As the wood coatings and finishes sector gears up for 2023 it is looking back on a strong performance in 2022 – despite the global economic, geo-political and supply chain issues that impacted every walk of life.
“Considering the current macro-economic environment showing signs of a downturn in our industry, 2022 has ended up showing strong demand,” said Chris Bradford, marketing director industrial coatings at AkzoNobel, which manufactures Sikkens Wood Coatings. AkzoNobel’s route to market for its industrial wood coatings and adhesives is via distribution and direct to its customers, with direct supply being the largest route.
Mr Bradford added that demand this year is also looking favourable.
Sayerlack manufacturer Sherwin-Williams’s direct business is focused on serving the larger OEMs, whilst working closely with its distribution partners to ensure they can provide “the best possible service” to their customers, who are typically SME businesses. Graham Buchan, commercial director west region – EMEA at Sherwin-Williams Industrial Wood Division, also reported a good year.
“Like many other businesses, there was a feeling that we were still working through a ‘post-shutdown’ period, so many of our customers were working through an order book that showed a strong recovery in demand as life began to normalise,” he said.
“This was good,” continued Mr Buchan, “but, on the other hand, we saw exceptional strains and stresses on the supply side, especially relating to raw materials, which caused significant pressure on costs which persisted for much of 2022. Even now, many of these materials remain stuck at historically very high levels and, of course, the surge in energy prices is now adding an additional dimension.”
Finishes specialist Osmo also noted the supply challenges, particularly those created by the war in Ukraine, which, according to Paul Thompson, sales director Osmo UK, has affected the company “hugely”.
“Our main ingredient is sunflower oil and Ukraine produces 60% of the world supply,” he said. “It’s had a negative effect on manufacturing costs.”
He added that Osmo experienced growth within the UK market in 2022, although this had slowed in comparison to the preceding two years, “which was to be expected”.
“The growth came from new business as all regions saw new accounts open and existing accounts increasing their portfolios,” said Mr Thompson.
The hope in the wood coatings sector now is for a less bumpy supply chain in 2023.
“Continuity of supply and high levels of service are two of our operating pillars,” said AkzoNobel’s Chris Bradford.
“All sectors of the coatings industry have seen extreme global raw material shortages and potential supply disruptions, however, this is now easing as demand softens. Despite the disruptions we have been able to manage our supply chain through our relationships with suppliers and customers alike. We are now seeing a more stable supply chain and look forward to further improvements.”
When it comes to the split between the exterior and interior coatings markets, for AkzoNobel the ratio across the globe is pretty even, with regional strengths.
“The contrast in business regarding UK and Scandinavia is a good example of regional diversity, with our key UK customers focusing on exterior coatings, whereas our key Scandinavian customers focus on interior coatings,” said Mr Bradford. “This diversity gives a welcome mix that provides stability to our business.”
Osmo saw greater growth in its interior market last year. “This could be due to the two previous years seeing growth in the exterior ranges as people were focusing on renovating their outdoor living spaces during the lockdowns,” said Mr Thompson. “This should bounce back this year as the exterior works will need maintenance coatings to be applied over the next two years.”
At Remmers, while the market for its interiors products had been growing, said Paul Scott, divisional manager Induline Wood Coatings at Remmers (UK) Ltd, “exterior will still be a major focus until Q3, 2023”.
For Sherwin-Williams the markets are more nuanced at the moment.
“Parts of the interior market – say kitchens and mouldings – are maintaining, but then other sections – doors or refurbishments/ fit-outs – appear to be quieter,” said Mr Buchan. “Exterior demand has generally been increasing, but there is now considerable uncertainty as interest rates have risen and financial confidence has weakened.”
CUSTOMER EXPECTATIONS
While the world around them may be changing, customers’ needs and demands on wood coatings and finishes have remained fairly consistent.
“Our market still wants to use the best possible products, which are natural and renewable and which Osmo can offer,” said Paul Thompson. “Yes the rising cost of living will have to be taken into account but the lifespan of the Osmo finishes and the ease of maintenance and longevity between recoats will help overcome this.”
Remmers’ Paul Scott agrees that longevity is key, along with innovation, “with simplistic systems”.
“Customers’ needs remain fairly consistent,” said Graham Buchan, at Sherwin-Williams. “They are looking for high performance products that can give them a competitive edge in the market and/or reduce their costs. And, especially in these times, our customers are looking for stability and reliability of supply.
“For us, it is important that we continue to innovate and our labs are constantly working on new products, or on further enhancing what we already offer to the market.
“In terms of functional coatings, customers are looking for ways to reduce their emissions and increase the sustainability of their production. Our water-borne and bio-based products support these initiatives and have seen increasing demand as a result,” said Mr Buchan.
AkzoNobel said that indoor air quality (it has a formaldehyde-free range), fire retardants, UV curing systems and antibacteria/ anti-virus products all remained important areas of focus for customers, alongside water-borne technology, both in 1K and 2K forms, and carbon footprint reduction.
“Our substantial R&D investment reflects the changing needs of the customer,” said Mr Bradford. “We believe the market is broadly responsive to the concept of indoor air quality and this welcomed awareness that will continue to grow as the topics of wellness and sustainability gather popularity.”
He added that, of AkzoNobel’s brands and from a UK perspective, its Sikkens Wood Coatings brand was most in demand, saying it had become “synonymous with superior exterior protection with no compromise on aesthetic qualities”.
“Customers are reassured by the brand’s extensive history and experience in developing high performing, durable systems and have confidence in the performance levels of our products, which are tested under our Global Weathering Program and well documented in case studies of all types across Europe,” added Mr Bradford.
Sherwin-Williams has enjoyed good demand across most sectors in 2022, said Mr Buchan. “As mentioned, the trend towards water-borne products or towards low VOC solutions in general is continuing to pick up pace. However, there has been good demand for the more traditional, solvent-based products as well. Any product that helps our customers improve their productivity and profitability will continue to be valued.”
Meanwhile, over at Remmers, Paul Scott said that the company’s isolating primer and opaque top coat with Aqua Stop technology were its most in-demand products.
When it comes to new products, the coatings and finishes sector hasn’t held back.
“Our labs are constantly developing new products across a wide range of technologies,” said Graham Buchan at Sherwin-Williams. “In the last year we have introduced a new range of fire retardant systems, achieved advancements in both interior and exterior water-based technology, and added a v-joint sealer to our joinery market portfolio. We are also pursuing specialist developments in excimer UV technology.”
AkzoNobel continued the momentum of its new CETOL range in 2022, including: CETOL WF 98xx – a translucent range of waterborne single pack topcoats for wooden windows, doors, and claddings, which the company says provides excellent application properties, transparency, and high durability.
“This range is suitable for all kinds of woods, giving a high-quality surface and a great look and feel to any wooden doors, joinery, or cladding, whilst delivering no dirt pick-up and excellent levelling,” said Mr Bradford. “The new CETOL WF 98xx range was tested under AkzoNobel’s global weathering programme.”
Another newcomer was CETOL WM 6900 – translucent waterborne single pack mid-coats for wood species prone to bleeding. They are suitable for components made of hardwood and softwood, with versions for dipping and flow coat (CETOL WM 6900-02) or spray (CETOL WM 6900-03) application. The company says CETOL WM 6900 gives good isolating properties against discolouring tannin extracts, without the addition of heavy metals.
And there is CETOL WM 6100 – translucent waterborne single pack mid-coats offering a long-lasting, high performing solution and demonstrating excellent transparency (crystal clear), superior pore filling, and “unprecedented” sandability with minimised risk of sanding through for a silky-smooth surface.
AkzoNobel has plans to introduce new products this year, more of which will be revealed in due course.
Remmers is playing its cards close to its chest but said that new products were planned for this year, while for Osmo, the plans it announced last year which would enable greater market share in the pigmented finish market, have come to fruition with the launch of a new mixing machine and ‘Elements’, which is a new exterior colour range.
“Elements has 120 designers’ colours, which will be more appealing to the UK market,” said Mr Thompson.
“The mixing machine will allow our customers to hold less stock but provide our full catalogue of colours by having the ability to pigment our clear, top-selling lines,” he added.
When it comes to colour trends, Paul Scott at Remmers points to “cloth matt finishes and pastel shades, with dark greys still important”, while Graham Buchan at Sherwin-Williams also notes that the recent fashion for “dead matt” finishes is still quite prominent, often combined with dark colours, such as blue, grey or black.
“Interestingly though, we may be seeing a higher demand for clear finishes,” he said. “We will see how this develops. We have a full colour team in the US who monitor and predict these matters, with the aim of keeping us and our customers ahead of the curve.”
AkzoNobel’s dedicated global colour and design team for wood coatings fulfils the same function and is “continuously capturing and interpreting the colour and texture trends”, said Chris Bradford.
Four unique colour palettes created around the Colour of the Year will have an influence on home decor – including furniture, flooring, cabinetry and building products – in the coming year:
• The Studio – soulful, warm, modern tones
• The Salon – embracing artful qualities
• The Greenhouse – revelling in nature’s influence
• The Workshop – creating flexibility in multi-functional spaces
“We always consider the latest trends for coatings development and our highly trained Technical Service and Global Color and Design teams work closely together to ensure our finishes are robust but also can be industrialised across the globe.”
For Osmo, it’s the clear products that still dominate its sales, “but there is definitely a move towards more opaque finishes for the exterior”, according to Paul Thompson.
“The pigment a customer can use, the greater protection they will have for their timber projects,” he added.
ACQUISITIONS
The companies themselves have seen some changes in the last 12 months and have more planned. Remmers hints at an “announcement” in the first quarter of this year, while Osmo reports that its training room is now up and running and the technical team is providing training sessions at its head office.
“There has been a very successful uptake throughout 2022 and we are looking at pushing this forward in 2023,” said Mr Thompson.
Sherwin-Williams has had “an exciting year” in terms of acquisitions, acquiring the Italian ICA Group in late 2022.
“This renowned company is an excellent addition to our portfolio and will allow us to significantly expand our capabilities in developing and supplying high-performance industrial wood coatings,” said Mr Buchan.
AkzoNobel also expanded its reach last year, completing the acquisition of Columbiabased paints and coatings company Grupo Orbis in April, thereby strengthening its long-term position in Latin America. It also confirmed an agreement to acquire the African paints and coatings activities from Kansai Paint in June, with completion expected during the course of this year.
AkzoNobel’s acquisition of Lankwitzer Lackfabrik’s aluminium wheel liquid coating business was announced in July and was expected to have been completed before the end of 2022.
As for what this year will bring, Mr Bradford said that although 2022 ended showing strong demand, despite the current macro-economic environment, this same environment could be the biggest challenge in 2023.
Conversely, the main opportunities will come from “building the strong customer partnerships we have, especially in distribution to gain market share”, he said.
“We are also looking at how we can change our way of operating in the UK to improve service and offer more flexibility, and reduce logistic costs, while at the same time helping to meet sustainability demands,” he added.
Graham Buchan agrees that the economic outlook for 2023 is “not very positive” and said we haven’t seen the end of the supply chain and energy cost pressures which were a major feature of 2022. However, he said Sherwin-Williams will maintain positive growth by continuing to provide its customers “with innovative and cost-effective solutions and helping their businesses to prosper”.
