Terry Knowles, European Correspondent 05.12.21
To say that the paint and coatings industry faces many challenges makes one a master of the understatement, but as the industry moves into the 20s good and proper many companies are setting out their stalls with new strategies that reflect different approaches to growth. Technology and digitalization are modern ways of increasing operating and application efficiency, which usually have the multiple benefits of efficiency, data-driven quality and worker safety.
AkzoNobel takes the high-tech road
AkzoNobel announced in April 2021 its second Paint The Future challenge, through which it aims to connect with startups from around the world. The company has a long-held passion for entrepreneurship and uniqueness within the industry and inviting the participation of startups to its challenge allows AkzoNobel to cherry-pick new companies and its technologies while keeping future potential in mind.
One outcome from its 2019 Paint The Future challenge was AkzoNobel taking a stake in the Dutch startup Qlayers, a new company boasting a pioneering technology for the application of industrial coatings. Qlayers’ coating technology offers a fully automated solution that is safer, more consistent and faster than the manual coating processes that are currently employed in the industry. By eliminating overspray, the technology offers a solution that saves costs. The company’s automated coating processes will help AkzoNobel’s customers to coat large industrial surfaces regardless of the weather conditions. Solutions for the coating of storage tanks and wind turbine blades (which themselves are a popular eco-friendly focus and growth market for many coatings companies) are currently in development.
Aerial robotics company Apellix was another winner in the company’s 2019 Paint The Future challenge, and it entered into a collaboration with AkzoNobel for the development of a spray-painting drone. The discrete aspects of building a drone and spraying paint may be relatively easy, but building an autonomous spray-painting drone that can be computer-controlled is a challenge that the companies are tackling jointly. Apellix has a custom-built drone that is tethered to the ground for its power and coating supply but has the freedom to fly autonomously depending on the area to be coated. According to AkzoNobel it uses unique software flight control to more accurately apply coatings, and can also capture valuable painting data. Shorter application times, less waste, consistent and reproducible coating and the especially valuable option of being able to apply paint at height will emerge as the key benefits from this cooperation.
A third company that has emerged in AkzoNobel’s portfolio of new corporate recruits is the French firm Les Companions. This is a newer startup that AkzoNobel has partnered with, to design a paint robot for use on interior walls and ceilings.
Not all of AkzoNobel’s strategic aspirations are purely robotic. Recycling and re-use reflect AkzoNobel’s ongoing interest in taking waste materials and turning them into useful raw materials for paint formulation. After harnessing recycled carbon black from tires for powder coatings, it has moved to the white end of matters. Billed as “the world’s first circular calcium carbonate mine,” consortium-led cooperation with Alucha has pioneered a technology that salvages calcium carbonate for the ultimate stage of the paper-making process, where breakdown products have hitherto not been recyclable. The non-commodity supply secured by this new technology affords AkzoNobel access to a low-cost filler for use in its decorative paints and is one that completes a ring in the circular economy. It is also sustainable.
What is left in the acquisitions scene for major companies like AkzoNobel is no longer likely to be a blockbuster or a megamerger deal that has been the transformative hallmarks of the industry over the last 20 years or so. What we are witnessing in the industry now with both AkzoNobel and PPG especially is the opportunistic acquisition of companies and businesses that have developed high-tech solutions that help to complete these companies’ portfolios of technologies with niche offerings that round out their portfolios into complete suites of finishing solutions. AkzoNobel’s acquisition of Stahl’s powder coatings for heat-sensitive substrates is a prime example; PPG’s recent takeover of Cetelon Lackfabrik – a producer of automotive wheel coating systems in Germany – is another, mirroring how it has been building its automotive coatings portfolio lately.
Hempel seeks growth on multiple fronts
In recent years Hempel has been working on a different perception and industry position for itself, with a memorable statement that the days of the company’s being just a leading marine and protective coatings producer being over; it has since embarked on a strategy of growth for its decorative paints arm. Further to its first acquisition of Crown Paints in the UK, it has gone on to acquire a majority stake (65%) in the German JW Ostendorf, and thereby Renaulac, a premier manufacturer of building paints in France.
These happen to have been extremely good moves for 2020 given the renewed interest that lockdowns spurred in DIY painting in Europe. Its latest purchase of Wattyl in Australia and New Zealand from Sherwin-Williams has been a successful implementation of its strategy to build up a stronger presence in the decorative sector, but also enjoying the additional benefit of Wattyl’s protective coatings arm. The decorative arm at Wattyl is similar in operation to that of Crown Paints in the UK and the company hopes to build on its UK model to good effect in Australia.
Amid this new chapter, comes the Double Impact strategy, through which Hempel seeks to double its revenue and refocus its activities once more. The target for doubling its revenues is by 2025, which given the announcement of the strategy at the start of 2021, presents a bold five-year window in which the target will be ideally met through a combination of acquisitions and organic growth as well as ambitious investments in sustainability, innovation and digitalization. In what looks like an examination of the company’s positioning in 2020, the outcome announced by Hempel was that it was spreading itself too thinly. The consequence will be refocused geographical priorities, more focused leadership positions and more takeovers.
Hempel is also aiming to become carbon-neutral in its operations by 2025, thereby reducing the carbon footprint for its customers. In February, it launched a new sustainability framework called Futureproof, committing itself to set science-based targets in its value chain in accordance with the 1.5°C pathway, making it one of only 300 companies around the world that have signed up to this.
It’s also interesting to note that Hempel is one of several companies segmenting its activities more specifically to do with energy, as serving the long-held application sectors like oil & gas takes on a more fashionable cloak as themes such as windpower (and perhaps solar power) represent growth markets for
the industry.
Strategic geographies within Europe
Market research studies invariably place Western Europe at the bottom of the regional list when it comes to growth rates and there are many reasons why this might be the case – maturity, fragmentation, legislative complexity all come to mind. However, for companies with global aspirations that continue to hunt market share, Europe has proven fertile ground in recent years and may yet continue to do so. The continent is home to various well-placed hubs that create regional strongholds. Japanese paintmakers Kansai Paint and Nippon Paint continue in their strategies to acquire companies and Europe is an attractive target as acquisitions are the quickest way to build market share.
Regional players in strategically-positioned countries have proven ripe for M&A activities in recent years. Turkey possesses a lot of charms that many industry players have been unable to resist: a young demographic, a large population, a strong automotive industry and a superb position for exports to southeastern Europe and the Middle East, as well as Russia. Nippon Paint and Kansai Paint of Japan have both sought to further their business by acquiring Betek Boya and 50% of Polisan Boya respectively in recent years. For Kansai, it offered a second bite at Europe, following on from its takeover of the Helios Group in Slovenia. Finally, returning to a more contemporary deal, PPG’s acquisition of Tikkurila captures a strategic regional player in Europe, one whose participation spans Scandinavia, the Baltic States and Russia. A very shrewd move indeed.
AkzoNobel takes the high-tech road
AkzoNobel announced in April 2021 its second Paint The Future challenge, through which it aims to connect with startups from around the world. The company has a long-held passion for entrepreneurship and uniqueness within the industry and inviting the participation of startups to its challenge allows AkzoNobel to cherry-pick new companies and its technologies while keeping future potential in mind.
One outcome from its 2019 Paint The Future challenge was AkzoNobel taking a stake in the Dutch startup Qlayers, a new company boasting a pioneering technology for the application of industrial coatings. Qlayers’ coating technology offers a fully automated solution that is safer, more consistent and faster than the manual coating processes that are currently employed in the industry. By eliminating overspray, the technology offers a solution that saves costs. The company’s automated coating processes will help AkzoNobel’s customers to coat large industrial surfaces regardless of the weather conditions. Solutions for the coating of storage tanks and wind turbine blades (which themselves are a popular eco-friendly focus and growth market for many coatings companies) are currently in development.
Aerial robotics company Apellix was another winner in the company’s 2019 Paint The Future challenge, and it entered into a collaboration with AkzoNobel for the development of a spray-painting drone. The discrete aspects of building a drone and spraying paint may be relatively easy, but building an autonomous spray-painting drone that can be computer-controlled is a challenge that the companies are tackling jointly. Apellix has a custom-built drone that is tethered to the ground for its power and coating supply but has the freedom to fly autonomously depending on the area to be coated. According to AkzoNobel it uses unique software flight control to more accurately apply coatings, and can also capture valuable painting data. Shorter application times, less waste, consistent and reproducible coating and the especially valuable option of being able to apply paint at height will emerge as the key benefits from this cooperation.
A third company that has emerged in AkzoNobel’s portfolio of new corporate recruits is the French firm Les Companions. This is a newer startup that AkzoNobel has partnered with, to design a paint robot for use on interior walls and ceilings.
Not all of AkzoNobel’s strategic aspirations are purely robotic. Recycling and re-use reflect AkzoNobel’s ongoing interest in taking waste materials and turning them into useful raw materials for paint formulation. After harnessing recycled carbon black from tires for powder coatings, it has moved to the white end of matters. Billed as “the world’s first circular calcium carbonate mine,” consortium-led cooperation with Alucha has pioneered a technology that salvages calcium carbonate for the ultimate stage of the paper-making process, where breakdown products have hitherto not been recyclable. The non-commodity supply secured by this new technology affords AkzoNobel access to a low-cost filler for use in its decorative paints and is one that completes a ring in the circular economy. It is also sustainable.
What is left in the acquisitions scene for major companies like AkzoNobel is no longer likely to be a blockbuster or a megamerger deal that has been the transformative hallmarks of the industry over the last 20 years or so. What we are witnessing in the industry now with both AkzoNobel and PPG especially is the opportunistic acquisition of companies and businesses that have developed high-tech solutions that help to complete these companies’ portfolios of technologies with niche offerings that round out their portfolios into complete suites of finishing solutions. AkzoNobel’s acquisition of Stahl’s powder coatings for heat-sensitive substrates is a prime example; PPG’s recent takeover of Cetelon Lackfabrik – a producer of automotive wheel coating systems in Germany – is another, mirroring how it has been building its automotive coatings portfolio lately.
Hempel seeks growth on multiple fronts
In recent years Hempel has been working on a different perception and industry position for itself, with a memorable statement that the days of the company’s being just a leading marine and protective coatings producer being over; it has since embarked on a strategy of growth for its decorative paints arm. Further to its first acquisition of Crown Paints in the UK, it has gone on to acquire a majority stake (65%) in the German JW Ostendorf, and thereby Renaulac, a premier manufacturer of building paints in France.
These happen to have been extremely good moves for 2020 given the renewed interest that lockdowns spurred in DIY painting in Europe. Its latest purchase of Wattyl in Australia and New Zealand from Sherwin-Williams has been a successful implementation of its strategy to build up a stronger presence in the decorative sector, but also enjoying the additional benefit of Wattyl’s protective coatings arm. The decorative arm at Wattyl is similar in operation to that of Crown Paints in the UK and the company hopes to build on its UK model to good effect in Australia.
Amid this new chapter, comes the Double Impact strategy, through which Hempel seeks to double its revenue and refocus its activities once more. The target for doubling its revenues is by 2025, which given the announcement of the strategy at the start of 2021, presents a bold five-year window in which the target will be ideally met through a combination of acquisitions and organic growth as well as ambitious investments in sustainability, innovation and digitalization. In what looks like an examination of the company’s positioning in 2020, the outcome announced by Hempel was that it was spreading itself too thinly. The consequence will be refocused geographical priorities, more focused leadership positions and more takeovers.
Hempel is also aiming to become carbon-neutral in its operations by 2025, thereby reducing the carbon footprint for its customers. In February, it launched a new sustainability framework called Futureproof, committing itself to set science-based targets in its value chain in accordance with the 1.5°C pathway, making it one of only 300 companies around the world that have signed up to this.
It’s also interesting to note that Hempel is one of several companies segmenting its activities more specifically to do with energy, as serving the long-held application sectors like oil & gas takes on a more fashionable cloak as themes such as windpower (and perhaps solar power) represent growth markets for
the industry.
Strategic geographies within Europe
Market research studies invariably place Western Europe at the bottom of the regional list when it comes to growth rates and there are many reasons why this might be the case – maturity, fragmentation, legislative complexity all come to mind. However, for companies with global aspirations that continue to hunt market share, Europe has proven fertile ground in recent years and may yet continue to do so. The continent is home to various well-placed hubs that create regional strongholds. Japanese paintmakers Kansai Paint and Nippon Paint continue in their strategies to acquire companies and Europe is an attractive target as acquisitions are the quickest way to build market share.
Regional players in strategically-positioned countries have proven ripe for M&A activities in recent years. Turkey possesses a lot of charms that many industry players have been unable to resist: a young demographic, a large population, a strong automotive industry and a superb position for exports to southeastern Europe and the Middle East, as well as Russia. Nippon Paint and Kansai Paint of Japan have both sought to further their business by acquiring Betek Boya and 50% of Polisan Boya respectively in recent years. For Kansai, it offered a second bite at Europe, following on from its takeover of the Helios Group in Slovenia. Finally, returning to a more contemporary deal, PPG’s acquisition of Tikkurila captures a strategic regional player in Europe, one whose participation spans Scandinavia, the Baltic States and Russia. A very shrewd move indeed.
