Paint and Varnish Wholesalers

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 9700 paint, varnish, and supply wholesalers in the US act as middlemen between manufacturers and a variety of end users, including retailers, other wholesalers, collision repair centers, OEMs, and building contractors. Special purpose coatings, which include automotive paints, account for over 40% of industry sales. Architectural coatings account for one third of industry sales. Other products include architectural coatings, enamels, primers, stains, solvents, and lacquers; paint supplies (brushes and rollers); OEM coatings; and wallpaper and wallpaper supplies.

Dependence on Automotive Collision Repair Business

Because automotive paint and coating sales account for a significant percentage of the market, the industry is influenced by demand from the vehicle collision repair market, which consists primarily of small independent businesses.

Dependence on Construction Industry and Economy

Demand for architectural paint and coatings is dependent on the health of the construction industry, which is cyclical and influenced by economic conditions.

Industry size & Structure

The average paint, varnish, and supply wholesaler employs 20-22 workers and generates $7-8 million annually.

    • The paint, varnish, and supply wholesale industry consists of about 940 firms that employ 20,800 workers and generate $7 billion annually.
    • The industry is concentrated; the top 50 companies account for about 84% of industry revenue.
    • Large automotive paint, body, and equipment (PBE) wholesalers include LKQ Corporation and FinishMaster (Uni-Select). Large manufacturers of paints and coatings include PPG, Sherwin-Williams, and RPM. Sherwin-Williams is one of the largest wallpaper distributors in the US.
                                  Industry Forecast
                                  Paint and Varnish Wholesalers Industry Growth
                                  Source: Vertical IQ and Inforum

                                  Recent Developments

                                  Sep 21, 2023 - Home Builder Confidence Drops on Falling Affordability
                                  • Home builder confidence declined in September as high interest rates and materials and labor shortages undermine buyer purchasing power, according to the National Association of Home Builders (NAHB). Home builder sentiment, as measured by the NAHB/Wells Fargo Housing Market Index (HMI), fell five points to 45 in September 2022, which followed a six-point drop in August. Any HMI reading over 50 indicates that more builders see conditions as good than poor. The HMI’s September decline was the first drop in five months. The NAHB said that mortgage rates pushing above 7% are hurting housing affordability. Supply-side challenges - including shortages of workers, materials, and available lots – are also contributing to higher home prices.
                                  • The Dodge Momentum Index (DMI) decreased 6.5% in August 2023 to 178.0 (2000=100), down from the revised July reading of 190.3. The Momentum Index is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which has been shown to lead construction spending for nonresidential buildings by a full year. On a monthly basis, the institutional planning component dropped by 14.8%, and commercial fell by 1.6%. Institutional planning weakened amid a drop in education and healthcare projects. In the commercial segment, stronger hotel planning activity helped partially offset weakness in the office market. Dodge’s associate director of forecasting, Sarah Martin, said, “Overall activity remains above historical norms, but weaker market fundamentals continue to undermine planning growth. It’s likely that the full year of tightening lending standards and high interest rates has begun to affect institutional planning, which has otherwise been resistant to these market headwinds. Also, planning in the sector continues to revert from the strong spike in activity back in May. As we move into the final four months of 2023, both commercial and institutional planning will continue to be constrained.”
                                  • A strike by the United Auto Workers (UAW) union against the Big Three automakers – Ford, General Motors, and Stellantis – could reduce demand for automotive paints and coatings if it significantly affects auto production. About 12,700 UAW workers implemented targeted work stoppages in September at three plants – one factory for each of the three car companies - according to The Wall Street Journal. In addition to calling for higher wages for auto workers, the union is negotiating for job security assurances as the industry pivots to electric vehicles (EVs), which require fewer components and less labor to assemble. The UAW is also pushing for cost-of-living adjustments, unionizing EV assembly and battery plants, and for the industry to reduce its use of temporary workers.
                                  • US mortgage applications for new home purchases rose 20.6% in August compared to a year earlier, according to the Mortgage Bankers Association (MBA). New home mortgage applications were up 4% in August over July. The MBA’s Deputy Chief Economist Joel Kan said, “There was strong purchase demand in August for newly constructed homes, as existing for-sale inventory remains low with most homeowners locked into lower mortgage rates and unwilling to give those rates up in this higher rate market.” New home sales are a driver of paint and varnish demand.
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