2009 was difficult, 2010 looks better

By Santiago Jaramillo H.

Leaving behind the not encouraging balances of 2009 is vox pópuli among the entrepreneurs of the companies of the paints and coatings sector in Latin American territory, it is also clear that despite the bad taste in the mouth caused by the global economic crisis, the main factor to throw the negative figures, the behavior of the market in 2010 can be, to a large extent, lifeline for the recovery of lost ground.

In order to better outline this situation, we invited some representatives of the Latin American industry in this first edition of 2010 of INPRA LATINA magazine to give us a balance of what 2009 was and, at the same time, tell us about the prospects they have for the year that is just beginning.

One of these guests is Gerardo Gurrola Togasi, director of Research and Development of the Mexican company Sherwin Williams S. A. de C. V., who when asked about the balance that threw the year 2009 in the paints and coatings industry in his country, said that "it is not known exactly how much was the comparative reduction against 2008, as a company we did not do so badly, but it is estimated that the market decreased by at least 15%, according to the National Association of Manufacturers of Paints and Inks to which I belong, "he said.

Meanwhile, when touching on the issue of which of the markets that companies serve suffered the most with the global economic crisis, Gurrola said that "we are divided into three segments: architectural, industrial and automotive, the latter let's say that it was maintained, since there was no decrease in it greater than 3 or 4%, but in industrial we had sharp falls due to the closure of many maquiladoras. These falls have a lot to do with which sector of the industrial segment it is, for example the OEM, which paints pipes and some other things, fell by up to 30% in some sectors. Already in what has to do with the architectural, it was less affected, not by the repainting, but by the construction of new homes. The repainting as such, that is, the one given to his house by the housewife or the father of the family, fell more than 30%, but for the benefit of the segment many new houses were built at least here in Mexico and that leveled a little the fall of the architectural sector that in total reached almost 8%".

Dilson Ferreira, Executive President of the Association of Paint Manufacturers of Brazil, Abrafati, said that "it was a very strong crisis, it reached us at the end of 2008 and began its recovery in the second quarter of 2009. Gradually the lost was recovered so that when we reached the last months the figures of the previous year were reached."

At the same time, the representative of the Brazilian industry said that "sales in 2009 fell quite a bit in the first part of the year, but recovered in the second part. The fall reached a figure close to 16% when it reached the month of March," he said.

For his part, Juan Carlos Velásquez, Manager of the Maintenance and Marine Line of the Global Paint Company Pintuco, said that "the balance in the industrial maintenance line is good. It was a difficult year, but we managed to maintain our leadership position, at the same time, we managed to start the implementation of the International Paint line in Colombia. It was a difficult year because of the contraction of world markets and because in general the industry fell in its production and investments. For example, on the subject of investments in large warehouses, the fall of a growth that was had of a lot of warehouse construction was felt. The only sector that did maintain its investments was the oil company for everything that Ecopetrol (Colombian state company) and its associates injected into the market, although somehow it was felt to have some delays with the Cartagena refinery. "

Likewise, Velásquez added when referring to the difference in sales with respect to 2008 that "the contraction of the industrial market, dust and maintenance was more or less 10% and our sales were similar to how the market behaved," he stressed.

Rafael Díaz, general manager of H.B. Fuller's paint business in Central America, commented that another point that considerably influenced the behavior of the market in 2009 was the price of energy "which is an item that has gone out of control, even beyond any expectation. We also saw with some concern the increase in the price of some raw materials, "said this representative of the Central American industry, who also said that the impact on sales of his company was between 10 and 12% compared to 2008, but clarified that some countries of those they serve were more affected than others, even many grew up despite the crisis.

The Director of Research and Development of the company Sherwin Williams estimates that in 2010 there will be a very small improvement, but that it is still not enough to compensate for the damages caused by the crisis of 2008 and 2009, "it will be very small, we will not reach the levels of 2007, we believe that until 2012 we will have a time of bonanza and good economic dividends. In the years to come, I believe that 2010 will be a year to survive with very small growth, 2011 with a slightly higher improvement, but we still will not compensate for the losses until before 2012."

Meanwhile, Miguel Naveira, commercial manager of Akzo Nobel Argentina, sees the fact of reaching other markets in the continent as a good business alternative: "Although we have representation in Brazil with the Coral brand, in Uruguay with the Inca brand and in Argentina with Cetol, where we are leaders; we are currently also entering Bolivia and Paraguay, so we can affirm that we have an important presence in the Latin American market, which will surely enable better future prospects for our company".

Environment, a matter of care
When it comes to balance sheets, the issue of environmental care cannot be left aside, precisely in recent years the paints and coatings industry has significantly increased its work on the subject, despite the fact that in many Latin American countries there are huge gaps in terms of legislation. However, towards this particular, as our guests recognize, the efforts of a considerable percentage of the companies in the sector are focused.

Gerardo Gurrola, said that in his country, Mexico, "there are no official initiatives, there is no scenario where the Government requests to reduce emissions or some polluting chemicals", however he pondered that "from the National Association of Manufacturers of Paints and Inks we are advancing an initiative called Coatings Care, which not only aims to reduce vapor emissions, but it is against the use of non-phenolated derivatives that do not pollute the air, but the land and water, but not all companies are affiliated with the Association and not all associates have committed to continue with the Coatings Care project. To say the least, the 15 largest manufacturers, which probably account for 70% of total production, are committed, and we have a period of two years, i.e. 2010 and 2011, to make modifications to our formulations so that they are in line with the trend called Coatings Care."

In the same sense was the opinion of Edison Acosta representative of the Ecuadorian company Pinturas Cóndor, who said that "in some companies what is being done is an adaptation scheme with reference to restrictions that come from Europe or North America and focused mainly on the reduction of VOC and promotion of the elimination of raw materials that in other countries have been discontinued due to environmental situations".

In the same sense, he stressed that "it is important to emphasize that the changes have to be aligned with state policies and with the commitment of paint manufacturers who are ultimately responsible for marketing products that minimize the environmental impact."

In summary, it is evident that most of the companies belonging to the industry in Latin America are united and work towards the same objective, to ascend more and more steps towards the consolidation of a modern industry, which thinks about the environment and, above all, that contributes to the economic and business development of the area.