Cure your headache

The easiest way to overcome the problem, which affects the competitiveness of the entire chain, is to transfer 100% of the increases in chemical inputs to the formulators. However, not all markets resist this measure because it is clear that if the formulator does the same, very possibly the end customer does not buy your product.

One of the options applied by resin producers is to gradually pass on the higher costs. The other is to assume part of those higher values at the expense of their profit margins so as not to lose customers. According to Bernardo Naranjo of the Colombian resin producer, Colorquímica, the solution to this problem would have two alternatives. The first is to look for new suppliers of chemical inputs, which thanks to globalization, can be found in any country in the world,  and the second is to develop new products with more added value for formulators that in the long run have a positive impact on the quality and performance of their coatings.

From the point of view of the formulation, there are other alternatives: migration to other niches that consume coatings with greater added value, greater water-based formulations,  increase in the amount of solids or substitution of raw materials.

The option for this structural problem of the industry is not short-term. Here you have to have a vision of the future in the face of the needs of the market. In other words, chemical input supplier and formulator must work as a team to pursue economies of scale and identify how to best meet the needs of their customers. This is because the scheme of competing only with   low prices, comes to the floor with each increase in oil prices because those who compete like this, only find in the reduction of the quality of their formulations the way out for their profitability problems.

The solution is not in a pill that soothes the pain today, but does not cure tomorrow a disease that can end the health of your company.