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PCI's Outlook on Coating is Bright

oneononeSteve Houston knows a thing or two

about both the technical aspects ofthepowdercoating industry and the rapidlychanging business dynamics shapingtrends in thesegment. As thenewly mint­ed executive director of the PowderCoating Institute, hehascritical access tonot only manufacturer and suppliermembers but also coaters and finishersserving the industry. Houston, a 28-yearveteran ofthe powdercoating sector, hasalso developed keen insights through thevariety of leadership positions he hasheldwith some of the industry's most promi­nent names, Nordson Corp. and DuPontamong them. Over theyears he hasalsochaired multiple PC! committees andtwice served asitspresident.

On the cusp of COATING 2008, thepowdercoating industry'spremier tradeshow and technical conference, MetalFinishing magazine caught up withHouston toget histake on thestateof theindustry. Following are excerpts fromthat discussion:

MF: What are some ofthe major con­cerns you're hearing regarding thestate ofthe organicfinishing industry?(e.g., raw materials/energy costs, out­sourcing, economic conditions, etc.}

Houston: In the beginning-and forthe first few decades-powder saw themajority of its growth through con­versions from alternative technolo­gies. In recent years the majority ofthis much more mature powder coat­ing marketplace finds its growthfrom the economy and upgradesand/or equipment offering efficiencyimprovements such as quicker colorchange. The fact is all of the itemsyou have mentioned have and willcontinue to affect the powder coat­ings marketplace. Raw materialincreases are negatively impacting thepowder producers' bottom line andforcing a pass through to the endusers, ofcourse, driving up the cost ofthis coating solution. And we contin­ue to see production of industrialproducts moving offshore to low-

labor countries such as China, India,and even Mexico. Those are the mainfactors that have stymied the growthof powder coatings in recent years.

MF: Based on.feedbackyou're hearing.from members, how is the powdercoating manufacturing communitydealing with some ofthose challenges?

Houston: Powder has been under­valued for a long, long time. The rawmaterial increases that have blind­sided us for the last few years haveforced powder producers to look atways to get the true value of powdercoating into the marketplace. Rawmaterials prices are going up due, inpart, to the ever-rising energy costs.Every vendor [serving] this market­place has had to pass throughincreases to offset this cost escala­tion. It has been a negative impactfrom one point of view, but on theother side it's been an importantpart of how we identify the truevalue of the offering that powderbrings in comparison to alternativetechnologies.

MF: The finishing industry is clearlybecoming increasingly global in scope.Looking at thesedynamics, doyoufore­see an even higher number ofinterna­tional supply partnerships and prod­uct/technology information sharing?

Houston: I think we will see more ofall of the above. We are truly a glob­al economy, and that's not just fin­ishing or powder coating but busi­ness in general. What you have to doin order to succeed in this market­place is leverage that potential.When most people think abour "aglobal organization" we think oflarge international companies [mak­ing] billions of dollars annually.Well, today there are many interna­tional organizations that are whatwe might call "small" businessesthat have found ways to leveragetheir support, products, and services

to effectively distribute and/or deliv­er those products and services allover the world. That just provesintellect and good product can besold in this competitive internation­al marketplace.

What I think will prove out in thefuture is that we have to find ways totake those good ideas from all overthe world and bring those to thedomestic market in which we partic­ipate. This is true with associationsas well. PCI is finding that powderconsumption in the Americas repre­sents only about 20% of all powdercoating consumed worldwide.China, in particular, representsalmost 40% of all the powder con­sumed in the world; we should bethere. At the same time, PeI is prettymuch considered a domestic associ­ation. Our mission over the next fewyears is to branch out and buildchapters allover the world. PCI has agreat history of promoting the useof powder coatings and exceptionalproducts to educate the market­place. As an association, we want tobranch out and support our mem­bers-international companies aswell-with the support we've beenable to provide domestically over thelast 27 years.

MF: Are there plans in place to pursuethese international partnerships?

Houston: We have plans in place; Irecently rolled out a five-year plan,part ofwhich calls for the creation ofchapters outside the U.S. Thisincludes doing feasibility studies inChina, Japan, Latin America,Europe, and the Middle East.

MF: Increasingly, we are hearing anec­dotal evidence of traditional electro­plating operations adding paint andpowder coating services to their reper­toire-and vice versa. Based on whatyou're seeing at the finisher leuel, doyou see this ratio moving more quicklytoward organicfinishing services?

Houston: The finishers that are nar­rowly focused are being bypassed byinnovators that are more diverse interms of what they can offer the

September 2008 I metalfinishing I 37

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Visit w\\'\\' ro readthis interview in irs entirety. While there, search"Sreve Houston" for more on his appoinrrnenr ro PCl.

oneononemarket. Smart businesspeople arejust looking at the supply chain ofeverything their customers need togive them a good, high-quality fin­ished product and vertically inte­grating their capabilities and compe­tencies. What I'm seeing is a transi­tion from what used to be exclusive­ly powder custom coaters to "finish­ers" putting in plating and e-coarlines to help build a more roundedproduct portfolio. Likewise , just asmany platers are putting in [coating]lines. In addition, finishers are alsooffering assembly services, JIT deliv­ery, managing customer's inventory,silk screening, high-performancecoatings, functional coatings, andmuch, much more. The winners con­tinue to be innovative in a dynamicmarket.

MF: Finally, what's your outlookregarding the short- and long-termmarketgrowthfor powder coatings? IsPClprivyto any recent market studies

forecasting growth for the paint orpowder coating sector that you canshare? (Some conservative estimateswe've seenput the global powder coat­ings market growth at approximately5-6% annually for the next fewyears.}

Houston: In my opinion, the 5%-6%growth projections over the short-to­medium term makes a lot of sense.Obviously, in some of the emergingparts of the world, we'll see in excessof double-digit growth. We've beenseeing some good growth in parts ofEastern Europe, Asia-Pacific, SouthAmerica. What will happen to helpdrive that number up in some of themore mature marketplaces will betechnology. The question is, whenwill it come? The more emphasispowder manufac­turers, raw materialssuppliers, andequipment manu­facturers, and virtu­ally all vendors tothe powder coating

market put toward innovation andnew technology, the quicker thatgrowth curve will increase. Over thelong term, I fully expect that we'll getback to larger growth parrerns-8%or more, perhaps. As the world con­tinues to look at hazardous disposaland hazardous products that areused in building, construction, andindustrial markets, there's no betterlean , green technology than powdercoating. Not only do we have the"push" to try to get powder into mar­kets that we don't see it in today, wealso have the "pull" from the marketwith an environmental conscience.That really is the perfect combina­tion for an increase in growth.

September 2008 I metalfinishing I 38

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