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
                                  Source: Vertical IQ and Inforum

                                  Recent Developments

                                  Nov 4, 2022 - Construction Outlook Mixed
                                  • The Dodge Momentum Index (DMI) increased 5.7% in September 2022 to 183.2 (2000=100), up from the revised August reading of 173.4. The DMI 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 commercial planning component increased by 2.9%, and institutional rose by 11.7%. Data center projects boosted the commercial planning pipeline. The institutional sector improved amid a growing pipeline of research and development laboratory projects in the education sector, as well as healthcare and recreation projects. Developers and project owners continue to see healthy demand, despite recession concerns, although continued high inflation has the potential to blunt the flow of new projects.
                                  • The NAHB/Westlake Royal Remodeling Market Index (RMI) reading for the third quarter of 2022 was 77, down 10 points from the third quarter of 2021, according to an October report by the National Association of Home Builders (NAHB). In the third quarter, 23% of remodelers said conditions were worse than they were three months earlier, 10% said they were better, and 67% said they were about the same. While the RMI reading for Q3 2022 dropped from a year earlier, overall conditions remained positive amid rising home equity, durable work-from-home trends, and aging housing stock. The NAHB expects a slight uptick in remodeling activity in 2023 as new home construction continues to slow.
                                  • New single-family home sales decreased 10.9% month over month and declined 17.6% year over year in September 2022, according to the US Department of Commerce. On a year-to-date basis, new home sales were down 14.3% in the first nine months of 2022 compared to the same period in 2021. According to Freddie Mac, on November 3, 2022, the US weekly average rate on a 30-year fixed mortgage was 6.95%. A year ago, the rate was just over 3%. Industry watchers expect new home sales to remain weak as the Fed uses interest rate hikes to bring down inflation.
                                  • While US manufacturing activity continued its expansion streak in October, it grew at the slowest rate since May 2020, according to the Institute for Supply Management (ISM). The ISM’s Purchasing Managers Index (PMI) in September fell to 50.2%, down from 50.9% in September. A reading above 50% indicates manufacturing expansion. October’s New Orders Index rose 2.1 percentage points to 49.2%. The Production Index rose 1.7 percentage points to 52.3%. Eight of the 18 manufacturing industries tracked by the ISM reported growth in October, and some of them are key end-users of paints, coatings, and adhesives, including machinery, transportation equipment, and electrical equipment, appliances, and components. The chemical products industry, which includes paint, coatings, and adhesives manufacturers – experienced a contraction in October.
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