We are at the halfway point of 2015, and it is time again to look at what’s happening in the coatings industry in North America and around the world. In this issue of PCI, we feature our annual study of the global top-10 and the top-25 North American coatings manufacturers.

The biggest change this year is at the top of the list, with Pittsburgh-based PPG replacing Amsterdam-based AkzoNobel at the number-one spot. The change is not surprising, as PPG made two very large purchases in the past two years, one from AkzoNobel itself. In 2013, the company purchased Akzo’s North American architectural coatings business, which at the time was PPG’s second-largest acquisition in company history. In November of last year, PPG completed its acquisition of Consorcio Comex, S.A. de C.V., an architectural coatings company with headquarters in Mexico City. That transaction, valued at $2.3 billion, increased the company’s reach in Mexico and Central America and replaced the Akzo acquisition as the company’s second largest. In last year’s PCI 25, Comex was listed as seventh in North America, with 2013 coatings sales of $1.1 billion. When announcing the acquisition in June 2014, Charles E. Bunch, PPG Chairman and CEO, said that the company anticipated acquisition-related synergies of 3 to 4 percent of acquired sales to be achieved over a two-year period.

Besides these two large acquisitions, PPG has acquired a number of smaller companies and brands since 2013. These include Hi-Temp Coatings Technology Co. Inc., a supplier of high-temperature-resistant and insulative coatings based in Boxborough, MA; certain assets of Flood^® Australia, a manufacturer and distributor of specialty wood stain and paint additive solutions; Cuming Microwave Corp., a Massachusetts-based supplier of specialty coatings and materials that absorb microwaves and radio waves; and IVC Industrial Coatings Inc., a U.S.-based specialty powder and liquid coatings manufacturer. PPG also purchased a number of coatings distributors in Central America and the United States last year.

Akzo, on the other hand, had no coatings-related acquisitions in 2014 and is instead focusing on organic growth. The company announced several growth initiatives in Asia during 2014 and the first half of 2015. These include the start-up of a powder coatings plant in Dubai, new decorative paint and automotive coatings facilities in China, and the doubling of production capacity at an industrial coatings facility near Shanghai. Earlier this year the company announced plans to invest €2.5 million to expand performance coatings capacity in Indonesia, and invested €5 million in added capacity for its marine coatings and protective coatings businesses in Singapore and Australia. Just this May, Akzo announced plans for a €30 million performance coatings manufacturing facility in Thailand.

Looking at the global picture, a report released this year by Persistence Market Research values the global paint and coatings market in 2013 at $121.9 billion and predicts growth at a CAGR of 5.5 percent, reaching an estimated $176.5 billion by 2020. The report cites increasing global population, continued urbanization, and an increase in the market for consumer goods and automobiles as coatings market drivers.

Other market studies report increases in building and construction coupled with growing manufacturing in Asia-Pacific as key drivers of growth in the coatings market. The developing construction industries in the Middle East, North Africa and South America are also spurring demand for coatings. Growing environmental concerns, including stringent regulations in Europe, will impact the coatings industry going forward. A study by Marketresearchreports.biz finds that the trend towards more environment-friendly products will continue to grow. It reports that waterborne coatings were the most widely consumed coatings and accounted for around 40 percent of the global demand in 2012. The study predicts that demand for waterborne coatings will rise as demand from residential, commercial, automotive and aviation end users increases, and that solventborne technologies will lose market share as regulations continue to increase. Consolidation is a continuing trend in the coatings industry, as the largest companies continue to buy up regional companies, as well as those with specialized technology. 

Faced with shifts in both regional demand and technology, companies develop strategies to compete. Industry leaders can address changes in technology and regional growth patterns through acquisitions, either in companies that hold the new technologies or in companies with a regional presence in faster-growing markets. Another strategy is to build up and reallocate resources within the company to address new technological and regional needs. These two strategies appear to be playing out among the two largest titans in the industry. This is a battle I look forward to watching, and I hope you do as well. 

 Our Global Top 10 and PCI 25 ranking can be found on page 20 of this issue. As always, please contact me at parkerpcimag@gmail.com if your company has been inadvertently omitted, and you are interest in being included next year.