The Central And Eastern European Market For Industrial Coatings

28-Mar-2001

On the global stage, the industrial coatings industry has reached saturation level over the last decade, particularly in Western Europe and North America. The increasing degree of maturity has forced coatings manufacturers to consolidate their positions in the existing markets, where the potential for growth has been exhausted. Meanwhile, opportunities in the Central and Eastern European industrial coatings market, racking up sales worth $741 million in 2000, are dictated by market demand, which in turn is determined by the degree of economic stability throughout the region. Improved economic conditions, increasing foreign investment and rising consumer demand are the harbingers of continued growth in the Central and Eastern European industrial coatings market, set to support revenues of just under $1 billion in 2006. Latest research by Frost & Sullivan (www.chemicals.frost.com), the international marketing consulting company, identifies the development of each industrial coating sector and highlights the activities of multinationals and national coatings manufacturers. Environmentally compliant coatings, which provide the same levels of performance as solvent-based products, are the prime challenge to manufacturers. This is particularly relevant to the marine coatings, protective coatings, wood coatings and vehicle refinish markets where the application of coating products may cause atmospheric pollution or water contamination. The gaining of ISO certification is also vital to success in these coatings market. The dominant revenue generator across the Central and Eastern European industrial coatings product market is the vehicle refinish sector, accounting for 46 per cent of total sales in 2000. Ranking in second position is the protective coatings sector, poised to experience the highest volume and revenue growth. In addition, foreign ownership and EU accession should stimulate growth for high performance, environmentally compliant products. Foreign investment and privatisation of the state-owned petrochemical, steel manufacturing and energy-related sectors will stimulate industrial protective coatings demand through increased capacity and the requirement for high performance products and improved substrate quality. Resumption in activity for end-user products from traditional export markets such as Russia and the former Yugoslavia will help drive protective coatings and wood coatings demand during the forecast period. Demand in the marine market will be driven by shipyard privatisation and modernisation as well as environmental legislation. Rising demand for coil coatings will be stimulated by increasingly stringent environmental requirements, as well as an increase in consumer demand for white goods such as kitchen appliances. Growth in the automotive OEM coatings and can coatings market will be directly related to increases in end use production capacity, as the region develops further as a preferred manufacturing base. Frost & Sullivan's study reports: 'Those companies who have been able to gain competitive advantage are those that have undertaken research into end-user markets, identified speciality and niche markets, entered strategic alliances, readjusted their product portfolios and developed competitively-priced industrial coatings products of sufficient quality to fulfil demand. This is underwritten by the development of customer loyalty by adding value such as increased levels of customer service, technological research and the integration of regional strategies.' Frost & Sullivan's review of the competitive environment confirms that the richest pickings will go to Akzo Nobel, Sigma-Kalon and PPG. The major challenges that market participants face in the forecast period are different for each sector. For the multinational companies, it is controlling price and distribution and identifying markets for their higher technology products.

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