Coatings World - September 2009

International Coatings Scene

EUROPE

Germany, the two largest in Europe, each grew by 0.3% bringing to an end a yearlong recession in both countries.

In Germany, the heartland of Europe’s manufacturing sector, exports rose by seven percent in June, the biggest increase for nearly three years. The Bundesbank, the country’s central bank, said that “the improvement of foreign demand (was) an important precondition for a further gain in corporate confidence.”

However the UK and Italy, two of the EU’s other big economies, registered GDP decreases of 0.8% and 0.5% respectively in the second quarter although the declines were lower than in the first quarter.

“The UK economy is moving in the right direction but, as elsewhere in Europe, a lot of the recovery in manufacturing appears to be coming from restocking after a period of destock-ing,” said Eastwood. “It is still unclear whether this shows a revival of underlying demand which will boost sales of paints and other downstream products. The problems of tight credit and rising unemployment are still holding back demand.”

Across Europe—including in the UK—falls in output of cars have been eased by government schemes giving automobile owners financial incentives to scrap old vehicles to buy new ones.

The number of new car registrations in Europe went up by 2.4% in June, the first rise for 14 months, according to figures from the association of European automobile manufacturers (ACEA).

The construction industry— another key customer sector for coatings producers—appears to be picking up as well. In the UK where construction activity has been badly hit by the recession, confidence among purchasing managers in building companies reached its highest level this summer since the spring of 2007.

Analysts are predicting that over
the next few quarters the European
construction sector will start to ben-
efit from economic stimulus meas-
ures by European governments.

The retail segment for decorative paints, serving the DIY market, has been more resilient in Europe in recent months than that for the professional trade, according to AkzoNobel. As a result there were double-digit declines in decorative sales in Eastern Europe where DIY is less prevalent. But elsewhere in the Europe—like in strong DIY markets like the UK—retail paint sales have been more stable

Nonetheless, despite brightening
prospects in major coatings sectors in
Europe, coatings companies are
treading carefully.

BASF Coatings, for example, is planning to continue with short-time working for around 1,000 staff at its two main German plants in Muenster and Wuerzburg. “In July, we extended short-time working for another six months until the end of January 2010,” said a company spokesman. “At this time no decision has been taken as to whether or not we are going to discontinue our short-time working arrangement.”

Like other companies in the coatings sector, BASF is anxious about the unpredictability of the economies of Europe and elsewhere. “There is still the danger of another painful setback due to overcapacities, bank-ruptcies and growing unemployment,” said Bock. CW

Use grind gages more consistently.

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