TTJ: AT THE START OF 2022 YOU WERE CONCERNED THAT NOT ENOUGH COMPANIES HAD GOT TO GRIPS WITH THE NEW, POST-BREXIT PAPERWORK AND PROCESSES. HAS THAT IMPROVED?
Tom Bowtell: Companies have got to grips with the new import/export processes through time, training and experience. However, those processes still add time and complexity to trade and that in turn means extra costs. A survey we carried out in 2022 showed that 59% reported increased operating costs due to Brexit of more than 4%, 32% said it had added more than 6%, while 10% had experienced additional costs of more than 15%.
TTJ: CAN YOU RECAP ON WHAT YOUR CONCERNS ABOUT THE PLANNED UK REACH (REGISTRATION, EVALUATION, AUTHORISATION AND RESTRICTION OF CHEMICALS) SYSTEM ARE?
TB: UK REACH will potentially reduce the range and increase the cost of raw materials for the paints, coatings and woodcare manufacturers. Defra has recently confirmed that transitional registration deadlines for UK REACH are being put back from the original 2023, 2025 and 2027 for the various tonnage bands, to 2026, 2028 and 2030. This is to allow a new transitional registration model to be developed as Defra had agreed the original plan, which its own figures estimate would have cost industry between £1bn to £3bn, was too expensive. We welcome that delay as long as we can actually come up with a more proportionate and workable model for our sector’s use of chemical substances. Otherwise, we are simply kicking the can down the road and just generating more uncertainty for businesses at a time when they desperately need some stability.
TTJ: ARE THERE ANY OTHER REGULATORY CHALLENGES COMING DOWN THE TRACK?
TB: The UK is still working on its own chemicals strategy, as well as GB-only versions of biocides and preservatives legislation, which is critical for the timber sector and classification and labelling laws (CLP).
“I would hope that in 2023 we can come up with a more workable and affordable solution to UK REACH and thereby create a bit more certainty for the coatings manufacturers in our sector”
So the British Coatings Federation (BCF) will be looking to engage with government on all of those issues.
At the same time, the EU is looking at revising REACH and also pressing ahead with a range of updates to other regulations. This matters for our coatings manufacturing members who wish to export to the EU but also because the UK is very much taking an approach of looking at what the EU is doing and then deciding whether to follow suit or not. What happens in the EU is still very important to us, given how integrated our supply chains are.
TTJ: IS THE UK STILL A NET EXPORTER OF PAINT? ARE EXPORTS HOLDING UP?
TB: Yes, the UK is still a net exporter of paint and we are very proud of that. However, it is more difficult and expensive for them to do so. While we know of only a small number of members who have stopped exporting completely, we know from the previously mentioned survey that around four in 10 companies had seen a drop in exports over the past year, and around three-quarters said that whilst they are still exporting to the EU and they planned to continue, it had become more difficult and costly.
TTJ: THIS TIME LAST YEAR THERE WAS A GLOBAL RAW MATERIALS SHORTAGE, WHICH WAS HITTING BCF MEMBERS HARD. HAS THAT SITUATION EASED?
TB: The situation is still tight. While availability of some raw materials has improved, prices remain high due to increased energy costs across the globe. Managing this – availability and prices of raw materials for paints, coatings and woodcare products – remains a key issue for all of our members at the present time.
TTJ: HAS THE COATINGS INDUSTRY BEEN IMPACTED BY THE WAR IN UKRAINE?
TB: As well as increased energy costs we have also seen availability of certain raw materials impacted too – for instance the availability of resins for solvent based coatings and stains.
TTJ: THE COST OF RAW MATERIALS HAS ALSO BEEN A HUGE ISSUE OVER THE LAST COUPLE OF YEARS – HOW IS THE SECTOR DEALING WITH IT?
TB: As noted, energy prices are still keeping many raw material prices high, although in general availability issues have improved since the peak Covid period. Members have been trying to absorb as many of these increases as possible but there comes a point where these do have to be passed on down the supply chain. Members are trying to be as transparent as possible about the reasons for this and BCF looks to help by providing information notes about the situation, which members can share with their customers. On average, paints and coatings raw material prices went up 23% in 2022, on top of 11% increases in 2021.
TTJ: WHAT PROGRESS HAS THE BCF MADE WITH ITS NET ZERO BY 2050 TARGET?
TB: We spent a lot of last year working on how best to benchmark emissions data for the sector. This has taken longer than we had hoped but we will be producing a detailed road map now in 2023, which we plan will also provide information to help members meet key decarbonisation targets. In the meantime, individual members continue to take actions to reduce energy usage and identify other areas where they can green their supply chains, from reducing packaging and waste to developing new formulations and products.
TTJ: WHERE WILL THE CHALLENGES AND OPPORTUNITIES COME FROM IN 2023?
TB: As we head into 2023 the UK economy looks weak and almost all forecasters have predicted a long recession. If consumer demand is depressed, which is likely, that will potentially hit our members and many other parts of UK manufacturing, including the timber sector.
The sustainability programme will also continue to challenge and this is something BCF is keen to help members with. In terms of opportunities, I would hope that in 2023 we can come up with a more workable and affordable solution to UK REACH and thereby create a bit more certainty for the coatings manufacturers in our sector.
We hope 2023 will be boring! After the last few years, businesses need time to reset, plan and invest for the future.
