Paint Industry Manages to Grow in 2006 – Preliminary Results

According to the latest Census Report for the 2006 fourth quarter and year, the paint industry achieved another record in both shipment volume and value. The results showed gains in Architectural and Product OEM coatings while Special Purpose coatings declined in volume.

The total paint industry increased in volume shipped for the year by 3.1% to 1,393.4 million gallons; shipment value increased 4.5% to $19,379.6 million. Both volume and value set all-time record highs. This is encouraging, but the fourth quarter results indicated a decline in shipment volume of 2.2% and only a small increase in shipment value of 1.1%. Although the fourth quarter is usually one of the smaller growth quarters for the industry, the negative growth in volume could be a prelude to a less-than-stellar year in 2007.

The Architectural coatings segment increased for the year by 2.2% in volume shipped to 812.3 million gallons, and increased 6.3% in shipment value to $9,477.2 million. This was an excellent result for the segment considering the slow down in the housing market. For the fourth quarter, the segment declined 3.7% in volume shipped while still increasing in shipment value by 2.9%. The volume downturn in the fourth quarter continued a trend of reduced shipments for the last three quarters. There is definitely a softening in the Architectural coatings segment taking place, which is likely to continue into 2007.

The Product OEM coatings segment had a good year, with shipment volume increasing 7.9% to 433.2 million gallons and shipment value increasing 3.0% to $6,163.8 million. The 2006 growth for this segment was impressive compared to the lower volumes recorded in the previous several years. The domestic manufacturing economy has shown growth during the last year. For the 2006 fourth quarter, the segment increased in volume shipped by 3.1% but decreased in value shipped by 2.7%. Shipment value could not keep up with the increased raw material cost during the last couple of quarters. Is this a sign of a possible softening of the segment for 2007?

     The Special Purpose coatings segment declined in volume shipped for the year by 5.0% to 147.9 million gallons while increasing in value shipped by 2.8% to $3,738.6 million. Exactly what this means is uncertain at this time since the complete annual results scheduled to be released by the Census Bureau later this year will likely change these numbers as it has the last several years. For the fourth quarter 2006, the segment decreased 10.2% in volume shipped while the shipment value increased 3.5%. The reporting in this segment continues to be suspect, especially between the quarterly reports and the annual report.

Exports for the year 2006 increased in value by 8.5% to $1,656.8 million. Imports were reported as 3.2% of shipments or $626.4 million. Imports have leveled off at more typical amounts during the last couple of quarters from those reported in the four quarters that ended with the second quarter of 2006.