Coatings World - June 2011

direct its’ R&D since the formulators have unintentionally misled the suppliers because valuable intelligence gathering by the formulator at the end-user level has been inaccurate.

Suppliers are starting to move around their direct formulator customer and into the value chain downstream activities in an effort to improve the quality of product-building intelligence for purposes of developing more “first-time” resins, additives, etc. for the formulators themselves. This tactic is designed to help the formulator by augmenting the understanding of the formulator.

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ings, adhesives, sealants,
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The problem with the supplier tactic of going around its formulator customer is territory jealousy. The formulator has always placed a barrier between its’ customer

1995

2005

Loss Value/vs. CPI

$2.75/lb $1.60/lb

$1.15/lb (loss in value)

2010

Loss Value/vs. CPI

$1.28/lb

$1.47/lb (loss in value)

(end-user) and its raw material suppliers’ since one of the couple of core strengths the formulator is perceived to have is channel-to-market customer rapport. The wise formulator, however, will realize that the supplier must use whatever tactic makes sense to survive and thrive in a much more complex and competitive world and to “go around” him is going to take place whether or not he likes it.

*A 59 percent value loss vs. liquid white systems of 32 percent loss in 15 years

CHEMARK CONSULTING GROUP Chart 5

Therefore, the formulator will do well to encourage a triangle relationship combining tactics that extract and compare intelligence gathered from any source with their own. This latter tactic is going to be of major importance in terms of increasing value throughout the supply chain.

For the foreseeable future, shifts in global power will continue unless something drastic occurs. Measures to curtail the easy access by offshore sources, namely China, into the U.S. could include prohibitive tariffs on hard goods, which is the course of action undertaken in Germany. Another option is for China’s Yuan to be allowed to float, which will make their goods much more expensive, or we could enforce a complementary combination of the two occurs.

If we don’t see a significant change in U.S. or Chinese policy the U.S. will continue to observe an erosion of OEM items to coat. In addition a major labor pool will be lost resulting in a reduction of the U.S. tax base, a smaller buyer base and lower GDP growth.

Research indicates that more than 80 percent of the laid off labor force in all industries in the U.S. shop at Walmart where more than 80 percent of its products are from China, which is one of the main reasons why we have laid-off workers in the first place. Where’s Andy Rooney when we need him?

There are a lot of positive technologies making their way down the research and development pipeline. These include functional paints and coatings sourced from sustainable renewables. Examples are green biocides capable of continuously eating anything objectionable that would normally grow on painted surfaces; coatings that grow and replace themselves as environmental influences wear at painted surfaces; coatings that react to changes in UV in-tensities; “green” coatings that demaculate barnacle build on ships; and coating systems that digest grease and fingerprint fats.

The paint and coatings industry must use its new innovations as value levers for differentiation. However, concurrently it is important that the government is totally educated and importantly, onboard in a way that proactively helps the paint and coatings industry. CW