Acquisitions Reshape the Face of the Paint Industry
As an example, in 1990 the top five companies controlled only 37% of sales, and the leading 10 held just over half. By 2003, the five largest producers dominated with 51% of industry sales and the 10 largest had almost three-quarters (Figure 1). Gone are some of the old names - DeSoto, Lilly, Guardsman and Grow Group, with their operations now held by others.
What has been spurring this desire to get bigger? First, the industry has long been fragmented. Each of its three major segments, architectural coatings, industrial OEM coatings and special purpose coatings, has supported hundreds of producers. With increasing pressure in recent years to reduce costs, many of the smaller and mid-sized suppliers have decided to sell or merge. Secondly, larger size means lower R&D expenditures, reduced shipping costs, and the ability to negotiate higher prices and terms from customers.