The Coating Industry's Challenge for the New Millennium Malhotra,Girish, President EPCOT International, USA In the free economy each product and/or product line is under constant challenge of being replaced by a better technology or an environmentally-compliant lower cost product. In the last thirty years, environmental regulations have forced the development of environmentally friendly technologies and the coating industry has kept its pace with changes. Lately the industry is under significant pressure from environmental groups to achieve zero emissions. In a recent article it was written, " One of the biggest factors threatening profitability throughout the supply chain is the pressure being exerted on the manufacturers to develop paints that are environmentally friendly." This statement is a challenge to those associated with the coating industry. Along with the environmental pressure, the coating industry is under constant pressure from major customers to lower prices so they can raise their margins. Stiffer Regulations Environmental laws are going to get tighter and applied across the nation. Coating formulators as well as raw material suppliers will have to work together to develop technologies which will comply with the laws of the land. Since all coating producers will use similar technologies for their markets, none of them may have significant price advantages or disadvantages. Along with the environmental pressure, the coating industry is under constant pressure from major customers to lower prices so they can raise their margins. Investors are pressuring raw material suppliers to improve their earnings. This combination of environmental regulations, customer's and raw material supplier's need for higher margins is definitely forcing coatings producers to review their overall business. They are reducing internal costs to maximize profitability. This effort is consolidating the industry in the hopes of lowering raw material costs through volume purchases and economies of scale in sales, marketing and distribution costs. These efforts have improved coating producer's profitability but has brought on continued pressure from the customers and suppliers. Enhancing Profitability Coating industry can significantly improve its margins. It has one additional avenue to explore. If the industry can lower its manufacturing costs, it will have found a way to enhance its profitability. Coating industry from its inception has produced products one batch at a time. Such a process has its inefficiencies and limitations. These require added capital to balance its deficiencies. Batch processes result in higher inventories and supply chain management challenges. It also generates quality and customer complaint issues, which are added costs. It may be time now to adapt and explore other methods of producing coatings. Semi-continuous and continuous production methods have been developed and tried. The initial results are astounding. Adoption has been slow but is coming. Change is slow but change leads to growth and prosperity. These methods not only reduce emissions and waste during manufacturing, but also improve productivity, quality, distribution and cash flow. Bottom line, newer processing methods will improve profitability. The suppliers can also benefit if similar innovations are practiced. it is a win-win situation. The new millennium will bring these newer technologies to fruition. Modern Paint & Coatings, 60, October 1999 Close