Taking the Pulse of the Powder Coating Industry
PCI President Tony Mazzarella of Bayer Polymers opened the meeting, noting the corporate scandals, stock market turmoil and generally uncertain times that have affected the U.S. economy and manufacturing. He discussed PCI’s work to retain existing members and sign up new members. He noted PCI’s continued commitment to promoting the benefits of powder coating and powder coated products to both the industry and consumers, including new marketing initiatives in the wood and architectural markets.
Additional PCI efforts include refining procedures for the collection of quarterly statistics to provide more consistent, accurate and valuable reports to participating companies; and monitoring ASTM’s efforts to develop an accurate test method for measuring VOCs in powder coating materials.
Mazzarella said that one of the most significant accomplishments of the past year was to re-engineer the PCI Strategic Plan. The changes in the economy and the dynamics of the business since the last strategic plan was constructed necessitated the important changes.
Guest speakers included Don Reynolds, founder of 21st Century Forecasting, and Abe WalkingBear Sanchez, founder and president of A/R Management Group Inc. Reynolds’ research company focuses on global demographic, economic, business and technology trends. Sanchez is the developer of Profit System of Credit and Collection Management, a set of methodologies recognized as the most significant evolution in credit management in the last 50 years, PCI says.
PCI’s executive director, Greg Bocchi, encouraged members to remain optimistic about the future, and then reviewed some statistical information compiled by PCI and other sources. Although there was a modest increase in the total amount of powder consumed from 2001 to 2002, the revenue from the sale of that powder was slightly lower than the previous year (Figure 1).
Prices dropped nearly 10% in the two-year period. In addition to the average price drop, the volume sold dropped in the last two quarters of 2002.
Bocchi estimated that there are 66 companies now manufacturing or distributing powder coatings in North America and noted that the market is more competitive than ever.
Bocchi said that the 2001 recession was relatively mild, with real GDP declining just 0.6% and payroll employment declining by just 1.3% of the labor force. But the U.S. manufacturing sector declined 7.3% between December 2000 and June 2001, and 73 of every 100 jobs lost from March 2001 to April 2002 were in the manufacturing sector. The underperformance in manufacturing also reflects the loss of U.S. manufacturing jobs to Asia, China in particular, which is a shift unlikely to be reversed.
The first quarter of 2003 showed signs that the worst had passed and that the industry was recovering. The volume of powder sold increased by more than 5%; the amount spent on powder coatings also increased.
Bocchi said that while the outlook for the rest of 2003 is not much better than the previous few months, a real recovery can occur in 2004 with a weaker dollar, higher capital spending and inventory building combining to boost real growth to around 4%. Powder coating system purchases may rise later this year because there’s less excess capacity and many companies need to purchase more technologically advanced machinery to reduce operating costs.
He reviewed several issues facing the industry, including the underappreciation by most end-users of the value and benefits a powder coated finish brings to a product’s final performance and appearance, and the need to change those views through stronger customer relationships. He also cited powder production overcapacity and a lack of product differentiation by powder suppliers.
Newly elected PCI President Steve Houston of DuPont Powder Coatings noted that the market is changing and technological advancements are occurring at a faster pace than ever before. He encouraged members to participate in committees and to look to their staffs to find the best people to participate in those committees.
He then announced the committee chairmen for the 2003-2004 year as follows: Executive Committee, Steve Houston, DuPont Powder Coatings; Finance, Dave Heflin, Akzo Nobel Inc./Interpon Powder Coatings; Technical Committee, Bruce Bryan, Industrial Paint & Powder magazine; Application/Recovery Equipment Subcommittee; Tom Matthey, Wagner Systems Inc.; Health & Safety/Test Procedures Subcommittee, Eric Dumain, Reichhold Inc.; Membership, Chris Merritt, ITW Gema; Industry Communications, Don Williams, Troy Corp.; Trade Show, Jerry Trostle, Spray Booth Systems Inc.; Raw Materials Suppliers, Ralph Owens, EMS-Primid; and Custom Coater Members, Dwight Murray, Calgary Powder Coatings.