and transport our products to market, to make every effort
possible to control costs at current levels. It is not going to be
productive or speed the economic recovery if we are forced to
pass on substantial increases on finished products to the professional applicator or consumer.
Weller, Rodda: The most significant changes have already
occurred although with instability comes guesswork and
with less demand often comes price adjustments. Until there
is consistency in development again, I think you’ll see the
fluctuations and consolidations continue.
Autenrieth, Benjamin Moore: The only upside of the recession
and reduced demand was downward pressure on raw materials. As demand and the price of oil begins to pick up, we would
expect to see upward pressure on raw materials once again.
CW: What strategies has your company adopted to
deal with these issues? Have interior decorative
coatings manufacturers been able to pass on price
increases to customers to maintain margins?
O’Neil, Kelly-Moore: All manufacturers and tradesmen supporting the construction industry are either being asked or
forced to reduce costs. The Kelly-Moore Paint Company must
continue to find innovate and cost effective ways to engineer
and produce architectural coatings the are competitively priced
and provide the performance and service life that is required
and expected by consumer.
Weller, Rodda: Our last price increase was late in 2008 and at
some point we’ll need to consider our future options. 2009 was
a year of reviewing and tightening policies and procedure to
pare down costs and try to maintain limited margin control.
The Northwest is an extremely competitive marketplace and I
think we will continue to see some erosion in competitors,
prices and job costing.
Autenrieth, Benjamin Moore: Benjamin Moore’s focus during
the recession has been on building our portfolio and making
investments in the business to position ourselves for strong
growth once the market turns around. For the most part, yes,
except in certain sectors where price is the driving factor.
CW: Please discuss how consolidation among paint and
coatings manufacturers as well as within the paint and
coatings industry supply chain is affecting the market?
O’Neil, Kelly-Moore: Over the last two decades, and what I
believe to be the affect of governmental regulations and environmental issues, the paint industry has lost a substantial
number of regional paint manufacturers through attrition or
consolidation. As a result, the work force has experienced substantial reductions, the U.S. has lost a number of quality small
businesses and the innovative and competitive edge that this
industry was known for, has been seriously compromised.
Future industry consolidation and stricter governmental regu-
lations will continue to affect innovation, performance and
variety of coatings that are available to the professional applicator or consumer.
Weller, Rodda: We have already experienced both global and
local versions from takeovers and absorption to disappearances and consolidations. This next year will be a testing
ground to see who’s been paying attention and who we may not
be dealing with next year. With limited production left on the
West Coast, inventories being limited throughout the supply
chain effect both costing and manufacturing and could possibly
be an area of great impact.
Autenrieth, Benjamin Moore: Consolidation should serve to
make the industry more efficient and better able to cope with
advancing regulations while still providing the consumers with
many brand and channel choices. We would not expect the
paint industry to be different from any other. It is simply the
natural progression in any mature industry.
CW: What are the most recent regulatory developments
and how are they impacting the market? What is the
industry doing to prepare for increasing regulations?
O’Neil, Kelly-Moore: Regulatory developments continue to
impact the paint industry. The Kelly-Moore Paint Company is
based in and manufacturers architectural coatings in the State
of California. We know first hand the impact of regulatory
requirements. California has some of the most stringent environmental regulations in the U.S. if not the world. Regulatory
requirements for limiting VOCs and chemical use have certainly impacted the engineering of our architectural coatings.
The Kelly-Moore Paint Company is proud of the positive
impact we have contributed to the environment. We have
worked extremely hard to develop a manufacturing process
that is environmentally sound and to engineer architectural
coatings that are safe to apply and are friendly to the environment. The ongoing challenges are the availability of new raw
material technologies that will allow us to produce substrate
specific interior and exterior coatings that will perform and
still meet all current and future regulatory requirements.
Weller, Rodda: Regulation discussions should be monitored at
all times. There is a constant ebb and flow of changes that you
must be on top of or already working towards just to stay in
business in this industry. Our greatest challenge is always the
interpretation and education of these changes such as Oregon’s
new Paint Stewardship law which goes into effect in 2010.
Autenrieth, Benjamin Moore: Expansion of OTC regulations in
Canada in 2010 as well as other areas of the U.S. are significant upcoming changes. Several years ago, Benjamin Moore
made a significant investment in developing our patented
Gennex waterborne platform, which serves as the foundation
of a growing line of products that already meet the most stringent regulations in the U.S.—the SCAQMD regulations. We
expect that in time the regulations will be the standards
