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Valspar Q3 Earnings Up, BASF Releases Auto Color Study, PPG Celebrates 50 Years of E-Coat

Mark Drukenbrod – Aug 15, 2013

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In financial results, Valspar's third-quarter earnings rose 8.6% as the paint and coatings maker reported sales growth led by its paint business. For the period ended July 26, Valspar reported a profit of $93.8 million, up from $86.4 million a year earlier. Excluding restructuring and acquisition-related impacts, adjusted earnings were up at $1.07 from 97 cents. Revenue increased 1% to $1.1 billion. Gross margin rose to 33.9% from 33.8%. Net sales in the paints segment increased 3% to $455 million in the quarter, driven by strength in U.S. and China. Net sales in the coatings segment increased 1% to $573 million, while earnings were up 3% thanks to stronger volume and margins.

"We continue to drive strong volume growth from our new business initiatives in the consumer paint, packaging and wood product lines," Chairman and CEO Gary Hendrickson said. "However, sales and earnings finished slightly below our expectations for the quarter due to continued macro-economic headwinds in key general industrial market segments and certain international regions."

BASF has unveiled its annual automotive color trend report, which looks 2-3 years out, based on research efforts by its team of global color design experts. The theme of the forecast, "Making Headway" indicates a movement towards more color shades than in previous years. In North America, cool deep and dark tone colors such as blue and brown have been refreshed from their traditional state by changes in depth and brightness. Special effect technologies, which give colors a three-dimensional quality, and matte finishes, offer a wider range of options.

In the Asia Pacific region, neutral colors such as black, silver, gray and white will continue to dominate, but as original design and personal style becomes more important to buyers, BASF predicts there will be a gradual emergence of sophisticated intermediate colors, such as olive-greens and bluish grays. In Europe, BASF sees a balance between creative, courageous colors such as red and green and calmer, neutral colors such as black and gray.

PPG Industries recently celebrated the 50th anniversary of its electrocoat systems at its China headquarters in Shanghai. It is worth knowing that PPG was the first company to introduce electrocoating technology commercially in an automotive OEM assembly plant - Ford's Wixom, Michigan in 1963. Since then, according to the company, PPG has been dedicated to constantly improving electrocoat performance by developing and introducing innovations such as cationic electrocoat technology, cathodic epoxy electrocoat and lead-free, low-VOC (volatile organic compound), high-throw electrocoat.

"Innovation is one key to PPG's leading position in the coatings industry, and electrocoat is a great example of our robust innovative strength," said Vincent Robin, PPG VP, automotive coatings, Asia Pacific. "In addition to continuing to improve electrocoating systems, PPG is committed to developing more state-of-the-art coatings products and techniques to help our auto industry customers - and their customers - save energy and reduce emissions."

In our weekly update of the California lead pigment and paint public nuisance litigation, health officials from Solano, Monterey and Alameda counties on Monday testified about the hazards lead paint poses in their jurisdictions and the need for abatement programs.

"There's no safe level, so any detectable level constitutes lead poisoning, children's IQ impairment, impairment of memory, difficulty with problem solving, inattentiveness, etcetera," said epidemiologist Bela Matyas, director of Public Health for Solano County and the plaintiff's final expert witness in the "public nuisance" bench trial now going into its fifth week in Judge James P. Kleinberg's court.

Defendants, who have argued that the case lacks merit, will present their side this week, including a motion for summary judgment expected to be filed Tuesday by ARCO and Sherwin Williams.

Plaintiffs will have until Wednesday to respond to the motion for summary judgment. Depending on Kleinberg's decision, the trial could resume Thursday.

In the end, not only will Kleinberg rule on the public nuisance claim, if he agrees with plaintiffs, he will establish the cost and parameters of the abatement program for the 10 cities and counties bringing suit.

Plaintiffs' witnesses have testified that lead paint is the most common cause of lead exposure, except in Seaside, located in Monterey County, where a large concentration of lead poisoning in a Latino community is said to be caused by candy and imported foods from the Oaxacan region in Mexico. Families in this community eat imported candy and chapulines, dried grasshoppers, according to court testimony.

Referring to Monterey County's own documents, Mittelstaedt argued that Monterey County only had one reported house with lead paint dust or lead laden soil. He displayed county records from 2000 to 2008 and showed a chart his defense team devised, breaking down results over eight years.

"There were 297 environmental investigations since 2000 and only 27 were lead paint or paint dust or soil hazards," he said.

Going through the various cases of lead poisoning, Mittelstaedt read the documented causes: "Mexican candy; next one says Mexican candy; next one says Mexican candy; next one says unknown, next one is due to Mexican candy; next two are false positives; next two are due to Mexican candy," he said.

During redirect, Monterey County health official Anne Reeves testified the high rates of Mexican candy cases were due to a public health doctor's focus on the community of Seaside, where a large community of Oaxacan immigrants lived and had high cases of lead poisoning due to eating imported food from Oaxaca. Some cases of childhood lead poisoning were prenatal. Reeves said that the community was an anomaly and didn't reflect the census of Monterey County.

Plaintiffs' witnesses also testified that lead paint is a serious problem in homes in their jurisdictions: an estimated 174,000 in Oakland; 80,000 to 90,000 in Monterey County; 75,000 to 80,000 in Solano County; and more than 100,000 in Alameda County were built before 1978, when lead based paint was banned, and therefore pose a high risk of contamination and exposure to children.

Loyd Ware, program manager for the city of Oakland's Housing and Community Development Department, took the stand to testify about the difficulties of lead paint abatement with current resources. Ware, who has worked for the city for 25 years doing housing rehabilitation, including lead paint abatement, estimated that 80-90 percent of Oakland's housing stock was built before 1978.

He called the 800 homes his office has rehabilitated from lead paint since 1999 the "tip of the iceberg."

"800 houses and there's 174,000", Ware said. "That's the pin point on the needle you find in a hay stack."

To demonstrate the extent of exposure children are subjected to in inadequately maintained homes, lead trial counsel Mary Alexander presented a series of photographs documenting a dilapidated house in Oakland.

The photographs Alexander entered into evidence showed a house with visibly peeling paint on the exterior, peeling paint on a garage door, deteriorating paint on window trim, peeling paint on a car cover and an interior, dented wall that showed a substrata of lead paint under a newer gloss coating of paint.

Mittelstaedt objected to Ware's testimony.

"The resources of this entity to be able to abate should not be an issue in this case," he argued.

Judge Kleinberg overruled.

It is worth mentioning that early in the trial, Kleinberg urged both parties to "settle" the case without a protracted trial.

"If you're interested in gambling go to Reno and Las Vegas," he said. "If you are interested in being intelligent you'll have to settle this case now. This is not Rhode Island and is not Milwaukee, go back and reread the 6th District's opinion again."

That sure sounded like a shot over the industry's bow to me - it will be interesting to see how this one plays out.

In research news, for a long time, scientists have been fascinated by the dramatic changes in color used by marine creatures like squid and octopus, but they never quite understood the mechanism responsible for this. Only recently have they found out that a neurotransmitter, acetylcholine, sets in motion a cascade of events that culminate in the addition of phosphate groups to a family of unique proteins called reflectins. This process allows the proteins to condense, driving the animal's color-changing process. The latest findings revealed that there is a nanoscale mechanism behind cephalopods' ability to change color.

Having begun to unravel the natural mechanisms behind these amazing abilities, researchers are trying to use this knowledge to make artificial camouflage coatings. New work from the lab of Alon A. Gorodetsky, Assistant Professor at the Henry Samueli School of Engineering at the University of California, Irvine, addresses the challenge of making something appear and disappear when visualized with standard infrared detection equipment.

In a paper in the July 30, 2013, online edition of Advanced Materials ("Reconfigurable Infrared Camouflage Coatings from a Cephalopod Protein"), the team demonstrated graphene-templated, biomimetic camouflage coatings that possess several important advantages.

"We used reflectin, a protein that is important for cephalopod structural coloration, as a functional optical material," Gorodetsky explained. "We fabricated thin films from this protein, whose reflectance - and coloration - could be dynamically tuned over a range of over 600 nm and even into the infrared (in the presence of an appropriate stimulus).

Our approach is environmentally friendly and compatible with a wide range of surfaces, potentially allowing many simple objects to acquire camouflage capabilities."

The novelty of these findings lies in the functionality of the team's thin-films within the infrared region of the electromagnetic spectrum, roughly 700nm to 1200nm, which matches the standard imaging range of infrared visualization equipment. This region is not commonly accessible to biologically derived materials.

Gorodetsky notes that reflectin's tunable optical properties compare favorably to those of artificial polymeric materials. "Given these advantages, our dynamically tunable, infrared-reflective films represent a crucial first step towards the development of reconfigurable and disposable biomimetic camouflage technologies for stealth applications," says Gorodetsky.

"I can also imagine applications in energy efficient reflective coatings and biologically inspired optics."

The team began their studies by developing a protocol for the production of the histidine-tagged reflectin A1 (RfA1). Experimenting with a variety of substrates and surface treatments for the reliable formation of RfA1 thin films, they achieved best results by spincasting 5 to 10 nm films of graphene oxide on glass substrates. They then spread RfA1 onto the graphene oxide-coated substrates, yielding smooth films over centimeter areas.

"Inspired by the dynamic optical properties of reflectin nanostructures, we sought to shift the reflectance of our RfA1 films into the infrared region of the electromagnetic spectrum," says Gorodetsky.

"Given that some squid can dynamically modulate their skin reflectance across the entire visible spectrum and even out to near infrared wavelengths of ˜800 nm, we postulated that it should also be possible to tune the reflectance of our RfA1 thin films across a similar, or even larger, wavelength range. Thus, we sought conditions that would significantly increase the thickness of our RfA1 films and, consequently, shift their reflectance spectra toward the infrared."

To that end, the researchers explored the response of their RfA1 coatings to a variety of chemical stimuli. They discovered that exposing the films to vapor from a concentrated acetic acid solution induced a large, reversible shift in the reflectance spectra, caused by the acid-induced swelling of the closely packed RfA1 nanoparticles in the film.

"With the goal of fabricating dynamically tunable camouflage materials, which will self-reconfigure in response to an external signal, we are currently developing alternative, milder strategies for triggering coloration changes in our material," Gorodetsky describes the team's future work plans.

Finally in awards news, a panel of independent judges and the editors of R&D Magazine annually award excellence in innovation by selecting the top 100 products that represent leading technologies introduced in the previous year. This year, one of those recipients was Dow Coating Materials' Evoque product.

"This award is the culmination of many years of hard work for the Dow Coating Materials team and we're thrilled to receive this honor from R&D Magazine," said Ashok Kalyana, Architectural & Industrial Marketing Director for Dow Coating Materials. "Customers worldwide have proven the value that Evoque Technology brings to the market and gaining this type of recognition from the industry serves to further validate the tremendous success we've had with this innovation."

With Evoque Pre-Composite Polymer Technology, paint formulators have the opportunity to raise paint film performance, improve titanium dioxide (TiO2) efficiency and enhance the eco-profile of their paints. In a recent Life Cycle Assessment, paints made with Evoque Technology were found to reduce the potential environmental impact of waterborne white and pastel architectural paints in ten out of ten key indicators.

"Evoque Pre-Composite Polymer offers performance properties that can help formulators create product lines that require fewer coats, are more resistant to stains and dirt, are easier to clean, and resist rusting, corrosion and other weather effects," said Keith Watson, Global R&D Director for Dow Coating Materials.

Added Kalyana, "Evoque Pre-Composite Polymer truly is a revolutionary technology that will change the way the industry makes paint, much like acrylic emulsions did some 50 years ago."

In other news, AkzoNobel recently announced that it has received a binding offer for the purchase of its Building Adhesives business by Sika AG for €260 million. Building Adhesives generated annual revenues of €185 million in 2012. The intended sale of Building Adhesives follows a strategic review of the business' fit within AkzoNobel's portfolio... more about this news

Axalta Coating Systems, a leading global supplier of liquid and powder coatings, has invested $5 million in a new pilot reactor that has begun operations to support coatings polymer research and scale-up activities at its Coatings Technology Center (CTC) in Wilmington. The state-of-the-art reactor system is coupled with a complete process automation and control system to enable precise control of ingredient amounts and critical process conditions such as temperature and pressure... more about this news

INVISTA and computational biology company SilicoLife announce collaboration for the development of new technologies to enable bio-derived processes for the production of industrial chemicals. The two companies are collaborating in order to further co-develop their technology platforms... more about this news

And finally, Succinic acid, itaconic acid and 2,5-furandicarboxylic acid (FDCA). The 'US Department of Energy for sugar-based compounds' assigns these three building blocks to the TOP 12 platform chemicals. Interviews with 60 key players from the international chemical industry resulted in a meaningful report of the current market potential and the most attractive end use applications... more about this news

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