Coatings World - October 2017

Gary LeRoux, President and CEO, Canadian Paint and Coatings Association

The impact consolidation has on the coatings industry is tangible, one that first emerged more than 20 years ago and continues today with several mergers and acquisitions in play. In particular, it changes the complexion of the supply and demand curves in terms of raw material supply and related pricing. This filters down the supply chain – right to the customer at the point of sale for both the industrial and retail sectors. As a result, companies of all sizes have had to roll with the punches, with some feeling the heat and others thriving.

With regard to the current status of the coatings industry in Canada, CPCA is conducting a comprehensive economic impact study of this national industry in concert with Orr & Boss. It is the first of its kind in Canada. This study will confirm some of the trends CPCA has been tracking for its members and how those trends might shape the future of the industry. Since the introduction of NAFTA, which is currently being renegotiated by the U.S., Canada and Mexico, the volume of paint and coatings sold has steadily increased in a slow but stable fashion.

This has occurred despite or because of consolidation depending on one’s perspective.

In 2008, the volume of paint and coatings imported from the United States was roughly 40 percent. Over the past 10 years that number has grown to more than 50 percent. At the same time, some manufacturing facilities of major multinational companies shut down in Canada with that capacity absorbed by their existing facilities in bordering states. Some would argue that in those cases proximity exacerbated this situation given that shipping time to Canada from the United States is relatively short and cost-effective, otherwise the trend would have subsided. So what triggered such a significant shift in production? The answer is not immediately obvious, but there are many clues.

Many allude to increasing regulations as a primary reason for the shift in production given that regulations are generally not as severe in the U.S. And, regardless of one’s view of the political situation, regulatory impediments to business will likely lessen in the months and years ahead under the Trump administration. In Canada, however, the coatings industry continues to be among the most heavily regulated sectors by all levels of government and this has not diminished. In fact, one could easily argue that it has ramped up in recent years with the Chemicals Management Plan at the federal level assessing all chemicals in commerce for the past 10 years and another five years to come, and very likely more on the horizon as government has already indicated there will be another phase post-2020. Over the last decade 2,300 substances were vigorously assessed by government, with more than 80 risk management measures taken including regulations, to address health and environmental concerns. Such a volume of chemical assessment is more than any other country has done to date or plans to do in such a short time frame.

The Canadian government regularly updates or amends ongoing regulations for health and safety. These include current amendments to the Canadian Hazardous Products Regulations, the Transportation of Dangerous Goods Regulations and the current thrust at the federal level to amend the Canadian Environmental Protection Act as it relates to chemicals management. All have impacts on business. All usually mean added time pressures and costs for business in Canada. Provincially, there are challenges that drive costs and these too are generally related to health, safety and the environment.

Industry does not deny the need for adequate protections related to these three most important areas of business, but often the regulatory red tape has little or no positive impact on