NASSAU, Bahamas - What strategies do global players have for economically countering the enormous costs pressure, the rising tide of legislation and saturated West European markets? For the second time, leading paint magnates met at the Coatings Summit in the Bahamas at the end of January to analyze the global economic situation, discuss lucrative business models and jointly look ahead to the future.

Building on the successful first global Coatings Summit in 2003, hosts Neville Petersen, president of IPPIC (International Paint and Printing Ink Council) and Jürgen Nowak, publisher at Vincentz Network, again issued invitations to the two-day coatings strategy conference. Eminent speakers, including the very best of the world's top players, such as PPG, Sherwin Williams and BASF Coatings, presented their individual "chess strategies" for a sustainable, prosperous coatings future.

Some 70 presidents, managing directors and senior management from 13 countries deliberated and debated issues that transcended national borders at the British Colonial Hilton Hotel in Nassau.

The magic word - innovations. The automotive sector is, and will remain, a trendsetter for many paint segments. Accounting for more than 8% of the US $60 billion in economic power that the paint industry represents, the automotive sector is at the very forefront, both technologically and strategically. That is why the auditorium paid very close attention to the analysis and forecast given by Charles Bunch, COO of PPG, USA. A "customized" approach is needed to counter shrinking Western European consumer markets, ever more legislation and skyrocketing raw material prices. In brief, this requires technical innovations, added value and expansion into highly promising growth markets. The massive costs pressure, combined with customers making more stringent demands on quality, should not merely be resisted, but strategically countered, asserted Bunch, whose remarks were met with a widespread nodding of heads in agreement.

Jean-Pierre Monteny, president and CEO of BASF Coatings, spoke in the same vein, albeit from a European perspective. "Eighty-five percent of total paint costs for automobiles are process costs. The material itself accounts for only 15%. The paint process therefore still offers enormous potential." He also appealed for "more optimism" and "self confidence" on the part of the European coatings sector, which he said still has exceptional technological expertise and so can continue to play an outstanding, competitive role.

"Knowing what the customer wants and differentiating oneself from the competition through specially conceived products" is the maxim of Christopher Connor of the Sherwin Williams Company. The example of a pourable and stackable paint canister instead of the conventional pail was a clear illustration of added value and an innovation advantage over national and international competitors.

One of the core tasks of Connor's successful management style consists in continually analyzing the market to serve as a basis for targeted strategies. Unlike the case in Europe, the DIY market in America has been ceding ground for years to paint contractors, which Connor plausibly attributed to the aging population and growing prosperity. Furthermore, new building starts make up only 10-20% of masonry paints business, with the lion's share being taken by redecorating and renovation.

Market research, market proximity and market urgency are of single importance for national, medium-size suppliers, according to Giovanni Domenichini, CEO of the family-run company Inver, citing the Italian market as an example. Unlike Northern and Central Europe, where consolidation levels are high, Southern Europe, and especially the Italian paint market, is very highly fragmented. Out of 828 paint companies, 815 have sales less than euro 50 million. Competition is extremely tough - and not only involves the multinationals. The charismatic Italian entrepreneur has switched his company philosophy to cater fully to the mentality of Southern European customers.

Denis Ilatovskiy, vice president of MAIR Group, Russia, argued along the same lines, albeit from another perspective. The highly fragmented, heterogeneous Russian market, the ongoing lack of infrastructure, the low population density and the unstable political situation often act as pitfalls for foreign newcomers. "Only a few multinationals have made any investments here so far, and even then only slightly. What are they waiting for?" he asked rhetorically. Several local coatings manufacturers, even small ones, were growing at double-digit rates and could see huge potential in their own country.