Coatings World - October 2012

SME’s In Wood Coatings Sector Are Growing

Central and Eastern Europe offer the greatest expansion opportunities.

by Sean Milmo Europe Correspondent milmocw@rodpub.com

Europe’s wood coatings sector is one in which there are pockets of sluggish growth or even decline but others in which there has recently been strong increases in demand, particularly in Central and Eastern Europe (CEE).

It is a relatively fragmented market, which offers a lot of opportunities to medium-sized and small coatings producers who have the flexibility to exploit gaps in supply and to respond quickly to changes in demand.

The multinationals have been reporting slow wood coatings growth or weak sales in Europe as a whole, which they catergorize as a mature market in the global context, since much of the existing growth is coming from the emerging economies in Asia and Latin America.

However, SME wood coatings producers in Europe, particularly in Germany, Austria, Switzerland and a lesser extent Italy, have been recording much more robust growth from the major outlets of construction, furniture and flooring.

In parts of Western Europe, which have been hit by a post-recession slump in the construction market, demand for wood coatings for new buildings has been rising because of a rising preference for less expensive timber-framed houses.

“Wood is not necessarily cheaper than other
building materials but it does allow houses to be
constructed much more quickly because com-
ponents of the building are pre-fabricated,” said
a sales executive at one wood coatings business.
“At a time of weakness in construction, wood is
a way of reducing costs.”
There is also in some areas a buoyant demand
for wood coatings in new upmarket luxury ac-
commodation where potential occupants expect
large amounts of wood panelling, flooring and
furniture, as well as wooden window frames.

The biggest growth in demand for wood coatings is currently in the CEE and Russia and other countries in the former Soviet Union.

demand was in Central and Eastern Europe in 2000. But by 2015 over 25 percent wood coatings sales should be in CEE, according to figures presented to a recent coatings meeting in Dublin, Ireland, by Orr & Boss Inc, a consul-tancy from Clinton Township, Mich., U.S.

A lot of this additional demand in the CEE region will come from continued sturdy growth in its construction sector, while construction activity in Western Europe is forecast by Orr & Boss to be among the lowest in the world.

In the first half of this year there was a 25 percent increase in the numbers of new homes completed in Poland, according to PMR Consulting, a Polish-based market research organisation. The quantity of apartments offered by property developers in the country’s major urban centers is now higher than in 2007-08 before the financial crisis.

Construction activity has also been busy in urban Russia, particularly at the higher end of the market, which has a big demand for wood coatings. PMR reports that around 70 percent of all newly built residential houses in Moscow are now in the business-class category.

Wood coatings demand in Eastern Europe has also been boosted by the region becoming a center for furniture production. A lot of manufacture of furniture and other wooden products has shifted from Western to Eastern Europe because of low production and raw material costs.

A large proportion of Europe’s plentiful supplies of wood are in its eastern region. There are 1.02 billion hectares of forest in Europe, around 25 percent of the world total and considerably more than its share of the total global land mass.

Wood coatings businesses with advanced technologies, efficient customer services and geographically located to have easy access to Eastern Europe are benefitting considerably from its growth in demand. This is particularly the case with SMEs in Germany and Austria.

However wood coatings producers are also gaining from the powerful influence of fashion and style on wood products across the whole of Europe. At present a need for people to show individuality is being combined with a liking for nature and purity.