“Overall, the industrial coatings market performed well in the past year,” said Chris Bradford, AkzoNobel’s global marketing director, Industrial Coatings. “The coil business was steadily driven by robust economic conditions. For wood, the market was steady overall due to the stable job market situation and low interest rates that increased consumer confidence and willingness to invest in new-builds and home improvements. Packaging saw an above-average growth rate, especially in beverage cans, driven by consumer attitudes and preference towards the high recyclability of metal cans. The food can market remained stable and continued its switch to BPAni and MOC-free coatings.”
“Our business is fairly balanced around the world, and one year ago we were seeing mild softness in the general market in all areas of the world,” said Kevin Braun, PPG vice president, Global Industrial Coatings. “However, we believed the market was primed for a slight recovery in 2020 as China and EMEA were starting to see an uptick in a few critical industrial segments towards the end of 2019. The outlook for industrial coatings markets has obviously changed considerably in light of COVID-19.”
“Our Protective segment, which includes industrial coatings, experienced steady growth in 2019, with revenue ending 5.2 percent higher than last year,” said Martin Wiese head of Protective & Industrial Business at Hempel. “This upward trend was partly thanks to strong results within our Wind Energy and Infrastructure sub-segments and good performance in our Rail sub-segment, where we remain a market leader in North America. This is a testament to the strong customer focus that is being built throughout the Hempel organization.”
The impact of COVID-19 will have a ripple effect on the industrial coatings market, as the industries it serves continue to be negatively impacted.
According to Wiese, despite lockdowns still affecting many countries, Hempel is still able to take care of its customers and their assets around the world, as they have a global set-up. “Our key priority right from the beginning has been the health and safety of our employees, customers and partners, explained Wiese. “The situation has developed day by day and, like many other companies, we are adjusting to a new normal, both internally and externally. Hempel has been affected by the global pandemic, of course. Business is tough, but we are also seeing that our business across segments is slowly recovering.”
“Protective is the largest of our segments, he continued. “It is a growing business and it is going well despite the current conditions. Our absolute main focus is to serve our valued customers safely – whatever it takes or costs. We have avoided disruptions in our deliveries, but it has required us to fly in coatings to our customers in some cases. It has also required increased flexibility in our production. China is a great example of this. During the lockdown period in China, we were not able to meet our Chinese customers’ demands through local production, as the authorities had put a cap on the amount of coatings we could produce in our three factories. As a consequence, we produced some coatings for the Chinese market elsewhere, such as Malaysia and the Middle East. This was of course cost-intensive – but we were still able to keep serving our customers.”
COVID-19 means that much large building and construction work around the world has been delayed or postponed. “Obviously, this has a negative impact on our protective business,” said Wiese. “Nevertheless, the market is moving in the right direction – not least in China. We are also seeing ‘big wins,’ especially in the passive fire protection market.”
“For industrial coatings, customer shutdowns, record declines in consumer spending, and lack of capital expenditures are trends all having a negative impact on our markets,” said Braun. “Within the broad scope of industrial segments, markets related to construction, automotive and transportation have been notably impacted. At this critical juncture, our company is focused on what the ‘new normal’ looks like. We’ve seen demand for coatings in our electronics and cookware segments increase, as consumers are telecommuting and continue to cook more meals at home.”
“The health and safety of our employees and their families are our top priority,” he continued. “While prioritizing the health and safety of our workforce, we’ve identified ways to safely and effectively deliver for our customers, many of whom operate essential businesses that are providing critical goods through this pandemic. We are continuously monitoring the health of our global workforce, and taking measures to protect PPG employees and customers in accordance with global and regional government requirements. We have adjusted our operations to comply with government guidelines, and the company has adapted operations to account for the significant reduction in economic activity.”
“Ultimately, at AkzoNobel, our priority is to keep our employees, their families and our partners safe and well,” said Bradford. “We are closely monitoring the pandemic situation and taking all necessary measures.
We fully support and follow national and local government requirements. We are also taking all reasonable steps to continue serving our customers and maintain business continuity. Our sourcing team is working closely with our suppliers to proactively manage our raw material supply. We are monitoring and managing the extent and duration of any local requirements impacting/related to our physical locations. As the situation continues to evolve, we are constantly adapting our actions.”
Hempel expects to see growth related to public-funded infrastructure initiatives, which are being started by governments to kick-start the economy and support industry, employment.
“Exactly which sectors this will affect differs from country to country, but we expect to see a number of infrastructural initiatives and projects driven by sustainability,” said Wiese. Countries have a strong focus on reducing CO2 emissions and promoting green and sustainable energy sources, such as wind energy.”
According to Bradford, there are opportunities for growth in many application segments. “In coil, commercial architecture provides the greatest opportunity for growth once markets begin to reopen and demand increases for projects already funded and in development phase,” he noted. “There is also a growing interest in anti-microbial coatings. For wood coatings, growth is based on new housing starts and home re-modelling. In addition, the shortage of contractor labor is driving an increased trend to in-factory finishing, especially in building products. Finally, in packaging, demand is increasing across food and beverage as consumers increase their in-house consumption, look for shelf-stable products and an alternative to fresh food due to price increases/availability.”
PPG has and continues to invest heavily in its powder capabilities, as they see powder being a leading market trend with above-market growth rates due to its inherent sustainability benefits. “Products that offer a sustainable advantage are driving the market across all industrial segments, but we have seen early adoption in waterborne coatings from consumer electronics customers, largely in a response to changing global regulations, the desire to reduce their environmental footprint, and consumer preference,” Braun noted.
“Before, and now emerging in the ‘new normal’ of the COVID-19 world, Asia is leading the way,” Braun said. “While we have seen slower growth in China in recent years, other parts of Asia have been showing development, such as India where there is continued expansion. The economic conditions outside of Asia, particularly now in the U.S. and Europe, have significantly limited industrial production, which was a cycle that started in the last two years and has been greatly exacerbated by COVID-19.”
“In a shifting global landscape, we see coil in Asia Pacific – closely followed by North America – as the fastest-growing regions driven by a portfolio mix of farming & agriculture and commercial construction. In packaging, growth is happening globally as economies entered in lockdowns for extended periods and due to a preference for sustainable and recyclable packaging,” said Bradford. “Finally, in wood, growth is largely connected to imports/exports and will depend on how quickly the movement of people, goods and the residential construction market recovers.”
According to Wiese, traditional industries, such as oil & gas and infrastructure, delivered strong growth in 2019 in the Asian-Pacific region. “Also, our Protective segment in Europe contributed to top-line growth, with our new passive fire protection products contributing positively,” he added.
In the midst of all this uncertainty customers are looking for assurances that the supply chain will remain strong and they will be able to obtain quality products.
“In light of the global pandemic, our customers are interested in assurances of supply,” said Braun. “As businesses restart, the full supply chain needs to be primed and ready to support. From a product performance perspective, we have seen an increase of interest in coatings that can help with inhibiting bacteria growth. PPG recently launched a quick-ship program for our SilverSan antibacterial-protected powder coatings in response to the growing demand in this market. Beyond these immediate needs, customers’ desire for performance and key features have not changed. Our focus will remain on asset protection, sustainable products and products that enable lower total cost solutions.”
“Building and construction customers must ensure their installations look great for years, so they specify coatings that are proven to provide long-term durability and weather resistance,” said Bradford. “They also seek functional and aesthetic features that will help differentiate their products. Our customers have different needs and demands from packaging coatings, from trusted epoxy coatings to high-performance BPAni coatings. Our customers are looking for consistently high-quality products whatever the technology need; and they are looking for a reliable partner that will bring value to their business through great products, technical knowledge and service, and the ability to innovate with them. Lastly, in wood, our customers have three key focus areas: added value to the end consumer, which means improved aesthetics as well as stain and scratch resistance, reduction in their total cost of ownership, which focuses on products that can remove process steps or costly labor steps, as well as increasing their overall production capacity or reducing their costs, and long durability of exterior products to reduce maintenance needs.”
According to Wiese, there are three key requirements in the industrial segments: global consistency and service; greater operational savings and reducing long-term maintenance requirements.
“Customers with operations in different parts of the world require consistently high-quality products that meet both local and international standards, as well as fast service, delivery and response wherever they operate,” said Wiese. “Our Global Key Account Management concept meets this demand and our largest global customers are entrusting increasing parts of their business to us.”
“Reducing operational costs is high on the agenda for most of our customers,” Wiese said. “In 2019, we increased focus on this key area. This included launching a tailored service for Protective customers with factory applied line production, with the overall goal of reducing their total cost of production. We also introduced new coatings in 2019 to help customers reduce application costs and increase productivity.”
“Most customers want to reduce long-term maintenance requirements,” Wiese added. “This need is particularly strong for owners of offshore assets, such as wind turbines and oil & gas platforms, due to the cost of performing maintenance at sea. To meet this need, we launched the water-repellent topcoat Hempatop Repel 800 in 2019, developed in close collaboration with one of the world’s leading oil & gas companies. Our analysis shows that water entering through the coating system is the primary cause of coating failure for offshore assets. By actively repelling water from the coated surface, Hempatop Repel 800 can significantly reduce maintenance requirements compared to currently available coating systems.”