Global coatings industry gathers for summit

Once again, 115 senior executives from 21 countries accepted the invitation of the World Coatings Council (formerly IPPIC) and Vincentz Network to attend the Coatings Summit, which took place in Paris from 30 January to 1 February 2019. The eminent speakers at the Summit used the event’s motto – “Shaping the future of a dynamic industry” – to address a number of topics ranging from global growth strategies and perspectives to specific markets and how to overcome special challenges.

Global growth strategies and perspectives

In his presentation, Charles Shaver, Chairman of Axalta Coating Systems, USA, highlighted a number of aspects that will be important for future growth scenarios. The millennials generation will play a key customer role. They will rapidly become a major consumer segment in the market, he said, and they have special requirements. They have a tendency to change their tastes quickly and are quick to spot trends. According to Shaver, the rapidly changing tastes and trend-spotting pursued by the millennials will force paints and coatings manufacturers to devise leaner colour-change processes, to gain faster approval for formulations and to boost overall production speed. “This generation values and expects a higher level of social and environmental responsibility from manufacturers,” he said. He added that 89 % of millennials are open to the idea of sustainable investment, compared to 79 % of generation X and 66 % of baby boomers.

What the future holds

Shaver was of the opinion that private equity will continue to be part of the industry, even if these investors have tended to be opportunistic rather than strategic so far. The industry is well positioned for further merger and acquisition activities, he noted. “The global coatings industry remains highly fragmented, but we are dominated by nine major international companies,” he said, before adding that, by 2021, Asia will account for 60 % of global coatings production – 37 % in China alone. This means that the Asia-Pacific region will continue to dominate international coatings business.

Focus on China

Thierry Vanlacker, CEO of Akzo Nobel, Netherlands, focused on China from a global perspective. His company is extremely active there and he pointed out right from the start that, despite the slowdown, growth rates in China are high compared to those in other countries and regions. Overall retail sales of consumer goods may have remained constant in recent years, but they have enjoyed consistent single-digit growth since 2018. The main challenges for the Chinese economy, as identified by Vanlacker, are the slowdown in the real estate bubble, the trade disputes with the USA, the speculative debt crisis, the flight of capital debate, rapidly changing sustainability policies and the rising costs of skilled workers. In terms of coatings sales, Vanlacker saw strong demand in China for bio-based and water-borne “eco-premium” products.

Yin Xu, Chairman of the Xiangjiang Paint Group, China, gave a detailed overview of the Chinese market in his presentation. From 2008 to 2017, paint production in China grew from 6.38 to 20.36 million tonnes, equivalent to a rise in value from 26.48 to USD 60.65 billion. At 69 %, industrial coatings are the largest market segment in China. Xu said that, so far, there has been hardly any consolidation among the roughly 10,000 paints manufacturers serving the market, and that merger and acquisition activities will start to trend within the coatings industry.

Insights into other regional markets

The five-star lecture programme also featured insights into the success strategies deployed by the leading lights in the international coatings industry. Armodios Yannidis, CEO of Vitex-Yannidis Greece, gave an entertaining presentation on how a family-run medium-sized company can successfully master crises despite a variety of simultaneous adversities. Tetsushi Tado, President and CEO of Nippon Paint Holdings, reported on the challenging times experienced by the Japanese coatings industry, too. Patrick Houlihan, Managing Director and CEO, Dulux Group, explained in his presentation how to achieve sustainable solid growth in a saturated market, such as Australia, without merger and acquisition activities.

Is the coatings industry conservative?

Daniel Llinás, CEO of Titanlux, Spain, posed the somewhat provocative question as to whether the coatings industry is conservative. He believes that the coatings industry has a good image when it comes to its economic contribution and environmental responsibility, but leaves something to be desired in other areas. It was not always seen as innovative, agile, cool, he said. He also asked, “Are we ready for the digital challenge?” Digitisation can affect business in many unexpected ways, he continued. Llinás stated that the industry should embrace digitisation and embed it into its strategy. He also showed that there is a strong correlation between management practices and productivity and that this is ultimately the key to success.

The participants unanimously agreed that once again the event had afforded an excellent opportunity to swap ideas and make valuable contacts. The next Coatings Summit will take place in the USA in January 2021.

By Dr Sonja Schulte.