But based on Industrial Paint & Powder's 16th annual Finishing Market Survey and other economic data and trends, a rebound appears at hand. Nearly 53% of finishers responded that their operating levels in 2003 would be higher than in 2002. In last year's survey, less than 43% of respondents said their operating levels would increase. Likewise, only 5% of respondents said their operating levels would decrease in 2003, compared to last year, when nearly 13% said their operating levels would decrease.
On average, the surveyed companies estimated that they would spend nearly 32% of their 2003 finishing budgets on liquid application equipment. That's about the same as last year, but down about 6% from two years ago. Companies say they will spend about 20% of their budgets on powder spraying equipment, 5% more than a year ago. Companies will spend about 42% of their budgets on support equipment, about the same as last year, and up from 34% a year ago (Figure 3).
Reduced operating costs continues to be the principal motive for new investments in finishing equipment. Like last year, a little more than half of the respondents list this as their top priority, followed closely by the need to upgrade or replace aging equipment (48%).
Other reasons for purchasing new equipment include:
- Increase capacity, 41.4% (up from 36.6% last year)
- Improve coatings appearance/performance, 37% (consistent with the last few years)
- Environmental compliance, 27.3% (this percentage has continued to decline in the last few years, from nearly 37% three years ago)
- Expand/improve color-change capabilities, 13.2% (about the same as the last three years)
- Conversion to new coating system, 11.9% (about the same as the last three years)
The "Typical" FinisherFinishing operations vary widely in size and scope of operations; thus, attempting to provide a snapshot of the "typical" finisher is no easy task. But the responses to Industrial Paint & Powder magazine's 16th annual Finishing Market Survey provide detailed information about staffing, spending, application methods and much more for small and large finishers alike.
While finishing facilities that use a relatively small amount of liquid paint comprise a huge portion of all facilities using liquid coatings, the same is less true for powder finishers. Of those respondents using liquid coatings, more than 46% use less than 100 gallons per month; 100 to 249 gallons, 18.4%; 250 to 499 gallons, 10.6%; 500 to 999 gallons, 8%; 1,000 to 2,499 gallons, 8%; and 2,500 gallons or more, 8.7%. Conversely, about 14% of shops applying powder coatings use less than 100 pounds per month; 100 to 249 pounds, 11.3%; 250 to 499 pounds, 10.6%; 500 to 999 pounds, 13.3%; 1,000 to 2,499 pounds, 14%; and 2,500 pounds or more, 36.5%.
A majority of the respondents (66%) say their finishing operations occupy less than 10,000 square feet; about 38% occupy less than 5,000 square feet. A little more than 5% occupy 50,000 square feet or more.
When asked about the age of their equipment, nearly 22% of respondents said their liquid application equipment was less than three years old; 38.8%, three to five years old; 23.7%, six to 10 years old; 16%, more than 10 years old. These numbers were very close to last year's numbers. Regarding powder application equipment, 26% of respondents said their equipment is less than three years old (compared to 33% last year); three to five years old, 38%; six to 10 years old, 26%; and more than 10 years old, 10%.
On average, respondents say that about 14 people are directly involved in the company's finishing activities, though more than 68% of respondents say they employ 10 people or fewer. The number of people involved in finishing, according to respondents, has fallen significantly the last few years.
How are those employees applying paint and powder? More than 41% of respondents use air or airless spraying, which is down from 48% last year and 52% four years ago. That category is now slightly behind powder spraying (43.9%), which is up from last year and 34% a few years ago. About one-third employ HVLP spraying and 22.2% use electrostatic liquid spray equipment (Figure 4).
And what are they coating? Ferrous metals account for nearly 61% of total coating volume, while nonferrous metals account for 23%. Those numbers have remained about the same the last several years, and respondents say they are unlikely to change over the next two years. Plastic accounts for about 6% and wood accounts for nearly 8% of total coatings volume.
Nearly 23% of respondents say they are reformulating their coatings. Of those that do, the vast majority (84.7%) add solvents. They also add pigments (54%), resins (30%) and other additives (61.3%).
In the plantCapacity-utilization rates in 2002 changed little from 2001 rates. The only utilization-rate category to show a statistically significant change is the 80 to 89% category, which decreased from 22% of respondents in 2001 to less than 15% in 2002. The other capacity-utilization-rate categories were:
- Less than 50% capacity, checked by 22.7% of respondents
- 50 to 59% capacity, 15%
- 60 to 69% capacity, 12.7%
- 70 to 79% capacity, 19.3%
- 90% capacity or more, 15.8%
For the most part, the percentage of each type of coating used by finishers hasn't changed much the last few years [check 2 and 3 years ago], and they don't expect to change that much over the next couple of years (Figure 6). The exception has been powder coatings. Respondents say that powder coatings account for about 41% of total usage, up from 35% of total usage last year and 30% three years ago. Finishers say they expect powder coatings to account for about 48% of total usage two years from now. The high cost of conversion was cited by more than 50% of respondents as the primary obstacle preventing them from switching to powder coatings, E-coat and radiation cure. Less than 60% of respondents cite poor performance as the main obstacle holding back the use of waterborne coatings.
Flashback-1988In 1987, Industrial Paint & Powder, which was then called Industrial Finishing, conducted its first Finishing Market Survey. Some things, such as the increased use of powder coatings and the decreased use of low-solids solventborne, have changed dramatically; other changes have been relatively minor. Here are some of the results from the second study, conducted in 1988.
Other trends and forecastsAccording to the latest census bureau data (Figure 7), OEM and special-purpose coatings shipments for the first half of 2002 are down 4.6% and 2.6% respectively. However, second-quarter 2002 shipments of OEM coatings spiked sharply upward over the first quarter and are not far off second-quarter 2001 shipments. Second-quarter 2002 shipments of special-purpose coatings also are not far behind second-quarter 2001 figures.
From 1996 through 2000, shipments of OEM coatings showed healthy gains each year, increasing from nearly 399 million gallons of paint in 1996 to 453 million gallons in 2000, before declining to 407 million gallons in 2001. Shipments of special-purpose coatings fared more poorly, declining from nearly 209 million gallons in 1996 to 182 million gallons in 2000, to nearly 162 million gallons in 2001, a decrease of almost 22% since 1996.
A Freedonia study released recently says that total U.S. shipments of paints and coatings will reach 1.5 billion gallons in 2006 as the United States expands its trade surplus in paints and coatings, with net exports forecast to reach 95 million gallons. In particular, the North American Free Trade Agreement has created substantial interregional opportunities for U.S.-produced coatings. U.S. exports within NAFTA expanded at double-digit annual rates between 1996 and 2000, before falling back in 2001.
Shipments of maintenance and special-purpose coatings will exhibit below-average gains, although forecast growth will increase from the recent pace of this sector. Industrial maintenance coatings will reverse recent declines to post solid gains through 2006. This sector remains a stronghold for solventborne coatings due to demanding applications such as marine coatings. In part, the stronger volume gains will reflect a more concerted shift to waterborne coatings.