One of the first questions that we often hear when we greet a friend or a business associate is "How's Business?" It is an easy question with which to start a conversation and we are truly interested in how our associates are doing. But the past few years have put more importance on the subject. Let's face it, the answer since the year 2000 has not always been positive. For some of us it has been just plain awful. And for some others it has been the end of business as they knew it. So here it is: How is business?
From my personal view, business has been great. Of course, I work all over the world and my work is very diversified so I am not too sensitive to regional depression or softness in particular industries. If I had to do all my business in Michigan (where I live) it would not be as good. Statewide unemployment in Michigan was 6.6 percent for the month of November, better than last year but still high compared to the national average of 5 percent. This means that we have 337,000 people who are actively seeking jobs. Many of them had jobs for many years in the automotive, general industrial and appliance markets. Looking at a broader geographic area, the unemployment picture is better - although many jobs of today do not pay the same wage as lost manufacturing jobs.
So what is happening in coatings? Total liquid coatings sold in 2004 (architectural, OEM and special purpose coatings) were 1,323,620,000 gallons with a value of $17,029,652,000.00*. The figures are not all in yet for 2005, but it looks like the volume sold will be around 1,394,507,000 gallons with a value of $18,832,315,000.00. That is around a 5 percent growth in volume and a 10 percent growth in value. Raw materials went up substantially this year so the cost per unit was raised on most coatings. This accounts for at least some of the difference in volume increase vs. the value increase. Still, some growth is welcome even if the amounts are modest.
In powder coatings, the total pounds of powder sold in 2004 in the United States was 73,946,000 pounds at a value of $829,176,000.00. The volume increase from 2003 was 1,542,000 pounds. The year-end statistics for 2005 are not yet published but based on quarterly reports the increase will again be around 9 percent.
Looking at the more informal sources of information (salesmen and other sources of gossip), 2005 was definitely better than 2004. We all know that 2004 was a poor year so it makes a pretty low benchmark. But still, some growth is better than none. And some companies had excellent years.
This data, formal and informal, does not really answer the question (how is business?), but it does show some steady, if unspectacular, growth.
I think the reason we all want an answer to this question and are not sure about the economy is that growth is not universally obvious. We still have major challenges. We are spending far too much money at the federal level, savings is terrible, federal and personal debt is at an all time high, energy costs are at an all time high, jobs are still going to Mexico and China, and there is no clear evidence that anyone is minding the brakes.
So my answer to the question has been a qualified positive one. Business is definitely better. Threats to the economy are still alive. The best news is that we did actually grow with the level of challenge we face in the current market. If we begin to focus more attention on new technology and manufacturing ideas instead of continuing with the same worn out economic ideas and practices of the past five years, imagine what we could do!*U.S. Census Bureau Statistics
EDITORS VIEW: State of the Coatings Industry
March 6, 2006