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VOC regulations and the Coatings Industry

May 4, 2005

With the adoption and implementation of VOC (volatile organic compounds) regulations, the coatings industry in the United States has changed significantly over the last thirty years. As pollution laws have evolved in other industrialized countries, similar changes have come about. The developers of standards, chemical suppliers and manufacturers should be applauded for meeting lower emission standards, though reluctantly at times. The progress in reducing VOC has been staggering. If someone had forecast today's VOC standards thirty years ago, very few would have expected the industry achieving current standards.

During and after the establishment of these regulations there has been and continues to be a continuous tug-of-war between the industry (coating manufacturers and suppliers), environmentalists and air pollution standard developers. One gets the impression of acrimony between all involved. Though an acceptable compromise is eventually achieved, the process needs to be more of cooperation rather than of confrontation.

Even with the challenges that come with the current VOC regulations, we have had the following benefits.

1. Improved environment.
2. Saved many jobs.

There is a continuous effort to reduce pollution due to coatings. Environmentalists want the fewest VOC emissions. To achieve this they want coating manufacturers to use not only minimally polluting raw materials and but also incorporate the best process technologies to minimize emissions. This is noble. Raw material suppliers have contributed significantly in this effort. However, the process technologies for coatings manufacture still needs improvement.

There is a considerable amount of input and negotiation from every side after the initial proposal of new regulations. Even with the best efforts to achieve consensus, we still have varying standards for different parts of the country and regions. These different VOC standards for regions and states, pose a significant economic challenge for the suppliers and manufacturers.

From a business standpoint, this variability has become an operating nightmare and adds costs that have no/low return. I will not go into the details but the total business process is affected. Some examples are i) different product development for same performance, ii) different labels, iii) inventories based on regions, iv) manufacturing schedules and v) compliance paper work etc. It has been said that it is expensive to ship water or solvent but under the right circumstances, it can be economical. Added costs open an opportunity for companies from the developing countries to supply the environmentally compliant same-performance products at lower cost. Wal-Mart has capitalized on this business model. Home Depot, Lowe's or any new player could do the same for coatings. Another possibility is that large coatings manufacturing companies could shift manufacturing overseas and supply compliant products through their distribution system to retain their profitability.

There is a big downside if we stay with the current methods of establishing VOC standards. We have to develop and implement regulations and methods in such a way that the industry will be able to progressively meet new and uniform standards, achieve desired profitability and retain manufacturing jobs in the developed countries. It is also necessary for coatings manufacturers to sharpen their pencils and work toward determining the pros and cons of supplying the lowest VOC coatings nationwide. This may simplify the total business process, reduce costs, and allow investments in the development of improved manufacturing technologies.

I believe it is time to address some of the short and long-term effects brought by a lack of cohesive effort in the development of VOC standards. Environmentalists and coatings producers, including suppliers, need to sit down at the same table at the start of new standards development process. Some visionaries who understand the importance of this unified effort have to keep the group together until the goals are accomplished. This has to be an ongoing process. In addition, the continuous improvement of raw materials has to go on. Development and implementation of better process technologies, which has been lagging, has to be accelerated. Raw materials and coatings producers may also need incentives.

If a cohesive effort is not made, it will have impact on the economies of the developed countries in the form of further erosion of manufacturing jobs. We have seen the chemical industry moving to developing countries and it can happen to the coatings industry. It is possible to have a win-win situation and if we achieve this goal, we will leave a legacy for generations to come. I believe if we make an effort anything is possible considering that we successfully sent a man to the moon and brought him back.

Should you have any comments or feedback, please contact me.

Girish Malhotra

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