Paint, Coating & Adhesive Manufacturers
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 1,300 paint, coating, and adhesive manufacturers in the US mix pigments, solvents, and binders into paints and other coatings; produce allied paint products, such as putties, removers, and cleaners; and produce adhesives, glues, and caulking compounds. Large companies may manufacture other construction-related products. Some large firms are vertically integrated and operate retail locations.
Regulation Of Hazardous Materials And Waste
Because the production of paint, coatings, and adhesives involves certain chemicals that are considered hazardous, manufacturers are subject to a wide range of laws and regulations dealing with environmental, health and safety issues.
Variability In Raw Materials Costs
The cost of raw materials used in paint, coating and adhesive production varies according to global market conditions.
Industry size & Structure
The average paint, coating, and adhesive manufacturer employs 47 workers and generates $31 million annually.
- The paint, coating, and adhesive manufacturing industry consists of about 1,300 companies that employ about 64,200 workers and generate about $42 billion annually.
- The industry is highly concentrated; the top 50 companies account for 73% of industry revenue.
- Some large firms are vertically integrated and operate retail locations.
- Large companies include PPG Industries, RPM International, Valspar, and HB Fuller. Large companies may generate a significant percentage of sales in foreign markets.
Industry Forecast
Paint, Coating & Adhesive Manufacturers Industry Growth
Recent Developments
Mar 29, 2023 - Architecture Billings Soften
- Demand for building design services dropped in February, according to a March report by the American Institute of Architects (AIA). The AIA’s Architecture Billing Index (ABI) fell to 48 in February from January’s reading of 49.3 in January. Any reading of 50 or more indicates growth in architectural billings. However, the pace of new project inquiries and new design contracts continued to improve. The AIA’s Chief Economist, Kermit Baker said, “The combination of an unsettled economy and high interest rates is causing investors and property owners to take a closer look at their plans for construction projects. While this is producing delays for some projects under design, architecture firms are reporting that prospects for future project work remain generally positive.” By major sector, billings index growth in February was mostly in contraction territory: mixed practice was 57.0, institutional was 46.9, commercial/industrial was 45.8, and multi-family residential was 46.2.
- Sales of existing US homes increased by 14.5% in February from January but were down 22.6% year over year, according to the National Association of Realtors (NAR). February’s results snapped a 12-month streak of declines in existing home sales and were the strongest month-over-month gain since July 2020. NAR chief economist Lawrence Yun said, “Conscious of changing mortgage rates, home buyers are taking advantage of any rate declines. Moreover, we're seeing stronger sales gains in areas where home prices are decreasing and the local economies are adding jobs." Yun added, "Inventory levels are still at historic lows. Consequently, multiple offers are returning on a good number of properties." Existing home sales are a key demand driver for paint and wallpaper stores. Sellers often make improvements before putting a home on the market, and buyers typically renovate before or shortly after moving in.
- In their recent fourth-quarter reporting, home improvement retail giants Home Depot and Lowe’s warned of weaker results in 2023 as consumers pull back on remodeling and shift more spending to services. Lowe’s CEO said consumers have grown more cautious amid inflation and higher interest rates. Home Depot also expects home improvement demand to moderate as spending shifts to experiences such as dining out and travel. Lowe’s said it estimates its same-store sales to, at best, be flat for 2023 and could drop by as much as 2%. Home Depot plans to invest $1 billion in higher wages for hourly workers, which it expects will contribute to a mid-single-digit drop in the company’s adjusted per-share earnings in 2023.
- Tight inventories of existing homes are pushing buyers into the new home market, which helped move home builder confidence higher in March, according to the National Association of Home Builders (NAHB). Home builder sentiment, as measured by the NAHB/Wells Fargo Housing Market Index (HMI), rose two points to 44 in March 2022 2022, although the HMI remained in bearish territory. Any HMI reading over 50 indicates that more builders see conditions as good than poor. While stress in the US financial system pushed mortgage interest rates down, affordability is still a significant roadblock to homeownership for many. The NAHB said a side effect of the increased pressure on regional banks would be a further tightening of acquisition, development, and construction (AD&C) loans for home builders.
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