy is to actively participate in the consolidation of the global coatings industry and grow through acquisitions. In 2017 we became virtually a debt-free company, allowing us to accelerate our acquisition ambitions over the coming years. Currently, we are looking at targets to complement our current business, especially within the Decorative and Protective segments. We are looking on targets worldwide. We will continue to expand our acquisition pipeline across regions and segments with interesting candidates in next years.
Another part of our strategy is our increased customer focus globally. We will continue to launch initiatives which makes us understand our customers and their needs better. This customer centricity will be even stronger from now on with our new commercial organisation, which is now complete. This enables us to focus on our global marketing activities, sales excellence and segment strategy capabilities on our growth journey.
Bremm: We expect 2018 to become a stable environment for the automotive industry, mainly driven by growth in Asia and Europe. This is where we will continue to strengthen our position. In addition to our investments in emerging markets, we will also focus on R&D in order to provide our customers with innovative solutions. With our new business unit Surface Treatment, operating under the Chemetall brand, we have further developed our portfolio and became an even more complete solution provider for coatings.
Chen: The market depth of the existing channels should be strengthened in terms of product, service, price and promotion. And TAIHO PAINT do effort to develop the part of new marketing channels about engineering internal and external wall coatings, waterborne UV coatings, cooperate with decoration company professional design channels so that increasing the exposure rate in China. It will expand the market influence of TAIHO PAINT lacquer.
Introduction of imported emulsion coatings and art coatings to be rich our lacquer decoration production line, for high-end business people and high-grade villa decoration market with suitable for products and enhance the brand value of TAIHO PAINT;
Provide incentive measures corresponding to the performance, stimulate the potential and vitality of the work team and customers, and to improve the brand sense and to push up pride of the company.
Falder: Just relentlessly trying to do the best possible job for our customers. Making product we like with suppliers and customers in partnership. It’s a strategy that never changes. We were delighted to win the national award for the supreme champion family business of the year in the U.K. Its Testament to all the staff of HMG and all of our customers and suppliers who’s continue to support us.
Gorella: We do not expect 2018 to be less dynamic than 2017. The market situation will continue to be challenging. However, with our global structure we are well equipped to respond to developments in the different markets. The flexible set up of a mid-sized company enables us to react quickly. Staying ahead of changes through quick adaption and continuous innovation as well as operational improvement is part of our strategy. We will further focus on the needs of our customers by offering individual solutions and continuing to deliver products that are future-oriented and sustainable. We have plans of further strengthening our innovation organization with investments in our R&D labs as well as capacity expansions in several of our sites.
McGarry: We remain focused on organic growth and growth through acquisition. Our goal is to achieve 25 percent of total sales from products introduced in the last four years. To ensure we are developing products that meet the needs of our customers, in 2017, we invested nearly $500 million in research and development to continue innovating our product portfolio. We continue to make earnings-accretive growth a top priority and have committed to deploy a minimum of $2.4 billion of cash in 2018 on acquisitions and share repurchases as part of our previously communicated target to deploy $3.5 billion in 2017 and 2018 combined.
Nauche: To offset the increase in raw material prices, Cromology has adapted its sales & marketing policy and increased the sales price of its products. To improve growth and profitability, Cromology’s management team launched a transformation plan in France and Italy in 2017 to strengthen the company’s sales performance and customer satisfaction.
In an expected better-oriented markets in Europe, Cromology will pioneer an omnichannel approach towards its pro customers and launch a platform of e-commerce services to improve the customer experience.
Qiu:
We will proceed with our brand promotion activities, aiming to increase our brand influence.
We will optimize our product structure, increasing the proportion of popular and hi-tech products.
We will enhance the competitiveness of the present sales network, providing more technical and marketing support to our distributors.
We will ameliorate our informatization management, respond to the market more swiftly, and improve our internal operation efficiency, thus forming a more sound domestic management system.
We will conduct new projects according to fields that have broad market prospect and create new competitive strength in fields like home renovation, waterborne wood coatings, waterborne industrial coatings and architectural energy-saving coatings etc. while maintain our strength of wood coatings and architectural coatings. With the help of our brand influence and our massive distributor networks, we hope to occupy more market shares generated by our new projects. Meanwhile, we hope to elevate our sales volume through mergers, acquisitions and internationalization.
We will expand manufacturing capacity and optimize resource allocation so as to achieve an optimum balance as a whole.
Roy: Our aim is to keep growing faster than the market thereby increasing our market share. To achieve the same we would be focussing on the expansion of our distribution network as well as on establishing the slew of innovative products that were introduced in 2017. We also remain open to exploring inorganic growth through acquisitions and partnerships.
Shaver: There are a couple of levers here. We will continue to drive organic sales growth in our existing segments. And, we will continue to add to our portfolio in our core segments through acquisitions. In 2018, we plan to add to our top line growth through new acquisitions, primarily in our Refinish and Industrial businesses. Coatings is a good marketplace and with global economies improving, we see our core markets only getting better.
We invest about $150 million in CAPEX annually, mainly in high Internal Rate of Return projects on top of a more modest maintenance budget. So, our business strategy will be to continue to invest in our core segments and, longer-term, to maintain a robust R&D portfolio. We invest about four percent of sales in R&D, which we believe is among the leaders in our industry. Customers demand innovation, not necessarily disruptive innovation, but innovation that drives value back to their business. We provide that.
Thierry Vanlancker: AkzoNobel has a strong track record of delivering on commitments to shareholders and other stakeholders. We have laid out a new plan with clear, ambitious goals. With the support of our colleagues across the world and building on our incredible brands, we will create two leading, customer focused businesses which will deliver enhanced value for all stakeholders.
On April 19, 2017, AkzoNobel unveiled a new strategy to create two focused, high-performing businesses with sustainable growth plans within 12 months.
We have consistently delivered on commitments to improve profitability and growth, while building momentum within the company. We have world-class teams and a solid financial and operational foundation.
We have a new strategy to accelerate growth and value creation with two focused, high-performing businesses – Paints and Coatings and Specialty Chemicals – which will lead to a step change in value creation for shareholders and all stakeholders.
Some 2017 highlights
We invested €12.6 million in a new innovation hub in the UK. Located in Felling in the UK, the facility will be home to teams of scientists and technical experts who will work on developing protective coatings for the energy, mining, infrastructure and oil and gas industries.
We added a colorful sparkle to the new McLaren-Honda Formula 1 car. The MCL32’s new Tarocco Orange livery – was developed by AkzoNobel in conjunction with McLaren-Honda.
We announced our commitment to accelerating our sustainability agenda by announcing a new ambition to use 100 percent renewable energy and become carbon neutral by 2050. We also returned to the top of the influential Dow Jones Sustainability Index (DJSI) to lead the rankings again for the fifth time in six years.
We opened a new Performance Coatings facility in Chonburi, Thailand
We partnered up with The Ocean Cleanup for the largest clean-up in history. The partnership involves AkzoNobel providing advanced, biocide-free coatings technology for all the devices and equipment used by The Ocean Cleanup for the next five years.
We made a double acquisition to strengthen our leading global position in Performance Coatings; UK-based Flexcrete Technologies Ltd and an French manufacturer Disa Technology (Disatech). The deals will further strengthen AkzoNobel’s global leadership position in supplying innovative industrial coatings and aerospace and automotive coatings.
We officially opened the world’s most advanced and sustainable paint plant in Ashington, in the UK. The hi-tech facility will become the new center of production for Dulux, the UK’s leading decorative paint brand.
We announced Heart Wood as 2018 Color of the Year.
We agreed to acquire V.Powdertech business to strengthen our leading powder coatings business in South East Asia
Together with peace movement MasterPeace, we completed 100 ‘Let’s Colour Walls of Connection.’
We entered the Volvo Ocean Race with team AkzoNobel. Furthermore all boats competing in this race around the globe have been coated with AkzoNobel products. We also signed a partnership with the Volvo Ocean Race to amplify their Sustainability program.
We revealed new powder coating trends and colors through our Collection Futura.
CW: In what areas are you focusing your R&D efforts?
Andersen: Our goal is to develop innovative and trusted solutions that protect our customers’ assets and add value to their business. This means a constant and increased customer focus, as all innovation starts with the customers. We enter partnerships with our customers to get an even deeper understanding of their needs and the challenges they face. Our strong global set-up with 15 R&D centres worldwide enables to respond quickly to local customer needs, develop specific solutions for local markets and provide technical support.
Our R&D department also focuses on entering into collaborative partnerships that drive value through innovation. It can be partnerships with suppliers, research teams, universities and other institutes.
Bremm: It is our goal to help our customers become more successful. Therefore, we continuously develop new products and processes to ensure the highest quality for our customers. The demand for sustainable and environmentally friendly solutions and products increases. Furthermore, e-mobility and autonomous driving will bring additional requirements in the future such as energy management, special paint systems for radar/lidar and coatings solutions for battery packs. These trends are reflected in our R&D activities.
Chen: TAIHO PAINT (China) has 100 Research specialists, which can form professional technical talents.
Under support of the National Laboratory and Provincial Engineering Technology Research and development center and market development needs, we have research some projects of odorless paint, two components .high open hole waterborne paint, free solvent spray UV transparent paint, waterborne plastic paint, poly-urethane low odorless paint, automotive upholstery, for elder healthy wall topcoat and so on. For environmental protection need our R&D direction is for low solvent and pollution, high characters hardness, weather durability and fast dry paint in the future.
Falder: Even greater customer focus, really getting close to our customers to deliver what they need for their success. We are nothing without our customers (or our staff and suppliers!) We are operating around 30 projects. All are to do with innovation and progression. Of course not all of them will come to fruition. But everything is a learning curve and our ambition is advancement . Probably some of the most exciting areas involve nano materials and some very important development in fire retardant materials.
Gorella: The course of 2017 has brought a number of highly promising technological developments and we continue to invest a significant part of our profits in research and long-term growth projects. Two aspects are always important in this regard: driving the customer-centric innovation, while at the same time fueling the industry agenda for more environmentally viable coatings solutions. The past year has also seen significant progress on new next-generation high-coverage systems, textured topcoats and bio-based paints, as well as new multilayer systems based on alternative chemistries.
McGarry: As a global leader in paints, coatings and specialty materials, PPG remains committed to investing in our R&D efforts in all areas to continue to meet and exceed customer needs. Our commitment to innovation is intertwined with growth and sustainability. It covers a wide range of products and services that provide environmental, safety and other benefits to our customers. Our products contribute to lighter, more fuel-efficient vehicles, airplanes and ships, and they help our customers reduce their energy consumption, conserve water and reduce waste. Our technologies are helping manufacturers protect their assets and products from corrosion, and we are sharing those technologies across our businesses. Examples include PPG’s award-winning waterborne technologies, our compact painting process for vehicles, and new coatings for lithium batteries needed for electric cars. The growing autonomous vehicle space is an exciting opportunity for PPG, and we have a dedicated team working on developing technologies to enable and enhance the future of mobility.
Nauche: Our R&D efforts are concentrated on environmental-friendly and user-friendlyness products.
Qiu: We will increase investment in developing new products to cope with the ever-increasingly strict environmental and energy-saving requirements. For instance, we intend to invest in waterborne coatings (including waterborne wood coatings, waterborne industrial coatings and architectural energy-saving coatings), powder emulsion paint with zero VOC, waterborne adhesive, waterborne printing ink, high solid UV coatings, unsaturated PE coatings, waterproof coatings, auxiliary materials etc. so that we can produce more environment-friendly and cost-effective products for our customers.
At the same time, we will focus on renovation and decoration coatings, as well as functional coatings, like waterborne renovation paint, artistic paint, insulated paint and impact-resistant paint and so on, to satisfy the market demands.
Roy: Consumers in the markets in which we operate demand very high value efficiency and much of our R&D efforts are directed at delivering this to consumers whether they are home owners or industrial buyers. Berger is also the first paint company in India to get all its products and factories Green Certified. Some exemplary work by our R&D has ensured that all our decorative products are Lead-free and nearly VOC-free. We clearly see ourselves as a responsible consumer company and corporate citizen; one who lays a lot of importance on environmental technologies.
Shaver: R&D is being driven by things like environmentally responsible products. In many cases that’s going to be waterborne products, but we see sustainable qualities in solvent borne products as well. We offer coatings that are designed to increase productivity, so customers can use less product per unit, and focus on corrosion to help maintain the longevity of products. We also innovate to develop more vibrant colors, as customers are not just looking for functionality improvements but also ways to make products look great. In 2017, we introduced more than 250 new products designed to meet customer needs and demands.
In the past 18 months, we added 450,000 square feet of new labs around the world - such as in Detroit, Shanghai, and Wuppertal, Germany. Our newest, and largest technology facility, the Global Innovation Center in Philadelphia, will be finished this year. These state-of-the-art facilities house 1,000 employees and represent a significant spend for the Company. Our forward-looking R&D efforts help us to continuously innovate and develop new technologies, including those we’re working on in the autonomous vehicle space. We will continue to invest in R&D to stay ahead of ever evolving demands and technology trends so we can continue to provide leading solutions to our customers and end-markets. We are not affected by change … we lead change.
CW: What is your company’s long-term plans?
Andersen: Our current focus is on accelerating our strategy Journey to Excellence even further. Our goal is to accelerate our growth – both organically and through acquisitions. We will continue to invest in delivering value to our customers through new solutions and increased service offerings, like we have done since 1915.
Bremm: In general, we aim to achieve profitable growth in all regions. Therefore, we actively drive innovation to help our customers be successful. We also continue to invest in emerging regions with a high growth potential. In addition to investing in our manufacturing set-up, we will also increase our research and development activities worldwide.
China remains a key priority for us, where we have grown above the market. We support this growth by having large investments and a complete operation in China, which includes manufacturing, R&D and technical services. We have also invested in other growing markets such as ASEAN and LATAM. Our recently opened production plant in Bangpoo, Thailand, for example complements the facilities at our Coatings Technical Competence Centre ASEAN. The co-location of production and technical facilities enables operational efficiency, best technical service for our customers and speed to market.
Chen: The company will provide long-term kinetic energy in product, service and enterprise innovation, so that the company will move to the centennial enterprise.
Products: we have to effort researching and development of leading-edge and undeveloped products to provide a basis for the continuous leadership of the enterprise.
In service aspect: we have to strengthen technical service team’s professionalism, consciousness of service consciousness and team structure. Continuity to ensure the long-term supremacy of the market services to provide assurance.
Innovation: TAIHO PAINT make it, as possible as we can, we will provide great resources for the enterprise’s structural innovation, system innovation, service innovation and so on, to ensure the vitality of the enterprise.
Falder: To remain a strong independent business, to hold the trust of our customers in doing the best possible job for them. Fair dealing in all things. And as a consequence of doing the job that we do getting what we deserve!
Gorella: The Beckers Group is a global service-oriented provider serving selected coating segments. With our focus on coil coatings and the five Industrial Coatings business lines, we clearly differentiate against a diversified mass producer. Our long-term business model is focused on sustainable growth and the key enablers for our success center on sustainable innovation, exceptional customer service with tailored technical solutions and a strong and highly committed workforce.
McGarry: We are committed to protecting and beautifying the world through innovative paints, coatings and specialty materials. This year marks our 135th year in operation, and the focus on our purpose has never been stronger and extends beyond the economic boundaries of our business to ensure the long-term sustainability of PPG.
We remain dedicated to supporting communities where our employees live, work and play. Since 2015, PPG has completed more than 125 COLORFUL COMMUNITIES projects, which positively impacted 4 million people. Through the Colorful Communities program and the PPG Foundation, we will continue to focus on and grow our community engagement efforts.
PPG also has an unwavering focus on growing long-term value with sustainable business practices. Our culture of continuous improvement underpins our approach and commitment to sustainability.
Whether it is increasing the efficiency of our operations, finding additional eco-friendly product solutions or developing our people, our improvement efforts naturally extend to many areas that impact our sustainability performance. As our paints, coatings and specialty materials portfolio continues to evolve, we strive to find additional sustainable solutions and identify new sustainability goals across the globe. PPG will continue to evaluate new opportunities as they pertain to product development, sustainability and long-term business growth.
Looking forward, PPG is well positioned to benefit from continued global economic growth because of our geographic reach; robust growth strategy; excellent product portfolio, innovation and advanced customer technologies; transformational leadership; and enduring commitments to sustainability, ethics and community engagement.
Nauche: Thanks to a customer experience, a high quality of products and a state-of-the-art multichannel and digital Go-to-Market approach, Cromology aims to increase its market share and to consolidate its leading role building an even stronger position in the Decorative Paint Business, especially in Europe.
Qiu: Our long term plan is to become the leading paint producer in China and a reputable Chinese paint company around the world, excelling in production-sales scale, factory layout, channel competitiveness, technology and brand influence etc.
Roy: We are currently ranked 15th in the world as per Coatings World rankings. We hope to be in the Top-10 in the next five years without eroding profitability. We operate in an economy that is seeing favorable tailwinds and we aim to make the most of it. You will see us investing in developing capabilities in our people, research and development centres and our production facilities. The consumer remains at the centre as always and our plans will include the development of innovative products and services that solve their pain-points.
Shaver: Financially, we will target high single-digit top line growth, including bolt-on acquisition contribution, and double-digit bottom line growth. We will stay focused on our core Transportation and Performance sectors.
At Axalta, people have never been more important. I think every year it’s becoming more and more important to acquire the right people. Obtaining and retaining skilled labor is getting harder to do. Demand is high for everyone – from scientists, to engineers, to talented business professionals. As a company, you must offer opportunities that will satisfy employees and we have that Axalta. Talent is one of the most critical elements going forward for our success.
We will also continue to focus on technology to better serve our customers. Technology is global and customers, from China, India, the U.S. and all over the world, expect the same things, whether that’s the latest in coatings, in innovation, in techniques, or productivity. To meet these needs, companies must be global with their talent and technologies so they can be transferrable around the world. All customers want the best new products and services, so no specific region will ever again lag another in the coatings industry. We have nearly 50 manufacturing sites around the world and are well equipped to produce solutions that meet local market needs.