Paint and Coating Manufacturing
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Industry Overview
The US paint and coatings industry includes about 1,400 companies with combined annual sales of $20 billion. Large companies include Sherwin-Williams, Benjamin Moore, RPM International, Valspar, and divisions of Akzo Nobel, DuPont, BASF, and PPG. The industry is highly concentrated: the largest 50 companies hold 80 percent of the market. Most manufacturing plants are midsized, with 20 to 250 employees and average annual sales of $30 million.
Competitive Landscape
Demand is driven by industrial production and the housing market. The profitability of individual companies depends on technological expertise and efficient production. Small companies can compete successfully with large ones because of the large number of paints and coatings used for a wide variety of applications, including decoration, water resistance, and corrosion resistance. The industry is highly automated: average annual revenue per employee is about $430,000.
Products, Operations & Technology
Major products are "architectural coatings" (house paints), product finishes, industrial coatings, and miscellaneous products like varnish removers and paint thinners. House paints account for about 40 percent of industry revenue; product finishes (for cars, furniture, etc.) for 25 percent; industrial coatings for 20 percent.
Paints and coatings consist of three major components: a resin or polymer that will ultimately form the coating layer, a pigment that provides color, and a solvent or vehicle that holds the resin and pigment in liquid form and evaporates once the liquid mixture is applied. Additives can be used to alter the flow characteristics of the paint or the glossiness of the applied product. Paints are often classified according to whether the solvent is water or a volatile hydrocarbon. In practice, paints with a hydrocarbon solvent are called "solvent" paints - what consumers think of as oil-based - while paints with water as the solvent are called water-based. Certain kinds of resins such as latex and acrylic remain dissolved in water until they dry; other resins, like epoxy and alkyds, are best dissolved in hydrocarbon solvents.
Paint manufacturers are mainly in the business of mixing components (pigments, resins, solvents, additives) into solutions that have the special characteristics required by customers. Titanium oxide is the most widely used pigment (white). Raw materials, which account for 50 percent of the selling price for many products and many which are made from petroleum, are usually procured from a number of industrial chemical suppliers. Large paint manufacturers make some of their own component materials, while small manufacturers often buy and mix components.
While the basic methods of mixing components to make paints are well known, the technology of producing new types of paints for special applications--such as paints that can be "cured" with ultra-violet light--requires special chemical and engineering knowledge. Computer technology is used to control the manufacturing process, which requires precise measurement of the component ingredients. Research and development of new products and applications is essential to success in a field where the overall use of paints is growing only slowly.
