Interview: “Investing heavily in our capabilities in Europe”
PPG’s recent expansions were mainly in Europe. Why?
Roald Johannsen: Of course, we also have investments in many other major and developing markets. But lately we’ve had a strong focus on the European region and are heavily investing there. We see tremendous opportunities for sustainable products and processes. For us there really is no better place than Europe for these particular investments.
What is the focus of your investments in Europe?
Johannsen: Our recent acquisitions in Germany are all in the automotive space, including Hemmelrath, Wörwag and Cetelon. But we are not just looking into bolt-on moves, we are also investing in our existing capabilities. For instance, we recently doubled our clearcoat capacity in Erlenbach, Germany for about EUR 3 million and announced an investment of some EUR 10 million in Weingarten, Germany that is heavily geared towards our sustainable waterborne basecoat production capacity. We also expanded our basecoat production at our site in Valladolid, Spain.
We have also opened a new “European Central Powder Coatings Research and Development” Center in Milan, Italy. The Milan facility is designed as a European hub for cross-technology research and development, hosting laboratories for PPG businesses that include automotive OEM and refinish coatings.
These investments are not only enabling us to produce some of our new advanced sustainable products, but also produce them using sustainable processes. These moves are geared towards focusing on sustainability and also on the growing segment of electric vehicles as part of the OEM segment.
Why is Germany a focus region?
Johannsen: Germany is a key part of PPG’s manufacturing and R&D footprint. We’ve got over 1500 employees and operate 11 sites in Germany. Six of those sites are automotive sites, the other five of them support various other coatings industry end-use sectors, whether that be packaging, aerospace, industrial, protective, marine or refinish.
The majority of your moves are focused on the automotive segment. Please explain.
Johannsen: This reflects the government incentives coming through to drive electric vehicle adoption to support the carbon neutral ambitions of the European Union and the EU Green Deal. The individual customer investments are happening in the OEM space from some of the large automotive manufacturers in the electric vehicle space and so we are investing to support that growth.
What is your outlook for the automotive market, in terms of opportunities and challenges?
Johannsen: When you look out to 2025, its is estimated that 20% of all new vehicles in Europe will be electric vehicles. For China this is estimated at about 25%, which is a good development because Europe is keeping pace with China. I think there’s a lot of investment happening in that space. This development translates into 7 to 10 million electric vehicles.
And if we fast-forward to 2030, that number grows to 25 million vehicles. When you consider both the traditional coatings that go on a vehicle and also consider the additional coatings content that an electric vehicle requires, I think this represents an exciting opportunity that is both good for the environment and helps enable e-mobility. So again, from a sustainability perspective all round, I think it’s good for the consumer.
On the other hand, I think the big challenge here is that a lot of economies in Europe, major economies, rely heavily on the automotive sector. Therefore, governments are paying more attention to providing appropriate funding and support at the large OEMs headquartered in those countries. I think it’s all about making electric vehicles, making them as scalable and affordable as normal mass-market car production.
Are there any further moves planned in Europe?
Johannsen: We just completed our latest acquisition of Arsonsisi’s powder coatings manufacturing business. The transaction will provide PPG with a highly automated, small- and large-batch capable, powder manufacturing plant in Verbania, Italy. We will also now have metallic bonding capabilities in the Europe, Middle East and Africa region. In 2021, the Arsonsisi powder business had sales of approximately EUR 14 million.
We are currently exploring where we will manufacture our battery fire protection technology, which is again geared towards electric vehicle capabilities. We have eyed Germany and France for this move. But we are always looking, whether it be automotive or other sectors, at investment or M&A. Our sales have increased through M&A by approximately 3% every year. We have completed six acquisitions over the past year very successfully. We will continue to lead the consolidation within the coatings industry.