U.S. paint industry growth modest through 2008; Certain sectors predicted to flourish.

While the U.S. paint industry is expected to grow modestly overall by 4.5% annually through 2008, the market for powder coatings and radiation-cured (UV/EB) paints is projected to increase at a rate above the industry average, according to the recently released Rauch Guide to the U.S. Paint Industry--Sixth Edition, published by Impact Marketing Consultants, Inc., Manchester Center, VT.

In current dollar amounts, the domestic consumption of all paint and coatings is expected to reach $20.1 billion in 2008, up from the $16.1 billion posted in 2003. During this time, unit volume is predicted to rise from 1.339 million gallons to 1.555 million gallons, an annual rate of 3%, indicates the report.

The driving force behind the growth of powder coatings and radiation cured paint and coatings are increasingly restrictive VOC legislation rulings. These products are becoming popular alternatives to traditional solventborne paints, as they produce minimal or no VOCs.

Powder coatings are forecasted to grow by 5% annually over the next five years. In 2003, the consumption amount, valued at $785 million, was 390 million pounds. For radiation-cured (UV/EB) paint and coatings, the growth rate varies depending on the application market. The current consumption amount for UV/EB coatings overall is 90 million pounds, valued at $350 million.

Of the three major market applications served by UV/EB coatings--architectural, OEM finishes, and special purpose coatings, which includes transportation and machinery finishes, road marking paint, marine finishes, and aerosols--architectural coatings is the largest segment at 47% of the industry total. Consumption of architectural coatings, which closely follows the building industry, is projected to grow by 3% annually through 2008. OEM finishes, representing 33% of sales, is forecasted to increase by 5% annually. The special purpose coatings category is expected to grow at a sales rate of 2.7% annually and 4% in units consumed through 2008. The growth of this category is muted because the leading application sector, transportation, is requiring less paint usage during refinishing due to the increased use of basecoat/clearcoat systems in new automobile production.

The report also discusses mergers and acquisitions, as consolidation activity continues in the industry. Of the 40 leading suppliers circa 1990, 13 have since been acquired or have merged. However, mergers and acquisitions have actually leveled off substantially since the 1980s. During that decade, 20-30 occurred annually, but that figure has been declining in recent years. Since 2000, the annual average is 11. All domestic mergers and acquisitions undertaken since 1995 are listed in the guide.

The Rauch Guide to the U.S. Paint Industry--Sixth Edition is available by calling 802.362.2325 or visiting www.impactmarket.com.