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36 The Coatings Industry: Economics and End-Use Markets

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JOSEPH W. PRANE 213 Church Road, Elkins Park, PA 19117

Products of the Coatings Industry and Shipments Trade Sales (TS) Industrial Finishes (IF) Automotive Topcoats Coil Coatings Coatings Materials/Systems Special-Purpose Coatings (SPC) Pressures on the Coatings Industry Raw Materials and Finished Products Energy Costs Environmental Control U.S. Coatings Suppliers

The subject of this chapter is the economics of the coatings industry in the United States. This industry comprises the manufacture, sales, and use of pigmented coatings (paints) and clear finishes. The focus is on this industry and its largely unsung role in the growth and health of the overall U.S. economy. Although relatively mature, the coatings industry is vital, vibrant, and progressive and continues to recognize and react positively to the needs of both its customers and the evolving regulatory structures that have been placed on it and other industries. Products of the coatings industry—paints, varnishes, lacquers, enamels, chemical coatings, maintenance finishes, and other products both basic and sophisticated—have been used to protect, decorate, and provide functional properties to a host of surfaces and objects. The leveraged value of coatings is exemplified by the contribution of corrosion-resistant primers and of protective and decorative topcoats to the long life of structures, such as buildings and bridges, and to the appearance and durability of automobiles and appliances. 0097-6156/85/0285-0857S07.25/0 © 1985 American Chemical Society

In Applied Polymer Science; Tess, R., et al.; ACS Symposium Series; American Chemical Society: Washington, DC, 1985.

A P P L I E D P O L Y M E R SCIENCE

858


Products of the Coatings Industry and Shipments The types of products produced by the U.S. coatings industry are shown in Table I. Sales of the industry, distributed by shipments in the three general categories shown, are reported by the Bureau of the Census, U.S. Department of Commerce, in their monthly "Current Industrial Reports" M28F. Table II i s a summary of these reports for the period 1977-82, with projections to 1987. Figure 1 displays these data in graphical form. Shipments for 1987 are estimated in terms of constant 1982 dollars, since exact inflation factors cannot be r e a l i s t i c a l l y predicted. The U.S. i n f l a t i o n rate started to abate at the end of 1982; however, resumption of the i n f l a t i o n s p i r a l cannot be e n t i r e l y discounted. The short-range effect of i n f l a t i o n can be seen in Table III, where shipments in the f i r s t 3 months of 1982 are compared to shipments in the same period in 1981. (In Tables II and III, unit values, d o l l a r s per g a l l o n , have been calculated, for comparison purposes.) Examination of these tables leads to a number of general conclusions concerning the current and future status of the U.S. coatings industry. Trade Sales (TS) These architectural coatings include stock type or shelf goods formulated for normal environmental conditions and for general a p p l i c a t i o n s on new and e x i s t i n g r e s i d e n t i a l , commercial, i n s t i t u t i o n a l , and i n d u s t r i a l structures. These products are usually distributed through wholesale/retail channels and are purchased by the general public, paint and building contractors, government agencies, and others. The effect of inflation in the trade sales area has been felt in the period 1979-82. Note in Table III the sharp increase in the calculated unit value of architectural finishes—compared with the s t a t i c real unit value predicted for 1987 (as compared to 1982). The decrease in housing starts in 1979-82, resulting in lower house paint shipments, has been p a r t i a l l y balanced by increased home maintenance. The trade sales market i s r e l a t i v e l y mature; long range, few major formulation changes are expected with l i t t l e increase in the real value of finished goods. Despite its maturity, the trade sales market has reasonably good growth potential-because of the pent-up demand for new housing and the p r o c l i v i t y of the buying public to engage in home maintenance projects during times of recession. The trade sales market has led the way to the use of waterborne (WB) finishes, mostly based on emulsion polymers. As shown in Table IV, WB coatings represented over 79% of TS finishes (on a g a l l o n basis) in 1982; this is projected to increase to about 86% in 1987. Industrial Finishes (IF) This category of chemical coatings includes finishes that are formulated specifically for original equipment manufacture (OEM) to meet specified conditions of application and product requirements. They are applied to products as part of the manufacturing process.


36.

PR A N E

Table I.

The Coatings Industry: Economics and End-Use Markets

U.S. Coatings Industry:


Product Type

859

Product Types Use

Trade sales (architectural coatings)(TS)

"Do-it-yourself," over-thecounter sales Exterior solventborne Exterior waterborne Interior solventborne Interior waterborne Architectural lacquers

Industrial finishes (product coatings, OEM; chemical coatings, factory applied)(IF)

Automotive finishes (primers, sealers, topcoats) Truck and bus finishes Other transportation finishes, e.g., aircraft, railroad, etc. Marine coatings, including off-shore structures Appliance finishes Wood furniture and fixture finishes Wood and composition board flat stock finishes Sheet, strip, and coil coatings on metals Metal decorating, e.g., can, container, and closure coatings Machinery and equipment finishes Metal furniture and fixture coatings Paper and paperboard coatings Coatings for plastic shapes and f i1ms, e.g., packaging Insulating varnishes Magnet wire coatings Magnetic tape coatings

Special-purpose coatings (SPC)

Industrial maintenance paints —interior, exterior Metallic paints, e.g., aluminum, zinc, bronze, etc. Traffic paints Automobile and truck refinish coatings Machinery refinish coatings Marine refinish coatings Aerosol paints and clears Roof coatings Fire-retardant paints Multicolor paints



mm gal. $ mmD $/gal.

mm gal. $ mmb $/gal.

mm gal. $ mmD $/gal.

TS

IF

SPC

160 944 5.90

370 1961 5.30

460 2466 5.36

990 5371 5.43

1977

160 1016 6.35

350 2092 5.98

523 2900 5.54

1033 6008 5.82

1978

166 1322 7.96

332 2284 6.88

571 3419 5.99

1069 7025 6.57

1979

191 1576 8.25

298 2419 8.12

530 3641 6.87

1019 7636 7.49

1980

184 1690 9.18

302 2737 9.06

505 3969 7.86

991 8396 8.47

1981

Bureau of the Census (except for 1987 figures).

This value is at the manufacturer's levels: mm = million. Estimates for 1987 are based on constant 1982 dollars.

Source:

b

a

AGR represents annual growth rate.

mm gal. $ mmb $/gal.

Quantity

U.S. Shipments of Coatings

Total

Product Type

Table II.

180 1699 9.44

269 2546 9.46

454 4052 8.95

903 8297 9.19

1982

220 2090 9.50

240 2400 10.00

600 5340 8.90

1060 9830 9.27

1987

2.4 12.5 9.9

-6.2 5.4 12.3

0 10.4 10.8

-1.8 9.1 11.1

77/82

4.1 4.2 0.1

-2.3 -1.2 1.1

5.7 5.7 -0.1

3.2 3.4 0.1

82/87

AGR2 (%)a



36.

PRANE


Figure 1. Products produced by the U.S. Abbreviations are defined i n Table I.

coatings industry.


861


862

APPLIED POLYMER SCIENCE

Table III. Product Type

U.S. Shipments of Coatings:

Three-Month Data

Quantity

1981 Jan-Mar

1982 Jan-Mar

% Change

Total

mm gal. $ mm $/gal.

236.5 1876.4 7.93

202.7 1823.2 8.99

-14.3 -2.8 13.4

TS

mm gal. $ mm $/gal.

113.9 833.8 7.32

98.9 853.6 8.63

-13.2 2.4 17.9

IF

mm gal. $ mm $/gal.

78.2 672.2 8.60

66.2 616.4 9.31

-15.3 -8.3 8.3

SPC

mm gal. $ mm

44.4 370.4 8.34

37.6 353.2 9.39

-15.3 -4.6 12.6

$/gal.

Source:

Bureau of the Census.



Waterborne Solventborne

Total

% Exterior

400 130

530 75.5 24.5

39.6

66.7 33.3 100

140 70 210

Exterior Waterborne Solventborne Subtotal

81.3 18.7 100 60.4

260 60 320

%

% Interior

Interior Waterborne Solventborne Subtotal

1980 mm gal.

390 115

505

135 60 195

255 55 310

%

77.2 22.8

38.6

69.2 30.8 100

61.4

82.3 17.7 100

1981 mm gal.

361 93

454

125 48 173

236 45 281

79.5 20.5

38.0

72.3 27.7 100

62.0

84.0 16.0 100

1982 mm gal. %

Trade Sales Coatings by End Use—U.S. Shipments

Coating Type

Table IV.

515 85

600

165 45 210

350 40 390

85.8 14.2

35.0

78.6 21.4 100

65.0

89.7 10.3 100

1987 mm gal.

7.4 -1.8

5.7

5.7 -1.3 4.0

8.2 -2.3 6.8

AGR (%) % 1982-87



864


Markets using IF, for example, automotive, have been in a severe recession, which continued through 1982. U.S. passenger car production in the calendar year 1982 was down to 5.4 million units; this was the lowest in over 12 years. However, in 1983 and beyond, automotive (with smaller cars), appliance and other IF markets should start to move forward. New formulations, for example, high solids, w i l l be used to a greater extent; therefore, dollar growth w i l l somewhat outpace gallonage growth. The industrial finishes market has always been the forerunner of new technology in the coatings industry. Closer examination of the business, economics, and technology in this market segment w i l l be i l l u s t r a t i v e of the continually growing importance of advanced applied s c i e n t i f i c techniques and principles in the coatings industry. Table V distributes U.S. shipments of industrial finishes into eight end-use areas for 1980-82, with projections to 1987. Declines in gallonage are indicated in markets for metal, wood, and transportation finishes. However, some of this i s due to the projected greater use of high-solids (HS) finishes; o v e r a l l , consumption of IF by dry g a l l o n i s expected to be about the same from 1982 to 1987, since the average nonvolatile content by volume is expected to increase from 40% to about 50%. Can coatings w i l l be affected by state returnable-container laws, the upsurge in the use of glass D o t t l e s , and the growth of p l a s t i c containers for soft drinks. Automotive Topcoats. The types of automotive topcoats that have been (or w i l l be) used are shown in Table VI. Examination of these topcoats offers a good illustration of the projected progress of HS coatings. TPL-SB are low-solids (12-18% by volume) solution coatings that have given b r i l l i a n t m e t a l l i c finishes for many years. Their properties were maintained when the major user, General Motors, went over to TPL-NAD. TSE-SB, the solution enamel used o r i g i n a l l y by Ford, Chrysler, and American Motors, is now virtually extinct as a topcoat for U.S. passenger cars. It has been replaced by TSE-NAD, which has higher solids and lower emission characteristics. TSE-WB i s used only by General Motors at three of i t s U.S. plants. This operation was decreed by the EPA as the best available technology (BAT) at that time. GM does not plan to introduce TSE-WB at any other of its assembly plants—primarily because of the high cost of equipment and the environmental changes required. GM continues to use acrylic lacquers at their other plants—but w i l l be moving to HS-E by 1985. This w i l l be a major move for GM—going away from their traditional TPL. However, HS-E, as they are being developed, offer the best opportunity for automotive companies to meet the stringent VOC ( v o l a t i l e organic compound) requirements and transfer efficiency minima being mandated by the EPA. These HS-E are predominantly of the acrylic type—with a goal of 60% solids by volume as delivered to the spray gun. At this l e v e l , and with e l e c t r o s t a t i c spray application, EPA compliance should be ensured to at least 1985. At one time, powder coatings (PC) appeared to be the answer to Detroit's prayer for nonpolluting topcoats. Both General Motors and Ford mounted extensive development programs with PC and coated many


36.

PRANE


Table V.

865


Industrial Finishes by End Use—U.S. Shipments mma gal.

AGRb,% 82/87

1980

1981

1982

1987

Metal finishes Can, container Prefinished (coil) Furniture and fixtures General metal

80 35 25 10 10

78 35 26 9 8

69 30 24 8 7

60 26 22 6 6

-2.8 -2.8 -1.7 -5.6 -3.0

Wood finishes Furniture and fixtures Prefinished

73 53 20

72 52 20

64 46 18

50 30 20

-4.8 -8.2 2.1

Transportation Automotive Truck, bus Aircraft, railroad Marine

60 45 6 5 4

55 43 5 4 3

46 37 4 3 2

36 28 3 3 2

-4.8 -5.4 -5.6 0 0

Machinery and equipment

30

30

27

23

-3.2

Appliance

10

9

8

6

-5.6

Packaging (paper, f o i l , plastic film)

20

25

24

28

3.1

Plastic parts

10

15

16

18

2.4

Electrical, electronic

8

10

9

10

2.1

Miscellaneous

7

8

6

9

8.4

298

302

269

240

-2.3

Finish

Total mm = million.

a

*AGR represents annual growth rate.



866


cars. They were able to demonstrate the technical f e a s i b i l i t y of the process. However, the need for many color application stations, d i f f i c u l t y of color change, limited use of overspray PC, and d i f f i c u l t y of achieving r e l i a b l e aluminum flake orientation in metallic colors served to doom the short-range potential of PC as a viable and economical alternative to liquid automotive coatings. Urethane enamels (PU) were also promoted as the ideal auto topcoat—with their well-known properties of mar and abrasion resistance, f l e x i b i l i t y and toughness, and high gloss and gloss retention (in aliphatic systems). Both General Motors and Ford have demonstrated that excellent nonmetal l i e topcoats can be provided as two-component, aliphatic PU systems. These can be applied in twoheaded mixing spray guns and cured at low temperatures (e.g., 150 °F) at rates that are consistent with assembly-line schedules. But, as with PC, m e t a l l i c colors are d i f f i c u l t to achieve r e l i a b l y because of the reduced flow of the system and the poor orientation of the aluminum flakes. However, the overwhelming blockage in PU usage remains the t o x i c i t y hazard associated with the residual isocyanate content. Both General Motors and Ford have shown that the use of robots in applying PU finishes can obviate direct toxicity hazards to workers. However, with the depressed auto business in the United States in the last 4 years, their recent efforts have been directed to coatings systems that were more compatible with their existing assembly lines, for example, TSE and HS-E, and that provided reduced emissions of VOC. Subcontractors to the auto industry are using considerable quantities of one-package PU enamels to f i n i s h p l a s t i c parts, for example, soft EPDM and thermoplastic elastomer front fascia and RIM and RRIM parts. These subcontractor operations are not yet subject to the stringent emission controls mandated by the EPA on auto assembly lines. However, the use of PU finishes on automotive metal on assembly lines w i l l not come about unless or until the toxicity problem is overcome. Urethane coating producers are active in the development of new PU systems—some involving proprietary blocking agents—to tackle this problem. Their efforts should show some success by 1985. Positive influences here include the growing use of base coat/clear coat systems; clear PU topcoats are under active consideration. In addition, vapor permeation curing (VPC) is under investigation. Here, aerylic/urethane topcoats are cured rapidly under ambient conditions in an amine catalyst atmosphere. Table VII distributes automotive topcoat usage by type, with predictions for 1987. The progression from low-solids, highemission coatings to high-solids systems i s shown. Research and development of HS-E are active at each of the auto companies and at every major coatings s u p p l i e r and raw m a t e r i a l s producer. Certainly, problems such as specific polymer design and cross-linker choice s t i l l exist—as well as application, flow, and aluminum flake orientation. However, current and future research and development should reduce these problems rapidly to manageable levels. Table VIII projects trends in o v e r a l l auto topcoat usage as a function of exterior surface area coated and nature of the surface. The dramatic drop in topcoat consumption can be explained as follows: The average dry f i l m thickness of auto topcoats w i l l


36.

PR A N Ε

Table VI.


Nomenclature for Automotive Topcoats

Abbreviation


867

Types of Automotive Topcoats

TPL-SB

Thermoplastic acrylic lacquer, solventborne

TPL-NAD

Thermoplastic acrylic lacquer, nonaqueous dispersion

TSE-SB

Thermosetting acrylic enamel, solventborne

TSE-NAD

Thermosetting acrylic enamel, nonaqueous dispersion

TSE-WB

Thermosetting acrylic enamel, waterborne

HS-E

High-solid thermosetting enamel, solventborne

PC

Powder coating, thermosetting

PU

Urethane enamel, aliphatic, one or two parts

Table VII.

U.S. Automotive Topcoat Usage (Percent, Gallonage Basis) 1980

56

57

50

10

42

35

31

29

17

5

7

7

7

6

7

50

1976

TPL-SB

25

TPL-NAD

25

TSE-SB

3

TSE-NAD TSE-WB HS-E PC

The Coatings Industry: Economics and End-Use ... - ACS Publications

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