Hello and welcome to your early week international coatings industry update, brought to you by SpecialChem. In industry news since last issue, AkzoNobel revealed its plan to split off specialty chemicals operations and PPG responded with a statement of its own. BASF received a 2016 GM Supplier of the Year Award and Dow won an Edison Award for its Canvera can coating. There’s much more where we continue and as always, you can go to the above items now using the links, or checkout our latest stories, which we’ll get to right away…
New Ceramic Coatings to Reduce Glass Reflection
Glass reflection is the source of many problems and frustrations, but a professor at the University of North Texas has discovered a solution. Diana Berman, a materials science professor in the College of Engineering, has created a simple coating with the potential to have a major impact and her work has just been published in the online journal ACS Nano. “This could help the everyday person in many ways,” said Berman. “For example, when you look at your cellphone outside, it’s hard to read because of the light reflection. This could change that. It could also help when you’re driving. Think of how the sun’s glare on your car windshield can make visibility difficult at certain times of the day. This could help lessen that. It could even help with the glasses you wear.” Berman works on this research in partnership with Argonne National Laboratory. She said they started out the project with a goal of helping make solar panels work better.
Axalta’s Training Centre to Focus on WB Auto Coatings Development
Axalta has launched the first of its kind Automotive Refinish Training Centre in Dubai, United Arab Emirates. The Centre will provide expert training in the use of Axalta products that are designed for the repainting of vehicles in body shops. The opening of the next generation facility follows the October 2016 opening of Axalta’s regional office in Dubai’s Jebel Ali Free Zone Authority (JAFZA). It is Axalta’s 47th such center in the world. The center will host world class training programs for body shop, repair and refinish technicians to hone their skills and learn to use the latest coating technologies found in Axalta’s refinish coating brands, and other refinish brands which are available in eighteen countries in the Middle East & North Africa (MENA) region. “We are excited to be able to expand our presence in Dubai and the region over such a short time span,” said Charlie Shaver, Chairman and CEO of Axalta, who formally inaugurated the new facility.
Milliken Acquires Keystone Aniline, a Pigments Manufacturer
Milliken Chemical has recently acquired Keystone Aniline Corporation. The acquisition will benefit manufacturers of agricultural, plastic, coating, ink and household institutional and industrial products that require innovative colorants. Milliken can now provide broad portfolio of solutions that include a broader array of advanced colorant solutions, technologies and services, a streamlined supply chain due to availability of a wider range of products from a single source and enhanced reliability of global supply. The deal brings together two world-class organizations with complementary expertise and capabilities, shared values and a long, successful history in the colorants industry. Milliken’s Performance Colorants & Ingredients business is one of the leading suppliers of polymeric colorants and is renowned for its innovative chemistry and the ability to synthesize new molecules and Keystone, one of the leaders in dyes, pigments, pigment dispersions and polymers, brings to the equation exceptional formulation skills and application development technology.
On your Coatings Radar: The AkzoNobel Plan to Remake Itself, and PPG’s Reaction
The past week has seen a few changes in the “non-negotiations” between PPG and AkzoNobel. Primary was Akzo’s revelation of their plan to split off their specialty chemicals business. Both companies also posted better than expected first quarter financial results. A response to AkzoNobel’s plan was tendered almost immediately, with the upshot being no real movement by either party in either direction.
First, both companies posted first-quarter financials at the end of last week which were much better that even financial analysts expected. PPG Industries logged adjusted earnings of $1.35 per share for the quarter, up 6.3% year over year. Revenues of $3,569 million, up 0.7% year over year and sales volume grow year over year in the quarter. AkzoNobel’s EBIT was up 13 percent at 376 million euros (about $403 million)—up from 334 million euros in the same period in 2016. Revenue was up in all areas of business and 7 percent overall, due to higher volumes and acquisitions, according to the company. Sales were up 4% driven by decorative paints and specialty chemicals. So both companies are seeing relative good times.
On April 19th, AkzoNobel proposed to break itself up by parsing out its specialty chemicals division within 12 months and returning 1.6 billion euros ($1.7 billion) to shareholders. Akzo Nobel’s payout for this year will include a 1 billion-euro special dividend as well as a 50 percent rise in the regular one.
PPG responded by saying that the proposal would create more uncertainty for stakeholders because it would create two “smaller, unproven companies and result in additional restructuring.”
Still trying to encourage communication between the two companies, Akzo shareholder Elliott Advisors predictably came down on the side of PPG, saying that the certainty of the PPG’s bid outweighs risks that Akzo won’t be able to meet its proposed targets.
Both parties are ratcheting up the hostility, with PPG CEO McGarry this week taking the step of appealing directly to Akzo Nobel shareholders with his vision of the deal. PPG said that its plan would create more value as it provides an immediate cash payout far in excess of AkzoNobel’s special dividend and is bolstered by PPG shares.
On the proposed chemicals separation, there are a few things to note. AkzoNobel said it will run a dual-track process for the separation of the specialty chemicals business, considering both a listed entity and an outright sale. AkzoNobel also outlined 150 million euros in annual cost savings and an extra 50 million euros in savings from the proposed carve out.
Akzo CEO Büchner said that separation of specialty chemicals will unlock that value and allow easier comparisons with peers, adding the division won’t be sold in separate parts. He also said Akzo Nobel’s new plan might allow for smaller bolt-on acquisitions, although bigger deals would be excluded in the short term.
As mentioned, we have both companies’ statements later in this newsletter for your perusal. I don’t know about you fair readers, but I’m getting a very strange feeling of déjà vu about much of this recent news, but that’s another Radar – maybe Thursday.
BASF Named a General Motors Supplier of the Year for Twelfth Time
BASF was named a 2016 General Motors (GM) Supplier of the Year for the twelfth time since 2002.
The award winners were chosen by a global team of GM purchasing, engineering, quality, manufacturing, and logistics executives. Winners were selected based on performance criteria in product purchasing, indirect purchasing, logistics, customer care and aftersales. With its broad array of color solutions and modern paint processes, BASF’s Coatings division helps GM improve productivity and environmental performance.
“We are focused on building positive supplier relationships, bringing new, customer-centric innovations to GM and being the OEM of choice among suppliers,” said Steve Kiefer, GM vice president, Global Purchasing and Supply Chain. “The companies we recognize not only have brought innovation, they delivered it with the quality our customers deserve.”
"BASF’s relationship with GM demonstrates the importance of cultivating partnerships to drive innovation,” said Teressa Szelest, President, Market and Business Development North America at BASF. "There is a creative space that lies between a materials provider and a car manufacturer, and BASF looks to fill that with cutting-edge products and solutions."
Ms. Szelest accepted the award on behalf of BASF at the 25th annual awards ceremony in Orlando, Florida on March 31.
Axalta Delivers Lecture on Sustainable Coatings at Universitas Indonesia
Axalta Coating Systems, one of the leading global suppliers of liquid and powder coatings, has recently presented a campus talk at Universitas Indonesia, one of the leading universities in Indonesia.
University speaking platforms provide a way for Axalta’s executives to share industry expertise with students and faculty in the science, technology, engineering and math (STEM) disciplines. Ms. Dewi Djanuwati, Managing Director of Axalta Coating Systems in Indonesia, discussed the importance of sustainability and how it has shaped the development of Axalta’s high-performance coating solutions.
Attended by a group of enthusiastic students and faculty members from the Department of Metallurgy & Materials Engineering, the event was designed to build awareness about sustainability goals in the coatings industry. Special emphasis was given on the reduction of volatile organic compounds (VOCs) emissions which has been linked to improved air quality.
“Sustainability is central to Axalta’s business and an important consideration in the on-going growth of our markets such as Indonesia. As a responsible corporate citizen, we are committed to promoting awareness about sustainability, especially to students who will become our industry’s stakeholders in the future,” said Ms. Djanuwati.
Ms. Djanuwati spoke about Axalta’s commitment to the development of environmentally responsible coatings that are designed to serve the sustainability goals of its customers. Axalta’s high performance coatings not only help customers’ products to last longer, but they also enable customer operations to run more efficiently, providing ways to save energy, reduce waste, and be more productive.
Axalta has also formulated customized low VOC liquid and virtually zero VOC powder coating products to meet specific customer needs for durability, weathering, abrasion, chemical or corrosion resistance, and excellent finish in a wide range of colors and textures.
“We encourage our students to learn from practitioners to enrich their understanding, and to build the connection between what they learn in the classroom and the reality of the industry. Today’s presentation enlightens us about the latest technology in the coating industry and how Axalta contributes to sustainable coating solutions,” said Dr. Mochamad Chalid, Msc.Eng, Polymer (Product) Technology - Department of Metallurgy & Materials Engineering, Universitas Indonesia.
AkzoNobel Unveils Strategy to Split Units
AkzoNobel today outlines a new strategy to accelerate growth and value creation with two focused, high-performing businesses – Paints and Coatings and Specialty Chemicals – which will lead to a step change in value creation for shareholders and all stakeholders.
The logical next phase of creating two separate companies builds on the strong financial and operational foundation developed in recent years. It will generate superior, faster and more certain value creation than the alternatives and with substantially fewer risks, uncertainties and social costs.
Strategy: create two focused businesses
Separation of Specialty Chemicals to take place within 12 months, project teams in place, Dual-track process with active consideration of a separate listed entity or sale. Focused Paints and Coatings business, with fit-for-purpose structure and processes
Accelerating sustainable growth and profitability-
€150 million annual savings resulting from ongoing continuous improvement programs in Paints and Coatings, Additional €50 million expected cost savings related to the separation of Specialty Chemicals, Continued commitment to sustainability with ambition to use 100% renewable energy and be carbon neutral by 2050, Investment of €1 billion in research and development by 2020 to maintain focus on innovation and new product development
Enhanced financial guidance
2017 EBIT to be around €100 million ahead of 2016 due to significant growth momentum across all Business Areas, Increased 2020 guidance: Paints and Coatings 15% ROS, ROI >25%; Specialty Chemicals 16% ROS, ROI >20%, reflecting continued growth in profitability equivalent to AkzoNobel’s current portfolio of 14% ROS and >20% ROI
Increased shareholder returns-
50% increase to the regular dividend per share to €2.50 per share, reinforcing confidence in the future plan to further drive growth and profitability, Vast majority of net proceeds from the separation of Specialty Chemicals to be returned to shareholders, €1 billion special dividend to be paid in November reflecting confidence in the planned separation, AkzoNobel also reported a record financial performance with its first quarter 2017 results today, which are available in a separate release.
Ton Büchner, CEO of AkzoNobel, said: “Our commitment to substantial shareholder returns reinforces our belief that the plan we are outlining today will create a step change in value creation, generating significant shareholder value in the short, medium and long term. It will be delivered at pace, with a clear timeline and is in the best interest of all stakeholders.
“During recent years, we have consistently delivered on our commitments to improve profitability and growth, while building momentum within our Company. We have world class teams and a solid financial and operational foundation.
“The industry-leading performance and outlook of our Specialty Chemicals business gives us the confidence to return proceeds to shareholders in advance of the separation. In addition, we see extensive growth momentum in our Paints and Coatings business, which we expect to keep growing faster than market rates, allowing us to improve our long-term financial guidance.
“Now is the right time to create two focused, high-performing businesses. This strategy will create substantial value for shareholders with significant less risks and uncertainties compared to alternatives.
“We believe our long-term focus in sustainability creates value for all stakeholders, including our shareholders, customers and employees. We continue to lead the industry with our ambition to being carbon neutral and using 100% renewable energy by 2050.
“Our ongoing commitment to invest around €1 billion in research and development by 2020 will create innovative products and services, as well as making a positive contribution to the communities in which we operate.
“We have laid out a new plan today with clear, ambitious goals. With the support of our colleagues across the world and building on our incredible brands, we will create two leading, customer focused businesses which will deliver enhanced value for all our stakeholders.”
Antony Burgmans, Chairman of the AkzoNobel Supervisory Board, said: “The Supervisory Board believes that management’s plan for AkzoNobel’s future will deliver superior shareholder value compared to the alternatives.
“It will be delivered by a competent, experienced management team with a proven track record at a faster pace, with considerably less risk and at significantly lower social cost.
“The plan will enable AkzoNobel to thrive both to the benefit of our shareholders and the communities worldwide in which we operate.”
PPG Issues Statement
On April 19, 2017, PPG issued the following statement in connection with its proposal to AkzoNobel to form a combined company:
PPG has listened carefully to AkzoNobel's new strategic plan, and we continue to believe in the merits of combining the two companies. PPG believes that AkzoNobel’s new strategic plan will be more risky and create more uncertainty for AkzoNobel stakeholders including employees and pensioners, as Akzo's revised strategy would create two smaller, unproven companies and result in additional restructuring.
PPG has a proven, demonstrated record of executing on strategic actions and driving performance and growth, and we continue to believe that a combination of PPG and AkzoNobel is in the best interest of all stakeholders. The combined company will be much better positioned to take advantage of the opportunities in our markets and deliver superior shareholder returns.
PPG’s proposal would create more value, as it provides an immediate cash payout far in excess of AkzoNobel’s special dividend and is supplemented with PPG shares. PPG has a proven track record of delivering superior shareholder returns over the last 5-year and 10-year periods, and we believe past performance remains the best predictor of future performance.
By listening to our shareholders and delivering innovative products that enable our customers to be more successful, PPG has consistently delivered value in excess of the S&P 500 average. We have not heard anything today that changes our belief in the value of combining the two companies, and now is the time for a complete review and full consideration of our compelling offer to combine PPG and AkzoNobel. We will be stronger together.
Axalta Introduces Next Generation Automotive Suspension Coil Spring Coatings
Axalta Coating Systems introduced what they describe as the next generation in coil spring coatings. Alesta® Spring Black is a new hybrid epoxy powder coating that provides flexibility and mechanical resistance as well as superior corrosion resistance.
“Axalta is excited to bring this new coating technology to our coil spring customer base,” said Craig Dietz, Axalta Product Manager. “These products provide Axalta the opportunity to serve a market that has growing performance needs.”
Complete with enhanced corrosion, impact and stone chip resistance, Spring Black is formulated to allow a vehicle’s coil suspension system to adapt to changing road conditions while supporting the weight of the vehicle. The product technology enables the coil suspension system to perform without compromising the integrity of the coating, which is designed as a one layer system. A high build in the coating’s thickness results in an excellent appearance.
Spring Black has a low curing temperature (150°C/302°F metal) which puts less thermal stress on the spring and reduces energy cost. Spring Black covers more surface area faster due to high transfer efficiency saving up to 20% in powder consumption per square meter.
Dow Earns Two 2017 Edison Awards for Breakthrough Technologies
Two innovative products from The Dow Chemical Company recently received 2017 Edison Awards. The Edison Awards honor excellence in new product and service development, marketing, human-centered design, and innovation. A silver Edison Award went to Dow’s ACCUTRACE™ S10 Molecular Fuel Marker used to combat fuel tax evasion. Dow’s CANVERA™ Polyolefin Dispersions for metal can coating received a bronze award.
“With a seat at our customers’ design table, we continue to bring forward breakthrough innovations that solve complex problems and serve the market,” said A.N. Sreeram, senior vice president, R&D, and chief technology officer for Dow. “Edison was a prolific inventor whose success is linked in part to his business sense and understanding of societal needs. For Dow, we continue to see the greatest success in delivering products that are meeting customer needs and solving the world’s most pressing challenges. We are grateful for this recognition of our market-disrupting products.”
Selected from hundreds of finalists, the winners were announced on April 20 at the Edison Awards Gala in New York City. Learn more about these award-winning technologies below.
Dow CANVERA™ Polyolefin Dispersions provides progressive food and beverage brand owners with a can coating made from polyethylene resins, replacing epoxy coating systems using BPA, bisphenols, epoxies and other materials of concern to consumers and regulators. CANVERA™ uses Dow’s proprietary and patented BLUEWAVE™ dispersion technology to create an aqueous polyolefin dispersion, applied directly to the interior metal surface of cans using the same equipment as current epoxy coatings. CANVERA™ makes a very thin, protective, thermoplastic lining with excellent food and flavor retention, adhesion, corrosion protection, and film flexibility. CANVERA™ polyolefin dispersions utilize the existing can-making infrastructure, facilitating world-wide adoption.
“Dow Coating Materials has been working on this progressive technology for several years, and it is really exciting to finally see it being adopted by the market place,” said Neil Carr, business president, Dow Coating Materials, Performance Monomers and Plastic Additives. “CANVERA™ Polyolefin Dispersions offer a genuine breakthrough in can coatings, and are a great testimony of our business’s ability to deliver science-based, sustainable solutions that aim to improve people’s lives.”
Arkema Starts New Kynar® Fluoropolymer Production Capacities in China
Arkema has just successfully brought on stream new Kynar® PVDF capacities on its Changshu platform near Shanghai. With this 25% increase in its production capacities in China, Arkema, which runs PVDF production plants on 3 continents (Europe, North America and Asia), has consolidated its world leading position in PVDF.
This new investment in Kynar® fluoropolymers supports Arkema’s ambition in Technical Polymers and its growth strategy for the High Performance Materials segment. It will enable the Group to continue sustaining its customers’ growth in Asia, in particular in the new energies (batteries and photovoltaics) and water management markets, as well as in more traditional applications like construction coatings and the chemical process industry.
Arkema’s PVDF plant in Changshu has undergone a significant expansion since its start-up in 2011. Following a 50% capacity increase in 2012 and this new 25% increase, the plant is sized to meet further growth in the region. Moreover it has shown a remarkable operating performance in terms of both reliability and quality for several years.
Exelon Generation Supports MIT Research on Advanced Nuclear Fuel Cladding Coatings
Assistant professor of nuclear science and engineering Michael Short and collaborators — professors Bilge Yildiz, Matteo Bucci, and Evelyn Wang, as well as the MIT Nuclear Reactor Laboratory and the Westinghouse Electric Company — have received funding from Exelon Generation to support research which could transform the performance of the fuel cladding in light water reactors (LWRs).
Four known issues can impact the safe and reliable operation of LWR fuel cladding. They include fretting and wear from grid-to-rod-fretting and foreign material; the buildup of porous corrosion deposits; hydrogen absorption; and boiling crisis. Fretting can wear through the fuel cladding, while deposits and hydrogen absorption can lead to corrosion-based fuel failure, respectively. Finally, a “boiling crisis” is when the normally bubbly mode of coolant boiling, called sub-cooled nucleate boiling, transitions to film boiling, insulating the fuel with a layer of steam and worsening heat transfer.
All four issues can and have caused failure of fuel cladding, leading to radioactive releases into the coolant and costing reactor operators over $1 million per day of downtime to fix the problem. The goal of the MIT project is to address all four issues at once by developing a viable solution, consisting of engineered cladding surface coatings and micro/nano geometric modifications to reduce or eliminate all four problems, within three years. The team will design a set of coatings and surface modifications for Zircaloy-based fuel cladding currently in use. The combination will simultaneously:
Minimize or prevent buildup of unidentified deposits and hydrogen pickup, which in turn will increase the lifetime, stability, and power density of the fuel;
Improve hardness to prevent grid-to-rod fretting, which occurs when the spacer grid (a metal piece which separates the fuel rods) and the rods themselves vibrate and wear holes into the metal; and
Maximize critical heat flux (critical heat flux describes the thermal limit of a phenomenon where a phase change occurs during heating) to improve hear transfer.
This targeted three-year development time from lab-scale tests to commercial reactor implementation is unprecedented. The normal process for most new reactor components is between 10 and 15 years.
The MIT team will work with fuel vendor Westinghouse Electric Company and the nation’s largest nuclear operator Exelon Generation to test and identify the best coating for commercialization and use in a commercial U.S. reactor by 2019. The project brings together MIT researchers from the departments of Nuclear Science and Engineering, Materials Science and Engineering, Mechanical Engineering, and the MIT Nuclear Reactor Lab.
The funding will support research in the Center for Advanced Nuclear Energy Systems, one of the MIT Energy Initiative’s eight Low-Carbon Energy Centers, which Exelon joined as a member in 2016 to advance key enabling technologies for addressing climate change.
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