Coatings and Adhesives Manufacturing Show Increased Shipments, Leaner Inventories


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In the manufacturing sector, the U.S. Census Bureau reports shipments and inventories figures for many durable and non-durable goods categories. One of the segments reported on a monthly basis aggregates adhesive manufacturing (NAICS 32552) with paint and coating manufacturing (NAICS 32551). The resulting report does provide some useful directional data.  This is particularly true in that adhesives demand is driven by many of the same drivers as paints and coatings; specifically, durable goods manufacturing and construction.

The Census data for the combined industries show a steady increase in the value of shipments following the end of the severe 2007-09 recession. However, as shown in Figure 1, while the value of shipments has risen 61.5 percent, the total inventories held in the two industries has only risen approximately 25 percent.

shipments-inventories

As a result, the inventory to shipments ratio for coatings and adhesives is now slightly above 1.0. The lean inventories held by the combined industries, as shown in Figure 2, compares quite well to the overall chemical industry, where inventories to shipments levels have held steady at approximately 1.3 over the past two years, and with the durable goods manufacturing sector, where the ratio of inventories to shipments has historically been lower than in coatings and adhesives, but which has seen steady, but higher inventories to shipments ratios than the combined coatings and adhesives industries since early 2015.

shipments-inventoriesManufacturers seek to maintain lean, but not overly lean, inventory levels, and it appears that the coatings and adhesives industries have done well in this regard since the end of the recession.

Contact ACA’s Allen Irish for more information.