International Coatings Scene
EUROPE
BY SEAN MILMO
EUROPEAN CORRESPONDENT
MILMOCW@RODPUB.COM
Housing slump hits paint makers
Decorative
paints is a big
topic at the
moment in
Europe due
to the state of
the housing
market.
Suppliers of decorative paints in
Europe were expecting to be severely
affected by the credit crunch but so
far their sales figures are better than
expected with few suffering any major
drops in revenues in the region.
The housing markets in many Western
European countries and also parts of
Eastern Europe have slumped as a result of
a squeeze on lending, which has been exacerbated by curbs on consumer expenditure
stemming from an economic slowdown.
Construction of new homes has declined
sharply in many areas.
Coatings companies have so far been able
to ride out the turbulence in the sector with
the help of their long-term strategy of
encouraging householders to use DIY as a
means of keeping up with fashion and being
responsive to color trends.
“The rate at which people move into new
homes obviously still has an influence on
sales of decorate paints because it is time
when houses are redecorated,” said Edward
Appleby, Rohm and Haas’ manager for market research and communications in Europe.
“But the DIY market for paints is being
driven much more now by creativity and the
need among people to have colors on their
walls which they like,” he continued. “DIY
painting is about creating your own space
and your own sense of inspired living. This
is a trend in consumer behavior which will
tend to carry on regardless of what happens
in the housing market, although large
redecoration jobs may be postponed because
of the economic downturn.”
Jotun Group of Norway, which has a
strong position in the Scandinavian decorative paints market, believes that a policy of
encouraging color awareness has helped it
withstand the impact of a depressed housing
sector. The company achieved record high
sales and profits in the first four months of
the year, although this was mainly due to its
extensive activities in high-growth markets
of the Middle East and Asia.
“The housing market in Scandinavia has
been dropping but so far the decline has not
affected our figures very much,” said Morten
Fon, Jotun’s president and chief executive.
“We are not seeing any growth in the overall
decorative paints market in Scandinavia
but it has been like that for a while anyway.”
“In Sweden we are concentrating on the
high end of the decorative coating market
where we are seeing good growth this year, “
he added. “Most people in this part of the
market decorate because they want a
change of color and not because they are
changing house. The trends in demand are
separate from economic trends. We try to
make our paints fashionable by promoting
different colors.”
In Norway, however, where Jotun has
approximately 60% of the decorative sector,
the company is expecting that the housing
downturn will inevitably have some sort of
negative impact. “With such a large share of
the market, it will be impossible to avoid an
effect on sales,” Fon said. “Activity in the
Norwegian housing market has dropped
only recently so any reduction in consumption of paints will come later.”
The European national housing markets
which have been hit hard by the harsh financial conditions have been those in the UK,
Ireland and Spain—all countries which for
several years have enjoyed a real estate boom.
In Spain, where house prices have
quadrupled over the last ten years, around
three quarters a million homes were constructed in 2006—more than the combined
total in the UK, France and Germany. Last
year new housing permits amounted to
650,000 while this year the number of per-
