“Digitisation will come faster than most in the industry are prepared for”
PPG has recently acquired two businesses which gives the company a stronger foothold in Europe. Tim Knavish, executive vice president, architectural coatings, talks about the company’s targets in Europe and further growth strategies. Knavish also elaborates on digitisation, which for him is a huge topic even though the industry is still at a starting point.
How do you rate the current development in the coatings market?
Tim Knavish: We continue to see growth in the coatings market worldwide. Although there is a bit of a challenge in some markets, for instance the automotive market. It is a great market but for the first time in many years we can see that car production is going down. Geopolitical and trade issues are having a negative effect on demand in certain parts for industrial coatings as well. However, we see a robust market for aerospace and protective coatings as well as a stable single-digit growth rate in architectural coatings. Apart from the global view, the same is true for the European market. We see stable demand in all the segments other than automotive.
What is PPG’s vision for Europe and the specific business unit activities?
Knavish: We see good potential to grow both organically and inorganically. We seek to continue growing through innovation and look to grow in segments where we are underrepresented. We are pretty excited about what is happening on the inorganic side in Europe this year. This year we closed a great acquisition with Hemmelrath.
Their business is largely in automotive, but we believe that we can take what we have learned regarding their formulation technology and can leverage this on a global scale. From a competition standpoint, we always knew Hemmelrath was a good competitor. And once we did the deal we were able to understand their modular concept of production better and we believe there is application for this beyond just automotive OEM coatings. We look to expand that technology.
Tim Knavish is executive vice president for architectural coatings at PPG.
With Whitford we have acquired another company with a large footprint in Europe, as the company has a strong position in the U.K. and Italy. Half of Whitford’s business is in the non-stick cookware segment. But the technology is also used in many industrial applications. We are convinced that we can leverage these technologies to other segments and industries and accelerate the growth on the industrial side.
Our long-term goal continues to include growth by both acquiring companies and launching new innovative products. We have real opportunities to grow with our brands here in Europe. We look forward to good growth in that region.
Do you have any concrete targets?
Knavish: We have a very healthy target pipeline that we are actively working. There are still many local or regional companies that we see as a great addition to the PPG portfolio. Either they bring us great brands, additional technology or access to a customer base we do not have yet. We have a robust pipeline with targets that we are at various stages in discussions with. We also want to lead in digitisation and new mobility initiatives, so also adjacent technologies are in scope to the extent that they help us in our core coatings business.
Digitisation is a huge topic in many industries. How digitised is the coatings industry from your point of view?
Knavish: On the scale from 1 to 10, ten being the highest, we as an industry are less than a five when it comes to digitisation. Maybe a three or a four. Other industries such as retail, transportation, or Amazon are really digitised. We have started to digitise processes and operations on the inside but when it comes to external digitisation we still have long way to go. Digitisation will come faster than most in the industry are prepared for.
Where do you see potential to further digitise the coatings sector? What are the challenges (or hurdles) for digitising the coatings sector?
Knavish: In the coatings industry, as we like to say at PPG, we protect and beautify the world. Therefore, we need to continue to innovate. We as an industry should not only focus on improving what is inside the can, specific to the coating itself. Our industry needs to help improve operations, productivity and sustainability by using less energy and causing less waste. The European customers not only demand that great finish, but are also interested in their own business performance, own sustainability, and own productivity. As a key player in the industry, we must also focus on continuously improving the customer journey and customer experience. I believe that digital will play a key role in each of these areas.
How do you rate the penetration of digitisation in Europe compared to other geographies?
Knavish: Across Europe we see digitization of the industry coming fast. In architectural coatings in France we launched a successful e-commerce platform. We also launched a digital services platform in Benelux.
However, the industry still has a long way to go to have a breakthrough in the downstream market. What kind of digital transformation is coming to the industry? What would a room look like when it is painted? Can I book painting services through an app? Can I do accurate colour selection on my mobile phone? I am convinced that digitisation will play a critical role in answering these and many other questions for our customers in the future.
The interview was conducted by Damir Gagro
