INTERNATIONAL
Europe's paint industry changes Major West European chemical companies, particularly West German, have increased their stake in the healthy paint business
Worker watches production of printing colors at Glasurit plant Europe's paint industry has gone through a major upheaval. Over the past few months a series of acquisi tions and mergers has sharply changed the face of the business. Items: • Last October West Germany's Farbenfabriken Bayer, A.G., acquired an 80% interest in the Swedish firm A.B. Nordstroem & Sjoegren (Nordsjoe), Malmoe. • In January Badische Anilin-& Soda-Fabrik increased its share in West Germany's fourth largest paint maker Herbol-Werke Herbig-Haarhaus, A.G., Cologne, to nearly 100%. •Also in January, the Netherlands' chemical giant ΑΚΖΟ acquired a ma
jority interest in Astral, France's second largest paint maker, and Ripolin-Georget and Société Freitag (third and eighth largest paint firms in France) decided to merge. • Last month Farbwerke Hoechst, A.G., purchased a controlling interest in British paint company Berger, Jenson & Nicholson. From these moves, it is evident that Europe's major chemical companies, particularly West Germany's big three, are increasing their stake in the West European paint business and especially in paint production itself. One major reason for this is that large chemical firms can offer know-how
Last year European paint makers accounted for nearly 40% of world paint production Western Europe's paint industry represents a market of more than $2 billion annually, C&EN estimates. Last year output amounted to 3 million metric tons, nearly 40% of the world production of paints. The industry has been particularly healthy during the past decade and production has been growing 3.5 to 5% per year. Europe's paint industry is very fragmented. In the U.K. there are some 480 producers, mostly very small. There are about 350 paint firms in Italy, 350 in France, 200 in West Germany, and 100 in the Netherlands. About 90% of the Dutch paint business is concentrated in a single company, ΑΚΖΟ, now the biggest paint producer on the Continent with paint sales of $140 million in 1969. Largest single producers, however, are in the U.K., with Berger, Jenson & Nicholson (now owned by West Germany's Farbwerke Hoechst) topping the list. Sales of BJN were about $151 million last year. The second largest paint firm is International Paint Co., part of Courtaulds, with sales of $145 million in 1969. Next is Imperial Chemical Industries, whose sales reached $130 million last year. The leading paint-producing country in Europe is West Germany, with output last year of more than 1 million metric tons with a value of about $650 million. West Germany is surpassed only by the U.S. in per capita production and con sumption of paint. Third in the world is Sweden. 22 C&EN MARCH 30, 1970
West Germany is Europe's leading producer of oil and alkyd paints; output of these paints amounted to some 280,000 metric tons in 1969. Emulsion and dispersion paint production has been growing at an average annual rate of 15% to top 335,000 metric tons last year. Europe's second largest paint-producing country is France, which produced 790,000 metric tons of paints last year. The value of this output was about $450 million. Oil and alkyd paint manufacture totaled some 260,000 metric tons; emul sions and dispersions, 100,000 metric tons; and waterthinned paints, 59,000 metric tons. U.K. production reached 590,000 metric tons in 1969, worth about $380 million. The British paint industry is par ticularly strong in emulsions and dispersions and produced about 85,000 metric tons of these paints. Italy's paint industry puts a lot of emphasis on waterthinned paints, producing about 120,000 metric tons of them last year. Total Italian output of paints amounted to 300,000 metric tons valued at $220 million. Dutch paint output increased 3.5% in 1969 to reach 170,000 metric tons. Value of this output was $120 million. Sweden produced 140,000 metric tons of paints last year with a total value of $165 million. Altogether the Scandinavian countries produced $300 million worth of paint in 1969. in Belgium output was 70,000 metric tons, worth $82 million.
U.K. boasts Europe's largest paint makers Sales (millions of dollars) 1968 1969 WEST GERMANY Glasurit-Werke, A.G. (BASF) Dr. Kurt Herberts & Co. Hermann Wiederhold Herdol-Werke Herbig-Haarhaus, A.G. (BASF) FRANCE Valentine Ripolin-Georget-Freitag (newly formed) Astral (now A.KZO) Duco (Centrale de Dynamite group) UNITED KINGDOM* Berger, Jenson & Nicholson (now Hoechst) International Paint Co. (Courtaulds) Imperial Chemical Industries Wallpaper Manufacturers (Reed Paper Group)5
$53.3 52.3 49 25
50
— 23 17.5
98 140 120 22
$62 60.5 56.5 45
56 45 25 21
151 145 130 24
ITALY Colorificio Italiano Max Meyer Industrie Vernici Italiane Montecatini Edison"
23 22 13
THE NETHERLANDS1 AKZO (includes Astral)' 0
76
140
SWEDEN A.B. Nordstroem & Sjoegren (now Bayer)
25
28
27.5 25 14.5
« C o n s o l i d a t e d sales. *>Paint sales o n l y . ^1968 sales i n c l u d e o n l y KZO sales (AKU a n d KZO m e r g e d in 1969).
plus money for supporting research and for developing new products. Small firms. The European paint industry, distributed among a number of small firms (see box) and plagued by a lack of R&D, is particularly vulnerable to takeovers. Whereas the six largest paint makers in West Germany account for more than 30% of the country's value of production, it takes 12 French firms to achieve the same contribution to French paint production. None of the largest paint producers in France is backed by a strong chemical company. This explains why investments are scarce. It is also why only a few companies support research and development centers. So it is not surprising to find that the French paint industry has been on the minus side of the foreign trade balance sheet for many years. Last year, for instance, exports of paints totaled $12 million and imports amounted to $16.2 million. In Italy, hundreds of small firms manufacture cheap water-thinned paints for domestic consumption.
Profits are very limited and R&D is virtually nonexistent. Bayer first. The series of major changes in the makeup of the industry began last fall, when Bayer acquired Nordsjoe, Scandinavia's largest paint maker. Swedish firm Nordsjoe makes a variety of paints and surface coatings, and also has facilities in Norway and Denmark. Last year sales of the Swedish firm reached about $28 million. Until it moved into Nordsjoe, Bayer produced only raw materials for the paint industry. The West German chemical firm views its acquisition of Nordsjoe as a step to penetrate the paint market of the European Free Trade Association (EFTA) countries. Hoechst's takeover of British paint maker Berger, Jenson & Nicholson, culminated last month, was initiated in November 1969. A struggle for control of BJN ended only recently when Sherwin-Williams, which had jumped into the fray over BJN last fall, decided to withdraw its offer. Now Hoechst controls about 90% of BJN's capital (C&EN, Feb. 16, page
2 5 ) . Consolidated sales of the British firm, biggest producer of paints in western Europe, were about $151 million last year (including sales of British Paints, acquired by BJN during 1969). Up until last year's acquisition of Flamuco, Munich, a small West German paint maker, Hoechst had no interests in the field of paint production. (Hoechst has supplied raw materials to the paint industry for some time.) The West German chemical giant sees its acquisition of BJN as a necessary step to take advantage of Hoechst-developed technology in the field of paints. Another major change was initiated in January when Bayer, Hoechst, and BASF made a complex exchange of various financial holdings (C&EN, Jan. 12, page 14). In the exchange BASF acquired Bayer's 25.6% participation in Herbol-Werke. HerbolWerke, West Germany's fourth-ranked paint producer, had sales of $29 million in 1969. BASF also controls the country's biggest producer of paint, Glasurit-Werke, A.G., Hamburg. Glasurit produces industrial paints and had sales of about $62 million last year. In addition, BASF owns Dr. Beck, A.G., Hamburg, a small firm specializing in insulation coatings. Sales of Dr. Beck are about $8 million per year. As a result, BASF now represents more than 15% of the West German output of paints. Recently BASF sold its 25% interest in Spain's dye and paint firm Fabricacion National de Colorantes, S.A. ( F N C E ) , Barcelona, to Bayer. This boosts Bayer's participation in FNCE to 50%. France, too. The French paint industry has also undergone various changes recently, starting with the acquisition of French paint maker M A R C H 30, 1970 C & E N
23
Painted metal strips are placed in this environmental chamber at a BASF facility to test their ability to resist corrosion
Astral by the Dutch firm AKZO. Over the past year AKZO purchased about 13% of the capital of Astral on the open market. Then last October AKZO offered to buy an additional 4 1 % interest in the French firm. The takeover, subject to the approval of the French government, was held up until early January, when the bid was okayed. Astral, France's second largest paint maker with some 1500 employees, had sales of about $40 million in 1969.
The acquisition of Astral by a foreign company severely rocked the French paint industry. Almost immediately Ripolin-Georget, France's third largest paint company, decided to merge with eighth-ranked Société Freitag. The new company is called Ripolin-Georget-Freitag. The merger creates a firm with estimated annual sales of about $45 million. In addition, the merger of French chemical groups Roussel-Uclaf and Centrale de Dynamite last month
West Germany is Europe's leading paint producer Production value
Exports
Imports
I
$19.6
1
(Millions of dollars)
West Germany France U.K. Italy The Netherlands Sweden Belgium/Luxembourg Spain Denmark Austria Switzerland Norway Finland I
Note:
Figures are for 1969
24 C&EN MARCH 30, 1970
$650 450 380 220 120 165 82 71 58 55.5 40 40 35
$60.5 12 39.5 8.1 45
16.2 13.2 9.6 12
0.4
0.2 28 0.8 21 6
47 7.4 22 2.8
1.3
4.4
— —
— —
I
1
(C&ExN, Feb. 9, page 21) has opened the French paint market to West Germany's Hoechst. One of the firms controlled by the Centrale de Dynamite group is paint maker Société Française Duco. France's fourth largest producer of paints, Duco had sales of about $20 million in 1969. Hoechst owns a 42% interest in Roussel-Uclaf. Same time Judging by these changes, it would appear that West Germany's big three decided to integrate forward in paints almost all in the same period of time. Furthermore they seem to have carved up the market geographically for themselves— Scandinavia and Spain for Bayer, West Germany for BASF, and the U.K. and France for Hoechst. One of the major reasons for the recent interest of European chemical companies in the paint industry no doubt lies in the fact that the European paint industry is solid and dependable. Domestic sales have grown steadily over the past few years at an average annual rate of 5%. Exports are healthy, representing more than 30% of the Netherlands' value of production and about 10% for West Germany and about 10% for the U.K. In integrating forward into paint production, the chemical companies will supply know-how and money. In exchange they will find a healthy and dynamic market. But competition will be tough for the hundreds of small paint makers scattered throughout western Europe, and more concentration is likely to take place in the paint industry within the next few years.
