Coatings Industry Gains Traction in 2011

It has been a bumpy four years since I began following the top global and North American coatings companies. The makeup of the industry has continued to change as large companies made themselves larger, buying smaller competitors and expanding their presence globally with acquisitions and joint ventures in the emerging economies of Asia, the Middle East and South America. Then came the global economic crisis, and everything slowed down. Companies were forced to deal with decreased demand coupled with rising raw material costs. Now it appears the industry is again gaining traction.

According to a report by market research firm Global Industry Analysts, Inc., the global market for coatings is forecast to reach 8.7 billion gallons in volume and $107 billion in value by the year 2017. The report lists major forces driving growth in the market to be recovery of the global economy, rapid industrialization in emerging economies, and increased demand from the automotive and construction sectors. Growth in the global market will also be propelled by increased regulations, rising competition, growth in unique formulations, and technological and product developments.

The report also states, “Global paint and coatings production is witnessing a major shift away from the developed regions, such as Europe and the U.S., to the developing economies, such as Asia, comprising Korea, India and China. Sustained demand from the developed countries, in addition to the burgeoning demand from the developing countries, is contributing to the overall expansion of the coatings market worldwide. However, industrial growth in developing economies is a major growth driver for the coatings industry. The coatings industry can be termed as mature in most regions of the world, and its growth is dependent on a number of factors, such as the level of economic activity and the state of the construction industry, which represents a major consumer of paints and coatings.”

This analysis reflects the results of PCI’s20^th annual listing of the top coatings manufacturers in the world, which is found on page 28 of this edition of the magazine. Listed in the article are the Top 10 global leaders and the Top 25 North American companies. Coatings sales listed for each company include worldwide 2011 global coatings sales figures.

In 2011, each of the top global companies reported increased sales numbers. The top four North American companies did very well, with companies seeing increases as high as Valspar’s total sales increase of approximately 24 percent. Sherwin-Williams reported a consolidated net sales increase of nearly 13 percent. Dupont Performance Coatings reported a sales increase of 12 percent, and PPG reported a net sales increase of 12 percent in two of its three coatings segments. In North America, the majority of companies on our list reported increased sales when compared to 2010. Sales in many companies increased between five and 10 percent. Most notable was architectural wood finishing manufacturer Gemini Industries (listed as an Honorable Mention), which saw a sales increase of 20 percent compared to sales in 2010.

Some of the largest players in the industry have installed new leadership this year. In April, Ton Büchner replaced Hans Wijers as the new CEO of the largest coatings company in the world, AkzoNobel. In June, Valspar Corp.’s Board of Directors elected Gary E. Hendrickson, Valspar’s President and Chief Executive Officer, to the additional role of Chairman of the Board, succeeding William L. Mansfield, who retired. These new leaders certainly face big tasks ahead as they work to keep their companies one step ahead of whatever challenges the global economy presents in the coming years. However, if the industry’s performance in 2011 is any indicator, things are looking up.

While the PCI staff made every effort to seek out the top companies in the industry, we may have inadvertently omitted some. Please contact me at parkerpcimag@gmail.com if you are interested in being included next year.