2008 Market Review – The End User Perspective

By Cynthia Challener

The mature coatings market in the U.S. saw an overall sales decline in 2008, both in value and volume terms. Manufacturers were faced with con­tinued increases in raw material and energy costs in the first half of the year, while demand in the key automotive and housing segments declined as a re­sult of the credit crisis and deteriorating economic conditions. Several other coating sectors struggled as well, according to Steven Nerlfi, a consultant with market research firm Kusumgar, Nerlfi & Growney (KNG). Coatings for prefinished wood and composition flat board, which is mostly used for exterior siding, experienced a drop in sales.

Demand for coatings designed for wood furniture applications also declined further, as manufac­turing continued its move to offshore locations. Some coating segments are holding their own despite the challenging eco­nomic conditions. Graphic arts applications do not account for a large per­centage of the volume of coatings sales in the U.S., but they are mostly UV ­cured coatings and carry a high price tag. “This market will not be nearly as hard hit as the automotive and architectural segments,” says Nerlfi. “There will always be a need for annual reports and marketing brochures, and because these publications reflect the image of the company, high-end overprint varnishes will always be in demand.” Metal furniture is a small part of the market, but most manufacturing remains in the U.S. and coatings demand in this segment is growing at about 4% per year.

Pipe coatings are another small market, but Nerlfi predicts a growth rate of 5% per year if drilling for oil begins in earnest on U.S. land. While some appliance production is moving off­shore, the majority of operations remain in America and the market should show positive annual growth of about 2%. Coatings for general metal applications should also experience a similar growth rate.