Protecting businesses and customers from future supply challenges requires keeping adequate stock and having backup plans.
FREMONT, CA: Business has experienced cascading effects from demand shocks and labor shortages to raw material constraints and inflation due to recent complex, evolving events. It is still possible for suppliers and customers to experience disruptions at all levels of their businesses, from tactical to operational to strategic, as the crisis continues to unfold.
An increasingly uncertain world presents businesses with some market drivers, pain points, and opportunities.
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Depend on alternative solutions: There were other raw materials in short supply last year besides titanium dioxide. In 2021, almost 85 percent of our specialty resins, rosins, monomers, silicones, surfactants, pigments, and additives were in the sales control or allocation process. Several factors were at play, including production disruptions, surging demand, and ongoing supply chain issues. Raw materials shortages have a domino effect. Suppliers can only tell distributors or customers when their production will run or when the next truck will arrive if they know when the ingredients will arrive. Their local home improvement stores suffered from depleted paint inventory, among other items, and consumers saw the impact firsthand.
Sustainability Matters: While the industry has faced upheaval caused by the epidemic, it still faces unrelenting pressure from two broad global trends: increasing regulation and balancing economic, environmental, and social interests. Increasing energy efficiency and becoming carbon neutral by 2060 are also top priorities for the government. Several chemical manufacturing plants have been forced to shut down because of environmental policies, resulting in a reduction in raw materials and specialty chemicals available for the global market. The industry is also bracing for tighter restrictions on air pollution in the United States, which could lead to regulatory changes related to volatile organic compounds (VOCs). VOC regulations are a complex, ever-changing landscape. In response, the coatings industry has had to reformulate or formulate new products that sometimes sacrifice performance. But today, customers expect coatings that are high-performing AND environmentally friendly.
Keep an Eye Out for Opportunities: As sustainability goals take hold, new business opportunities worldwide exist. In Italy, for instance, the government started providing generous financial incentives in 2020 to help buildings become greener, from insulation to solar panels to replacing boilers and windows. As a result of the tax credits, 110 percent of the costs of energy efficiency and structural improvements will be covered. According to studies, the incentives created 153,000 jobs last year and increased Italy's gross domestic product. Investing in infrastructure is essential. It prioritizes climate resilience and weatherization to cope with more frequent and severe droughts, floods, and wildfires, rebuilding roads and bridges, and upgrading airports and ports. It has been a technology push in the automotive industry to make things lighter and stronger, but construction projects are no different. The industry offers various opportunities in various fields, including concrete coatings, sealers and membranes, roof coatings, and industrial bridge coatings. These projects also require modifiers for cement, mortar, grout, stucco, and construction adhesives.
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