Latin America
June 2014 www.coatingsworld.com Coatings World | 33
It is not unlikely that there could be more mergers and acquisitions in the Brazilian architectural market, because several multinational competitors have such small market shares,
Kuiper said. Domestic production is one reason investments in
Brazil could rise. “It is very critical for us in closed economies
like Brazil to increase our domestic capabilities, to respond to
market in an easier and a leaner way,” Macouzet said.
In Brazil, auto production in 2013 was up 9. 9 percent to
3.74 million units, compared with 3. 4 million the year before, according to the Associação Nacional dos Fabricantes de
Veículos Automotores (Anfavea), the national auto manufacturers association, in Sao Paulo. This production level created a
demand of $280 million for OEM automotive paints and coatings and $365 million for the automotive repair market out of a
total of $4.28 billion in sales for all segments last year, reckons
the Associacao das Fabricantes de Tintas (Abrafati), the national
paint and coatings manufacturers association, also in Sao Paulo.
Chile
Chile’s market for paint and coatings is cited as one of the strongest this year, despite the expected domestic growth rate of only
3. 5 percent. The per capital consumption of paint in Chile is about
three liters, Kuiper suggests. Apart from strong architectural demand from construction, the country’s ports include extensive
ship-building and services capacity, boosting industrial demand.
One significant Chilean architectural line customer investment made this year was that by the owners of the Sodimac DIY
chain, based in Santiago. Parent Grupo Falabella made a $45
million purchase of property in Sao Paulo for a new store. The
group logged $11.8 billion in diversified sales last year, and is
present in five Latin American countries already.
In the past, Pinturas Ceresita and Sherwin-Williams have
been singled out as leaders in the Chilean DIY market. Among
Brazilian coatings manufacturers active in Chile is Renner
Coatings Chile, which has been providing maritime coatings
provisions through its licensee relationship with Chugoku.
Colombia
In Colombia’s architectural segment, a new paint manufacturing
facility in Bogota, is being completed by Orlando-based Lanco
Paints and Coatings with local construction materials partner
Sumicol. The new venture, called Corlanc, will continue to supply the Sodimac home improvement centers in Colombia.
Within Colombia’s automotive industry, over 30 percent of
the estimated 300,000 units sold every year are manufactured in
the country, which has eight vehicle and nine motorcycle assembly plants, according to a 2013 study by Spanish bank BBVA.
Among automotive segment investments made over the recent
past by paint and coatings companies was a strategic market entry
by PPG. “Two and a half years ago we bought a paint company in
Colombia, Colpisa. We will continue to look for opportunities to ex-
pand our operations there,” said Macouzet. Colombiana de Pinturas,
which was a privately-held company, is based in Itagüί, near
Medellin, and manufactures and distributes coatings for automotive
OEM and refinish, industrial and architectural coatings customers
in Colombia and Ecuador. The acquisition, which was not priced,
provided PPG with its first manufacturing base in the country.
Mexico
Mexico has garnered much of the international attention paid
to paint and coatings in the region with the saga of Sherwin-Williams attempts to purchase Comex. The latest report on
the twice-rejected effort was that Comex would sue S-W for
breach of contract. Mexico’s anti-monopoly agency, Comisión
Federal de Competencia Económica (CFCE), argued that the
deal would leave S-W with a majority control -- about 60 percent -- of the Mexican paint and coatings industry, and that it
would be six to 10 times larger than its closest competition.
Apart from its broad manufacturing base in Mexico as the largest domestic paint company, Comex also detains a distribution
network that includes 3,200 points of sale, operated by some
875 concessionaires.
Prior to the failure of the Mexico acquisition, S-W did manage in September to acquire the U.S. and Canadian Professional
Paint businesses of Comex for $90 million in cash and the assumption of debt valued at $75 million.
Among recent investments concluded in Mexico, PPG announced in March a $27 million investment in its manufacturing center at San Juan del Rio, in Queretaro state. The new lines,
expected to be operational in 2015, will serve the automotive
OEM, protective and marine, packaging and industrial customers in the country, the company indicates.
Mexico automotive production hit a new record of close
to three million units in 2013, and expectations are that the
country will be the fourth largest producer in the world within
five years, after Brazil. With some 18 percent of the automobiles
made in Mexico are exported, there is elasticity in demand when
domestic consumption cools, as it has recently.
New OEM automotive investments are valued in the tens of
billions of dollars, with new players from China and South Korea
helping to stir competition for paint and coatings suppliers.
Rest of the Region
In the heart of the Andean region, Peru is a standout in terms of
economic growth and paint and coatings demand, says Kuiper.
Eclac estimates that Peru’s GDP will expand at 5. 5 percent this
year, with the construction industry expected to grow even faster at close to 9.0 percent.
“The Andean region could be a hot market over the next few
years, and Peru will lead growth for the region,” said Mauro
Trevisani, the chief operating officer for Andes Chemical, based
in Miami, earlier this year. “That is why last year we opened a
subsidiary including a warehouse in Lima; a lot is going on there
in terms of infrastructure,” he noted.
In Central America, PPG in March made an acquisition of
Canal Supplies in Panama that will serve as a distribution hub
for the company not only in the sub-region -- including Costa
Rica, notably -- but also the rest of Latin America, Macouzet
says. The company had specialized in marine and industrial
coatings prior to the acquisition. CW
