A very competitive market

Challenging – this is the best way to describe status quo of the European paints and coatings market. Katarina Lindström from Hempel provides an overview by addressing various factors that have an impact on the industry.

Katarina Lindström
Katarina Lindström is Executive Vice President and COO at Hempel.

In another year rocked by market challenges, Hempel has initiated activities to shore up its supply chain and focuses on risk mitigation. In Europe, the coatings industry faces its own challenges, like high inflationary rates, driven by war in Ukraine, high energy costs in some regions and energy limitations. Globally, inflationary cost pressures persist alongside raw material cost increases and uncertainties negatively impact consumer confidence.

Current market conditions

The expectation is that the European paint and coatings market will grow in value during 2022. The growth is driven by price increases as a reaction to the huge increase in raw material cost during 2021 and 2022. These prices increases are expected to be around 15-20 % across segments, though with significant volume decline in the coating market.

High inflations rates across Europe, driven by war in Ukraine has led to low consumer confidence, challenging the decorative segment. Energy and Infrastructure segments are expected to show volume growth in 2022, especially the wind coatings market, further strengthened by the energy crisis currently experienced in the region.

Supply chain challenges

Global supply chains are challenged due to the many uncertainties in the world – unstable geopolitical situations, high inflation globally and energy limitation and high costs in some regions. At Hempel, we have initiated activities in our supply chain to mitigate for these challenges and we benefit from being a truly global company to be able to best serve our customers.

We work with risk mitigation on a continuous basis throughout our complete supply chain. In collaboration with our third party risk engineering partners, we have a well-established loss prevention programme where we keep track, monitor and implement risk improvement measures related to protection of our assets, properties and business from potential negative events, including Natural Hazards.

We have established an internal process for actively working with Business Continuity related risks, following the principles described in ISO 22301:2019 Security and resilience – Business continuity management systems – Requirements. This includes mapping our critical activities and resources and what potential events may render these impaired during a certain period of time. Mitigation actions and plans are set in place and implemented thereafter. The main purpose is to create robustness in our business should it be impacted by a negative external event.

Focusing on Europe

In general, the coating market is very competitive. To state that the European market is more competitive than other markets is difficult to say. Other regions (such as APAC, for example) are more fragmented from a customer perspective with more local players in the market, which could influence the overall competitiveness and push down prices.

Hempel is primarily operating within a specified coatings market and our competition is primarily tier 1 international coating companies operating all over the globe, meaning that competition is based more on the bargaining power of each company within a region.

Reading tip

This guest editorial is part of a preview magazine for the European Coatings Show. In addition to information on the event, it is packed full with expert interviews.

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