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The goal is to be more competitive

Gunther Bock - Venezuela
Venezuela continues to watch the local paint market grow, however, the industry is preparing for a drop in demand in 2009 motivated by the phenomenon of the global financial crisis.

by Duván Chaverra A.

The paint market in Venezuela had an upward curve in 2008, and this is demonstrated by the figures that estimate an approximate consumption per year of two gallons per person, being one of the main in Latin America.

This was stated by our professional of the month, Gunther Bock, sales manager of the Sigma Coatings division at Couttenye & Co. S. A, who added that in that country the interest in this business sector continues to rise.

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"The paint market in Venezuela is large in almost all segments, given the size of its economy, and it has probably the highest consumption in Latin America at about two gallons per capita per year. The largest segment is occupied by economic wall paintings (type C, D and up to E), reflecting the volume and level of population in the country, "said the leader.

However, Bock believes that Venezuela has yet to develop the quality and productivity of its paintings, in order to be more competitive abroad. All this based on improving the level of essential knowledge about the industry and for that he has in mind an idea that he considers could be beneficial.

"As in many other countries, there is a marked deficit in knowledge of paint application and quality of labor, which makes it necessary to create an educational system or institute for contractors and painters. I think it is more urgent to try to improve the level of productivity and quality internally before thinking about becoming a paint exporting country," he explained.

Less polluting paints
Venezuela is also choosing to find good quality paints but with lower content of polluting substances. Therefore, industries have already made several modifications in production in order to meet the consumer.

Our professional of the month said in this regard that "customers and institutions are becoming aware of the use of less polluting paints, opting for the elimination of pigments based on heavy metals (chromates and lead) in anticorrosives. This change in oil paints and automotive refinishing in the colors yellow, orange, red and some greens that are still manufactured with lead chromates is still missing."

Marine and protective paints have also been handling similar concepts and modifying some chemicals to reduce contaminants. "The concept and use of high solid and 100% solvent-free paints is being implemented, as well as the replacement of pitches or tar free products," Bock said.

Regarding marine paints, this is the market with the lowest volume in the South American country and is therefore the smallest sector in sales and production, according to the executive of the company Couttenye & Co., S. A, "the smallest but no less important segment is that of marine paints, because Venezuela lacks a commercial merchant fleet and does not have a naval industry, nor shipyards according to its economy. The oil tankers of PDV Marina (a subsidiary of the state oil company PDVSA) are forced to go abroad to carry out their fairing work."

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Raw materials
Venezuela will have to adapt to the movements in the costs of raw materials, for now the fall in oil and mineral prices keep the balance at a midpoint, which shows that the market of that country will behave in the same way as the figures of these inputs do.

"I do not think there are many alternatives that the Venezuelan paint industry can have in the face of the increase in international prices of raw material in recent times, since everything that is produced in the country has a tendency to follow the international pattern, as it happens with the price of solvents," Bock said.

However, our professional of the month expects that country to be able to support the first part of the year with the provisions it currently has. "Venezuela is a country very dependent on imports of raw materials, it is estimated that companies have enough inventory of these for the first semester, then everything will depend on the approval of import permits and allocation of foreign currency, to know how this point will develop from then on."

2008 forced the halt of projects
Venezuela was not exempt from the appearance of the financial crisis that occurred since the last quarter of 2008, which for obvious reasons reduced its income, after living in 2007 one of the best years for the paint industry.

"2008 was somewhat lower in sales volumes compared to 2007, and it will be difficult to repeat it, since the Venezuelan State is the largest buyer and depends on oil revenues, now diminished by the greater world situation."

Most large projects, with some exceptions, are currently paralyzed as are maintenance projects, which have been diminished but not suspended.

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Another drawback that appeared the previous year in the nation bordering the Atlantic originated with the crisis experienced between the state company PDVSA and its contractors and suppliers, to whom according to our professional of the month, the oil company is not complying with the payments, which could lead to protests that would spread during this year.

"The problem at the moment is that PDVSA has not been canceling suppliers and contractors for several months, and therefore many of them have been forced to stop their work until they receive the pending payments. It is estimated that at this moment the oil industry owes them an amount close to US$6 billion."

It is important to note that in recent days the state oil company announced the start of a massive payment update plan.

Survive 2009
How much could the painting industry grow in 2009? To fail to mention the financial crisis would be to turn our backs on a problem that affects the entire economy to a large extent, so the goal for that country will depend largely on the movement of crude oil, which for now is not living its best times.

The sales manager of Couttenye & Co.S.A said in this regard that "the prospects for paint growth in Venezuela go hand in hand with the economy, so there has been a strengthening in recent years. In the same way, there are fears of a fall for the year 2009, a logical consequence of the price of oil that is at the lowest level, which did not happen for about three or four years ago. "

The paint industry in Venezuela, which has not yet felt the recession in a great way, has lower expectations due to the coming time: "The financial crisis will come into force in Venezuela in the first quarter, the indications show that the year 2009 is going to be very difficult due to the lower income from crude oil and the availability of the public sector. to make important investments and maintenance, especially in the oil industry."

Finally, the leader is optimistic that the tide will go down for the second half of 2009, when the industry may be able to think about investments again, but for the moment the plan is to postpone the projects: "The prospects are more limited than in previous years, because in Venezuela the public sector is the one that invests the most in infrastructure, I would say the only one, so those projects are postponed for a while until other better times arrive."


The veteran of paintings
Gunther Bock is a Colombian descendant of German parents who was born in 1939 in Manizales, a city located in the west of that country. He studied at the Andean College of Bogotá and took several chemistry courses at the Instituto Gran Colombiano.

He entered the paint industry because of the familiarity he had with one of the shareholders of the multinational company Sherwin Williams located in Colombia, where he was given the opportunity to exercise several jobs in production and in the research laboratory, there he had as bosses and professors superintendents from the United States and Mexico. He also did extensive training at the company's factories in Mexico, Chicago and Cleveland.

Then, in 1964, he served as laboratory director at Sherwin-Williams in Central America for a period of three years, then traveled to Peru, where he began operations of the same company in the city of Lima until 1976.

A year later he arrived in Venezuela, where he was initially working with Sherwin Williams, a company of the Chemical Group, now Venezolana de Pinturas that belongs to the multinational Compañía Global de Pinturas.

Since 1986 he has been part of the executive staff of the company Couttenye & Co.S.A., a firm belonging to the chemical sector, which was founded 50 years ago by who still remains its president, Mr. Rodolfo Couttenye.

"Couttenye & Co. S.A. is dedicated to the manufacture and distribution of glues and paints, being the market leader in glues and has an important and growing position in the paint sector with the Cromas brands for the architectural segment and Sigma Coatings in the field of protective and marine paints, field in which I have been dedicated as a sales manager."

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