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All opinions are my own.

Wednesday, April 26, 2017

Would The Coating Industry’s Consolidation Lead to Manufacturing Innovation?

Change as usual is a continuous process. We have been seeing consolidation in paint and coating segment for many years. Generally consolidation leads to savings that pay for some of the monies needed for the buy out. This is normal. Savings come from better management of supply chain, information services, R&D and better manufacturing operations (1). Sherwin Williams buying Valspar and PPG Industries wooing Akzo Nobel Coatings (2) are the latest.

Significant progress has been made in the development of coatings by incorporating design of experiments and other development tools in optimizing use of various raw materials. Raw material technologies and their performance have been continuously improved. All these have led to better performance and environmentally friendly coatings.

Review of some of the consolidations suggests that one thing has not changed much and that is the manufacturing process of making coatings. Batch processes are the still norm and I call the process making one paint can at a time.

There is an explanation for paint and coatings manufacturing has not whole-heartedly ventured to continuous manufacturing. Coatings are made using batch processes with adjustments being made for raw materials and color to match the desired performance needs. This has worked from the beginning of coatings manufacture more than a century ago.

There are excellent reasons for not adopting continuous or any other manufacturing. Explanation comes from reviewing the customer’s need for different performance and colors. If we leave color aside, i.e. everything is same color “X” for the time being, one can go from low to high performance coatings by adjusting different raw material additions as the coating is being assembled in a pipeline or similar equipment. Actual task would be more challenging than as written here. Process control technologies do assist. I am sure we have sufficient creative and imaginative engineers who can deliver quality product with minimum waste during transitioning from one performance level to the next.

Moment we bring different colors to fulfill customer’s demand, industry has to stay with batch technology as development and commercialization of viable in-line color matching technology has been a challenge. Companies like Renner Herrmann (Brazil), E.I DuPont (now Axalta) and BASF initiated and progressed with the development of inline color measurement and adjustment technologies. Significant monies were spent and progress was made in the development of the technology but lack of funding and other factors led to slowdown and demise of the development at external company to commercialize the technology. It is my conjecture that since continuous manufacturing was and is alien to the coatings industry, funding and desire for such technology have been and will stay a challenge.

Continuous manufacturing, if incorporated in coatings, including automotive and industrial coatings and inks will have significant financial benefit from manufacturing technology innovation, improved inventory turns, supply chain improvements, product quality and environmental sustainability. Seasonal demands could be easily addressed.

It is my conjecture that based on the volume of coatings produced savings for the coating companies could be much higher than the general projections (1,2). As of writing of this blog it is my understanding that some companies still might be using in-line color match and adjustment technology, but who actually is using the technology is unknown. Opportunities for better manufacturing technology do exist.
  1.  Mixing it up M&A reshapes the paints and coatings industry, Chemical Week, Vol. 179, No. 10, April 3/10, 2017, Accessed April 25, 2017
  2. Akzo Nobel-PPG: Why This Trans-Atlantic Megadeal Could Actually Happen, The Wall Street Journal, March 9, 2017, Accessed April 25, 2017

Girish Malhotra, PE
President
EPCOT International

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