In our first annual Powder Report, Industrial Paint & Powder talked with several industry experts about powder coatings and their part in the finishing industry. Read on for what some of the industry's suppliers think about powder's place and performance in the market.
Powder coating is one of the most exciting finishing methods to be introduced in the last several decades. It brings with it several advantages, including economic, environmental, finish quality and corrosion resistance, among others.
According to the findings of our latest Finishing Market Study, the finishers we surveyed indicate that they will spend about 47 percent of their 2006 budgets on powder spraying equipment. This is up 25 percent from last year's survey. (For a report on all the stats we collected, see our January 2006 issue, A Close-Up Look at Finishing, page 12). To find out why finishers may be spending so much more of their budgets on powder spraying equipment this year, we talked to some industry players for their take. Why the jump?
According to Thomas P. Frauman, global marketing director, powder coatings, at Rohm and Haas Co., there are three reasons. First, raw materials, energy costs and competition are forcing finishers to look for every cost saving and efficiency option, and newer equipment is a lot more efficient, saving money. "We see it in their request for more efficient products and with Rohm and Haas Powder Coatings offering High Yield (HY) powders to the industry for over eight years and introducing a next generation of this technology later this year," he says. "We see the marriage of process improvement and more efficient materials continuing in the long term."
Second, he says that technology advances have opened up new markets. "Powder coating occupies approximately a 12 percent share of total OEM product finishing, leaving significant headroom for technology to open new niches for powder. I see global powder producers opening a number of new markets over the coming years," Frauman says.
His third reason is that international competition from emerging markets in Asia and Eastern Europe are driving western manufacturers to respond more quickly and be more flexible, especially at the job coater level. "If you want to succeed at that game, you need the right equipment," he says.
Steve Houston, vice president of sales, decorative powder coatings, at DuPont Powder Coatings, Houston, also says that the powder industry has gone through a three- to five-year drought where investments in new and/or replacement equipment were difficult to justify. "In 2004, the North American powder business finally saw an increase in consumption and this brought a much needed confidence back to the marketplace, thus positively affecting spending for capital," Houston says.
Chris Merritt, general manager at ITW Gema, Indianapolis, says that new business or new demand for powder coating is being driven in a few areas. First, he says there is an increased consumer demand for quality finishes. "This would include refurbishment of products such as hobbyists and custom coaters," Merritt says. There also is an increased awareness from consumers and the potential value that may be added by the manufacturer, according to Merritt. New capabilities with materials such as in the aluminum extrusion market (fluoropolymer development) and ongoing ecological issues that continue to gain attention such as Florida's Green Building Movement and California's renewed concerns over VOCs are also driving the demand for powder coating. Merritt also says that continuous process improvement that provides opportunities to manufacturers to address color change requirements more rapidly also is a contributing factor to this growth.
Merritt goes on to say that much of the increase for powder equipment is being driven by evolution within the existing manufacturing base that now makes an investment more attractive. As examples:
- Capital equipment is being more fully utilized within the companies that have experienced increased consumer demand. This is also a reflection of manufactures more fully embracing just in time or MRD that has reduced inventories.
- Energy costs have been increasing steadily as well as material and labor.
- Increased pressure from competitors or potential suppliers that are utilizing offshore supply or outsourcing as a way to reduce cost demands that local manufacturers must continually reduce their applied costs to remain competitive.
- Some manufactures who embraced off shoring now have to deal with poor quality, reduced control and flexibility, forcing them to reinvest locally.
- Increases in chemical/powder manufacturing costs provide additional ROI when evaluating new technology that may improve application or process.
The TrendsWhen asked what trends they see with powder in the marketplace, our respondents had a variety of answers. Alan E. Barton, vice president, business group executive, coatings, at Rohm and Haas Co., says, "What I am seeing is not simply a trend, but a real sea-change in this industry, and it is happening along three lines."
The first, he says, is that excess industry capacity is forcing companies to reexamine their business models. "Rohm and Haas has responded by moving to close one plant in both North America and Europe, while continuing investment in growing markets."
The second is that run-away raw material cost increases are changing the economics of the industry from the basic material supplier to the consumer level forcing Rohm and Haas to take pricing actions in the marketplace.
And the third, "Value generation at many end-use markets is stalled underscoring the importance for Rohm and Haas to continue making significant investments in R&D to develop new technology," he says.
Barton says Rohm and Haas sees the strongest growth coming from three main areas, including emerging markets like China, Eastern Europe and Latin America; specialty technologies that expand the markets they serve; and job coaters.
"The production of fabricated metal goods will continue to leave Western Europe and the United States in favor of lower cost operations in Asia and other developing regions," he says. Local demand will increase in developing nations with increases in disposable incomes, higher awareness and the enforcement of environmental issues.
"Rohm and Haas has assets in nearly every country that is important to the coatings business. In terms of Rohm and Haas overall, Asia is not a foreign area for us. We've been active there for more than 40 years, and in China since 1987 and are very much at home there. However, for powder, it is a new frontier as our business had been concentrated in Europe and North America." Barton says that for years the company looked to develop a partnership in Asia, but in early 2005 they opened their first powder plant in greater China near Shanghai and set an "aggressive business plan" for the business in Shanghai, which they report they have consistently beaten.
"The focus of Rohm and Haas at Shanghai is to follow and support our global customers and aim at our power alleys such as automotive wheels, suspension parts and architectural aluminum. In other words, segments that value the total solutions we provide." In both China and Latin America, Barton says that Rohm and Haas' powder business is doing well with "premium technology." Barton says, "The demand for these technologies is present in emerging markets but customers find their current choices limited by suppliers offering ‘plain vanilla' products.
Barton goes on to say that growth in Western Europe and the United States will be largely technology-led with new chemistry enabling the powder coating of articles that could heretofore only be finished with liquid paints. These areas will include automotive body coatings, continuous steel coil, architectural metal and coatings for engineered wood and plastic. Additionally, speed and agility will become increasingly important differentiators as the customer landscape reshapes to serve higher-end, more specialized and more customized end applications, according to Barton. Applied cost savings enabled through higher application efficiencies, lower cure temperatures and thinner films will become increasingly important as metal product manufacturers in developed regions seek to drive costs out and improve competitiveness.
"If we look at the job coater segment we can see steady growth in this sector with those businesses that stay in the home region long term vs. those industrial businesses that have migrated to Asia and other developing regions. These manufacturers will require a high degree of customization and fast response which we can service well from any one of our regional sites and ensures their growth at better than GDP for the foreseeable future," Barton says.
According to Wagner System's Bryan, the most significant trend has resulted from dramatically reducing the color change time associated with a powder coating system. "Companies are now able to spray a larger number of colors and not be negatively impacted due to color changing." He says that powder system technology has advanced to allow large systems with automatic and manual guns to be completely color changed in 5 minutes. "This is accomplished through improvements in powder booth design and construction. A double-walled booth of polymer construction minimizes powder buildup and allows for easy cleaning. In addition, powder feed centers permit rapid cleaning of the automatic and manual guns. Finally, improved cyclone recovery system design allows for efficient recovery of powder for re-use and minimal attention for color changing," Bryan says.
DuPont's Houston also says that quicker color change is a trend taking hold as well as the desire for higher efficiency applicators.
Feeling ItSo, which industries are affected most by increased powder usage? DuPont's Houston says that general industrial is up slightly, automotive is up, appliance is up and architectural - while small - is growing very fast. He says that functional is growing quite rapidly as well.
According to Bryan at Wagner, the industries most affected are those that are seeing an increase in demand for more colors. "For example," he says, "companies that manufacture their own product are also manufacturing similar products under a private label. As a result, manufacturers are required to apply a greater variety of colors. In addition, as companies consolidate manufacturing locations, their color requirements can also be affected. Finally, many custom coaters are gaining additional business by competitively offering a greater number of colors to end users. However, in order for a custom coater to be competitive, they must be able to recover the powder and minimize color changeover times."
Frauman at Rohm and Haas says, "As discussed before, it is all about attacking that 88 percent of OEM product finishing that is not powder coated. This takes you into a variety of areas today not finished with powder coatings, including engineered wood and plastics."
He says that in North America, powder coating extruded aluminum profiles, common in Europe, "will certainly see significant growth in the coming years." Additionally, he says that high performance automotive body and specialty component parts continue to represent attractive opportunities for powder.
"Job coaters serve the segment of the market that continues to grow above market rates in both Europe and North America. Rohm and Haas is committed to this segment and seeks to continue strengthening our product offering and service model to support the needs of these customers for product availability, consistency and responsive service. Furthermore, we seek to leverage our expertise and technical capabilities to be a driver of industry specifications and standards."
According to the Powder Coating Institute's communications director, Jeff Palmer, all of this is a good sign for the powder industry. There is a lot of potential in the various markets and particularly in the architectural segment.
According to Greg Bocchi, PCI president, "With the installation of two new vertical powder coating lines for aluminum extrusions in the United States last year, PCI has made a concerted effort to target architects and others in the building and construction industry, educating them on the benefits and the versatility of powder coatings. After proven long-term success in Europe, powder coating in the architectural market holds the greatest potential for industry growth in North America, once enough decision-makers understand powder coating's potential and have the information and resources to choose powder coating for their latest projects." Be sure to check out Bocchi's Industry Forum this month on page 58.
SIDEBAR: Advantages and Disadvantages of Powder CoatingsAccording to SpecialChem, a knowledge and service provider in the domain of specialty chemicals, the success of conventional powder coatings is the result of their excellent properties and many economic and environmental advantages over traditional solvent based paints. Many of the disadvantages to the use of powders that had existed (as noted in the above table) have been eliminated or minimized through formulation and equipment development. These developments will help to ensure that powder coatings market will continue to grow at an impressive pace.
New resin systems allow powder to meet the end-user's specification for almost any product. Many of these coatings can be cured at temperatures as low as 250°F (121°C). The advent of low curing temperature systems, such as infrared-cured powders, has significantly opened up the market to heat-sensitive substrates such as wood, plastics, and assembled components with heat sensitive details. The coating of metal substrates also benefits from this technology, with lower energy and investment costs, shorter curing times, and higher lines speeds.
Wagner System's Bruce Bryan offers the following as significant advantages of powder over other finishing technologies:
- Environmentally friendly - no VOCs or hazardous waste.
- Efficient and economical - overspray powder can be reused.
- Easy to apply - extremely difficult to generate rejects due to drips, runs or sags.
- Excellent finish - higher molecular weight resins provide a quality finish.