Industrial Coatings - Investor Center

Transcription

Viktor Sekmakas
Senior Vice President, Industrial Coatings and
President, PPG Europe
Ri k Zoulek
Rick
Z l k
Vice President, Industrial Coatings, Americas
May 17, 2012
Information current as
of 5/17/2012
Forward‐Looking Statements
Statements contained herein relating to matters that are not historical facts are forward‐looking statements
reflecting PPG’s current view with respect to future events and financial performance. These matters within
the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended, involve risks and uncertainties that may affect PPG’s operations, as
discussed in PPG’s filings with the Securities and Exchange Commission pursuant to Sections 13(a), 13(c) or
15(d) of the Exchange Act, and the rules and regulations promulgated thereunder. Accordingly, many factors
could cause actual results to differ materially from the forward‐looking statements contained herein. Such
factors include global economic conditions, increasing price and product competition by foreign and domestic
competitors, fluctuations in cost and availability of raw materials, the ability to maintain favorable supplier
relationships and arrangements, the realization of anticipated cost savings from restructuring initiatives,
difficulties in integrating acquired businesses and achieving expected synergies therefrom, economic and
political conditions in international markets, the ability to penetrate existing, developing and emerging
foreign and domestic markets, foreign exchange rates and fluctuations in such rates, fluctuations in tax rates,
the impact of future legislation, the impact of environmental regulations, unexpected business disruptions,
and the unpredictability of existing and possible future litigation, including litigation that could result if the
asbestos settlement discussed in PPG’s filings with the Securities and Exchange Commission does not become
effective. However, it is not possible to predict or identify all such factors. Consequently, while the list of
factors presented here and in PPG
PPG’ss Form 10
10‐K
K for the year ended December 31,
31 2011 are considered
representative, no such list should be considered to be a complete statement of all potential risks and
uncertainties. Unlisted factors may present significant additional obstacles to the realization of forward‐
looking statements. Consequences of material differences in results compared with those anticipated in the
forward‐looking statements could include, among other things, business disruption, operational problems,
financial loss, legal liability to third parties and similar risks, any of which could have a material adverse effect
on PPG’s consolidated financial condition, results of operations or liquidity. All information in this
presentation speaks only as of May 17, 2012, and any distribution of this presentation after that date is not
intended and will not be construed as updating or confirming such information. PPG undertakes no obligation
to update any forward‐looking statement, except as otherwise required by applicable law.
2
1
Industry Profile
3
Global Coatings Industry by Competitor
2002 (~65B)
Akzo
Akzo Nobel
2011 (~95B)
Akzo Nobel
PPG
ICI
Others
PPG
Others
Sherwin‐
Williams
Sherwin‐
Williams
DuPont
DuPont
BASF
BASF
Nippon
Sigma‐ RPM
Kalon
Valspar RPM
Jotun
Kansai
Valspar Nippon
Coating market growing and consolidating; PPG gaining share
Source: Orr & Boss, SRI, & Company Annual Reports
4
2
Coatings Industry
Competitive Landscape
Industry End‐Market Mix by Dollar Value of Sales (~$95B)
100% = $95 Billion
Companies
(#)
Company Size (Sales)
10%
Hundreds
< $100MM
20%
~60
$0.1 B ‐ $1.0 B
45%
17
$1 ‐ $10 B
Aerospace
2%
Packaging
3%
Protective & Marine
13%
Auto OEM 6%
Refinish 7%
Architectural 43%
Industrial 26%
25%
2
> $10 B
Industrial 2nd largest segment
Few large global players
5
Source: Coatings World, Company Annual Reports, Orr & Boss and SRI
Position by End Use Market
Position by Vertical
Global Position
PPG
#2
Akzo
#1
SHW
#3
DuPont
#4
Valspar
#5
BASF
#6
Arch.
~$42B
Industrial
~$25B
Protective Refinish/
& Marine Collision
~$12B
~$6B
Auto OEM Packaging Aerospace
~$6B
~$3B
~$1B
■ #1 Position ■ #2 Position ■ #3 Position #4+ Position ■ No Participation PPG only company with participation in all end‐use markets
Source: PPG estimates
6
3
Industrial Coatings
7
Industrial Coatings Overview
• Diverse end‐use markets
– Tied to multiple industries
• Broad technology spectrum
Broad technology spectrum
– Increased focus on sustainable coatings
• Factory‐line applied coatings
– Customer specification driven
• Significant number of customers
– Primarily direct to OEM
Pi
il di
OEM
• Consolidating industry with further opportunities (many players)
• Strong growth in emerging regions
8
4
Industrial Coatings Market Growth by Region
Industrial Coatings Demand
2005‐2008
2010‐2015
10% CAGR
5% CAGR
6% CAGR
1% CAGR
4% CAGR
2005 2008
Americas
2005 2008
2005 2008
2010 2015
EMEA Asia Pacific
Americas
Pre‐Crisis
4% CAGR
2010 2015
2010 2015
EMEA Asia Pacific
Post‐Crisis
Solid global growth aided by emerging regions
9
Source: IRFAB
Industrial Production Growth
Industrial Production
China Industrial Production Outpaces GDP
160%
180%
5% Global Growth
‘11 to ‘12
160%
140%
140%
120%
120%
100%
100%
80%
2008
2009
North America
Asia/Pacific
2010
2011
Europe
Global
2012
80%
2008
2009
2010
2011
2012
China Industrial Production
China GDP
Growth in industrial production led by China
Source: IHS Global Insights
10
5
Industrial Coatings End‐Use Markets
Size by End‐Use Market
Appliance
Auto
Parts
Functional
Coil
Consumer
Electronics
Extrusion
General
Finishes
Heavy Duty
Equipment
Transportation
Wood
Products
Coil & Extrusion
Auto Parts
Heavy Duty Equipment
General Finishes
Wood
~$25B Broad and distinctive end‐use markets
Source: PPG Estimates
11
Industrial Coatings
By Region
By Technology
~$25B
Latin
Latin America
U.S. & Canada
Powder
EMEA
Asia / Pacific
Liquid
•
•
•
•
Solvent‐based
Water‐based
Water
based
High Solids
UV Cure
Includes Japan
Asia largest region / Liquid largest technology
Source: IRFAB & PPG Estimates
12
6
Industrial Coatings Competitive Landscape
All values include Japan
2005
Today
Top 6 = ~28%
Top 6 = ~35%
Akzo
Akzo
PPG
PPG
Competitors 3‐6
Others
72%
2%
Others
65%
Competitors 3‐6
Competitors 3‐6:
(Alpha Order)
Beckers
DuPont
Sherwin‐Williams
Valspar
Consolidating end‐use market led by PPG & other multi‐national paint competitors
13
Industrial Coatings End‐Use Markets
Total
Industrial
Appliance
Auto
Parts
Coil
Consumer
Electronics
Extrusion
General
Finishes
Heavy Duty
Equipment
Transportation
Wood
Products
Est. Market Size
$25B
$1B
$1B
$3B
$1B
$1B
$11B
$1B
$1B
$5B
30‐35
Top 3 Share %
35‐40
55‐60
50‐55
50‐55
40‐45
50‐55
30‐35
35‐40
45‐50
Market Growth
5%
5%
5%
5%
7%
5%
5%
7%
4%
5%
PPG Position
Top 3
Top 3
Top 3
Top 3
Top 3
Top 3
Top 3
Top 3
Top 3
Top 10
hundreds
thousands
hundreds
hundreds
thousands
tens of thousands
thousands
thousands
thousands
• Rebound of • Construction • Standard of • Construction • Global GDP • Population • Emerging Growth
Region Recovery / Automotive Recovery / y/
Livingg
y/
Growth
g
• Emerging Growth
• Changing Growth
• Construction • Standard of Growth
Region Consumer Recovery / Living
• Rise in • Infrastruct‐
Growth
Tastes
Growth
Logistics ure Growth
Demand
• Furniture Growth
• Emerging Consumers
# of Customers
Macro Drivers
• Demand for Style
y
• Emerging Middle Class
PPG well positioned
Source: IRFAB, KNG, Orr & Boss and PPG Estimates
14
14
7
Industrial Coatings: Appliance
Appliance – Functional and decorative coatings supplied to the appliance industry. •
•
•
•
•
•
•
Laundry
Refrigerators
Freezers
Dishwashers
Ovens & ranges
Exhaust hoods
Microwaves
Examples
• Countertop appliances
• Vacuum cleaners
• HVAC
• Furnaces
• Air conditioners
• Radiators
• Fireplaces
15
Industrial Coatings: Automotive Parts
Automotive Parts and Accessories – Functional and decorative coatings for Tier II and Tier III parts suppliers for automotive applications. Functional coatings protect from corrosion and wear. Decorative coatings provide color and gloss for visual appearance to match OEM body color.
Examples
• Rigid and flexible exterior trim systems
• Steel and aluminum wheels
• Brake systems
• Windshield wiper assemblies
•
•
•
•
•
•
Bumpers
Shocks
Axles
Coil springs
Under hood/body parts
Sway bars
16
8
Industrial Coatings: Coil
Coil – Decorative and functional (corrosion protection) coatings applied to coiled sheet metal that is then fabricated into parts or products (also referred to as prepaint).
Examples
•
•
•
Building and Construction
• Metal roofing
• Metal building panels
• Rainware & gutters
• Siding & trim
Manufactured Goods
• Garage & entry doors
• HVAC
• Lighting fixtures
• Appliances
Automotive/Transportation
• Truck trailer
• Automotive components
17
Industrial Coatings: Consumer Electronics
Consumer Electronics – Functional and decorative coatings for electronic devices.
Examples
• Mobile phones
p
• Laptops
• Computers and accessories
• GPS systems
• Tablets
• e‐Readers
18
9
Industrial Coatings: Extrusion
Extrusion – Decorative and functional (weather resistance) coatings applied over extruded aluminum shapes used in residential and commercial construction and specialized applications.
Examples
•
Building and Construction
• Commercial windows
• Curtain wall
• Column covers
• Residential windows
•
Transportation
• RV and bus windows
• Windshield frames
Specialty
• Sports equipment
p
q p
• Solar panels
•
19
Industrial Coatings: General Finishes
General Finishes – Decorative and functional (hardness, corrosion resistance) coatings used in a wide variety of end uses not included in any of the other sub‐segments.
•
•
•
•
•
•
Examples
Golf balls
•
•
Fitness Equipment
Caskets
•
Bathroom fixtures
•
Tool boxes
•
Office furniture
•
Transformers
Electrical switchgear
Screening
Pipes
Mirrors
Barbeque grills
20
10
Industrial Coatings: Heavy Duty Equipment
Heavy Duty Equipment – Decorative and functional coatings for agricultural, construction, mining and excavation equipment.
Examples
•
•
•
•
•
•
•
•
•
•
•
Aerial lifts
Aggregate equipment
Agricultural
g
equipment
q p
Air Compressors
Backhoe loaders
Boring machines
Compact track loaders
Compaction equipment
Cranes
Crawler dozers
Crawler loaders
•
•
•
•
•
•
•
•
•
•
Drills
Excavators
Forestryy equipment
q p
Material handlers
Motor graders
Scrapers
Skid steer loaders
Telehandlers / Forklifts
Wheel dozers
Wheel loaders
21
Industrial Coatings: Transportation
Transportation – Functional and decorative coatings supplied to non‐automotive vehicle manufacturers. EExamples
l
• Commercial truck/cab bodies
• Commercial buses
• School buses
• Transit rail
• Locomotives
•
•
•
•
•
Motorcycles
Golf carts
Recreational vehicles
Bicycles
Trailers
22
11
Industrial Coatings: Wood
Wood – Functional and decorative factory‐applied coatings supplied to various wood product manufacturers. Examples
• Wood and resilient
flooring
• Window assemblies
• Doors and door frames
• Flooring accessories
• Architectural moldings
• Kitchen cabinets
• Furniture
• Factory‐finished siding
23
Industrial Coatings Technology Options
Primary Technology Offerings:
• Pretreatment ‐ cleaners & phosphate chemicals to condition metal before paint is applied
to condition metal before paint is applied
• Electrocoat – coating applied by electrically charged immersion
• Liquid – traditional primers and topcoats in a full array of chemistries
• Powder
P d – solid coating applied by electro‐static lid
ti
li d b l t
t ti
spray
24
12
Technical Solutions
End‐Use Market
Pretreat Electrocoat
Liquid
Powder
Appliance
Automotive Parts &
Accessories
Coil Coatings
Consumer
Electronics
Extrusion
Products
General
Finishes
Heavy Duty
Equipment
Transportation
Wood
■ Primary ■ Secondary ■ No Use
Source: PPG Illustration
25
Competitive Technology Profile
Basis: Notable market presence
Supplier:
North America Liquid Ecoat
Europe
Asia Pacific
South America
Powder Pretreatment
PPG is the only coatings supplier with a complete technology portfolio in each region
26
13
Customers’ Coatings Decision Factors
E‐Coat
Liquid
Design Scrap Appearance
Investment Rate
Capital
Operating Cost
Safety
Key Factors
• Superior coverage, adhesion, appearance and corrosion resistance
• High capital investment
• Metal substrates
Environmental Regulation
Key Factors
•
•
•
•
All substrates
Best color control
Highest design flexibility
Highest design flexibility
Moderate capital investment
Industrial Customers
Labor vs. Automation
Productivity / Efficiency
Precision Specification
Capacity & Thru‐put
Pretreatment
Powder
Key Factors
Key Factors
•
•
•
•
• Metal substrates
• Used in critical adhesion applications (prior to other 3 technologies)
Environmentally friendly
Minimal capital investment
Low cost finish
Metal substrates
Key factors for customer success: process selection, coating technology & paint line operation
27
Example: Customer Required to Reduce VOC Emissions
E‐Coat
Operating Cost
Investment Investment
Rate
Capital
Safety
Pretreatment
Liquid
Key Decision Factors
Solution: Customer converts from Low‐
Solids, High‐VOC liquid to No‐VOC Powder
• Complies
Complies with with
new regulation
• Controls costs and maintains current output level
• Require minimal investment
• Product finish appears unchanged
Powder
Winning coatings supplier is able to help customer comply with new regulations
28
14
Example: Customer Has Sales Opportunity, But No Capacity
Solution: Reformulate liquid product to reduce cure rate which increases oven thru‐put without capital investments
E‐Coat
Operating Cost
Liquid
Investment Rate
Capital
Safety
Industrial Productivity / Efficiency
Customers
Labor vs
• Fast implementation to take advantage of opportunity
• No capital spending
• Increase productivity
• Significant thru‐put improvements
Pretreatment
Powder
Winning coatings supplier knows customer lines and helps them gain new business with quick and effective solutions
29
Example: Global OEM to Build Plant in Scarce H2O Locn
Solution: Supplier develops pretreatment & E‐coat line (typically water intensive) to operate on minimal water availability
K
E‐Coat
• Minimal water consumption
• Investment must meet return requirements
• Operating costs must be similar to other Ecoat
lines
• Product specifications ifi ti
must be achieved
Scrap Rate
Design Appearance
Operating Cost
Pretreatment
Liquid
Investment Investment
Capital
Safety
Powder
Winning coatings supplier provides creative solution that enables customers strategy
30
15
Application Solution: Electrocoating (E‐Coat)
Typical Electrocoat Process
Step 1
Step 3
Step 4
Step 2
Parts entering paint bath
Electrocoating Process:
Step 1: Parts are cleaned and pretreated
Step 2: Parts are dipped into a d
d
paint bath where direct current (electricity) through the part acts like a magnet between the metal and paint
S
Step
3 P
3: Parts are removed from df
the bath and rinsed
Step 4: Parts are baked in an oven to cure
31
Source: Electrocoat Association
E‐Coat: Investment Considerations
E‐Coat Costs & Benefits:
• Significant capital investment required by customer ($2MM $4MM)
($2MM‐$4MM)
• Extremely efficient painting method
• Coating transfer
efficiency is high
• Complete coating
coverage of complex parts
• Density of parts on conveyor can be maximized
Full Scale Electrocoat Line
32
16
Electrocoat Application Comparison
Electrocoat Dip
Capital Investment
High
Operating Cost per Part (ex: Low
utilities, labor, maintenance) Performance Specification
Capacity / Thru‐put
Occurrence Frequency
High performance
High
Sole application method for electrocoat
l
End‐Use Market
Appliance, Auto Parts, General Finishes, Heavy Duty Equipment, Transportation
Examples
Mass produced parts including
automobile suspension components, wheels, appliance bodies
33
Application Solution: Liquid Coatings
Roll Coating
Paint is applied via a roller
Robotic Spray
Manual Spray
Paint is applied via robotic spray guns
Paint is applied via manual spray guns
*Primary liquid applications, not all application methods have been included
Dip
Paint is applied via submersion in paint
34
17
Liquid Coatings Application Comparison
Roll Coating
Robotic Spray
Manual Spray
Dip
Capital Investment
High
High
Low
High
Operating Cost per Part (ex: utilities, labor, Low
Low
High
Medium
Must be flat
substrate
Non‐intricate shapes
and must fit on pulley
Non‐intricate shapes
Any size shape; must fit on pulleys & tank must be big enough
Full coverage, smooth
Consistent film thickness, textures may prevent full g
coverage
Subject to variation in film thickness, textures may prevent full coverage
p
g
Subject to variation in film thickness, any texture
maintenance) Object Shape
Finish Specification
Highest
High
Low
Medium
Occurrence
Frequency
Common to all in Coil market
Common with larger operations
Common with smaller operations
Rare
End‐Use Market
Coil & Appliance
All end‐uses except Coil
All end‐uses except Coil
Auto Parts, General Finishes
Metal roofing
Mobile phones, car parts
Parts coated in job shops
Automotive springs
& engine mounts
Examples
35
*Primary liquid applications, not all application methods have been included
Application Solution: Powder Coatings
Electrostatic Spray
Process that charges the particle of powder and then attracts it to the grounded part before being oven cured.
Source: Coatings Method, Inc
Fluidized Bed
Preheated parts are dipped into a bed of fluidized powder. Upon contact with the heated parts, the powder melts and adheres to the parts. The parts are then passed through a second oven for curing.
36
18
Powder Coatings Application Comparison
Electrostatic Spray
Fluidized Bed
Capital Investment
Medium
High
Operating Cost per Part (ex: Medium
High
Non‐intricate shapes and must fit on conveyor
Intricate shapes; must fit on pulleys & tank must be big enough
Finish Specification
Textures may prevent full coverage
Subject to variation in film thickness, any texture
High
Medium
Most common method
Rare
Appliance, Auto Parts, Consumer Electronics, Extrusion, General Finishes, Heavy Duty Equipment, Transportation
Auto Parts, Consumer Electronics, General Finishes, Heavy Duty Equipment
Aluminum wheels, window screening
Dishwasher racks and metal pipes
utilities, labor, maintenance) Object Shape
End‐Use Market
(excludes Coil and Wood)
Examples
37
*Primary powder applications, not all application methods have been included
Application Solution: Pretreatment
Spray
Pretreatment is applied via automated spray system
Dip
Pretreatment is applied via submersion into the system
38
19
Pretreatment Application Comparison
Spray
Dip
Capital Investment
Low
High
Operating Cost per Part (ex: Low
High
Low performance
High performance
High
Medium
Most common method
Less common
Extrusion, General Finishes, Heavy Duty Equipment, Transportation
Appliance, Auto Parts, General Finishes, Transportation
Relatively smooth and clean metallic surfaces
Rusted, dirty, oily or rough metallic surfaces
utilities, labor, maintenance) Performance Specification
End‐Use Market
Examples
*Primary pretreatment applications, not all application methods have been included
39
Industrial Coatings Challenge
9 4 Global Regions
End‐Use Markets (multiple sub‐
segments)
4 Technologies
10+ Application Methods
Industrial Coatings: Complexity
= Opportunity
PPG advantaged by global scale, product offering breadth and customer service capabilities
40
20
PPG Position
41
PPG Industrial Coatings Segment
PPG Industrial Coatings Business Units
• Automotive OEM Coatings
• Industrial Coatings
• Packaging Coatings
Total PPG Industrial Segment Geographic Sales Mix
Latin America, 9%
OEM / New, ~20%
Auto OEM Coatings
Asia/Pacific, 27%
U.S. & Canada, 28%
Aftermarket, ~80%
Europe, Europe,
30%
Industrial Coatings
Eastern Europe, 6%
Packaging Coatings
Emerging Regions >40%
Global businesses serving multi‐national customers with specified products
Source: PPG Financial Reports
42
21
PPG Industrial Coatings Segment
Annual Results
Q1 Results
10%
1.0
8%
0.8
3.0 6%
2.0 1.0 0.0 16%
12%
8%
0.6
4%
4%
0.4
2%
0.2
0%
0.0
2007 2008 2009 2010 2011
EBIT Margin
1.2
Sales ($B)
Sales ($B)
40
4.0 12%
EBIT Margin
5.0 0%
‐4%
2007 2008 2009 2010 2011 2012
Sales
EBIT Margin
Strong sales and earnings growth
43
History of PPG Industrial Coatings Business
Busineess Expansion
European footprint acquisitions (Italy, Spain & UK)
Chemfil acquisition (US - pretreatment entrance)
Akzo JV (South America)
Man-Gill acquisition (US pretreatment)
China JV (manufacturing start-up in China)
APPG JV (India)
Ameron acquisition (Global)
(
)
Dongju acquisition (Korea)
SigmaKalon acquisition (Global)
BASF Coil acquisition (NA)
Technology Comm
mercialization
1970
1980
1990
2000
2010
Powercron 600CX (Ecoat)
Framecoat II (Ecoat)
Electrocolor/Electroclear (Ecoat)
XMR (Powder)
Framecoat I (Ecoat)
Powercron 8000, 8th Gen (Ecoat)
Powercron, 7th Gen (Ecoat)
Enviroprime, 6th Gen lead-free (Ecoat)
Uniprime (Ecoat)
1st commercially coated Automotive Parts with cathodic (Ecoat)
Duranar fluoropolymer developed (Liquid)
1st tank filled with anodic (Ecoat)
44
Continuous strategic investment and innovation
44
22
PPG Industrial Coatings Business PPG Manufacturing Locations
Winnipeg, MB
Veenendaal, Netherlands
Bochum, Germany
Springdale, PA
Cieszyn, Poland
Saultain, France
Euclid, OH
Burgdorf, Switzerland
Felizzano, Italy
Oak Creek WI
Oak Creek, WI
Tianjin, China
Mt. Vernon, IL
Busan, Korea
Cheonan, Korea
Greensboro, NC
Suzhou, China
Zhangjiagang, China
Bangplee, Thailand
San Juan del Rio,
Mexico
Auckland, New Zealand
Sumare, Brazil
Chennai, India
Petaling Jaya,
Malaysia
Clayton, Australia
Strong manufacturing presence in every major global region
45
PPG Industrial Coatings Business Unit Sales
Sales CAGR
PPG Global
7%
2011
2001
AP
LA
LA
USCA
EMEA
AP
USCA
EMEA
Enhanced global position; Asia now largest region
46
23
PPG Industrial Coatings Business Headcount
Asia Pacific Headcount
Years 2008‐2011
1,200
‐38%
1,000
‐14%
800
‐4%
600
400
2008
2009
2010
2011
2011
2010
2009
2008
2007
LATAM
2006
AP
2005
EMEA
2004
0
USCA
2003
+31% 200
+170% over 8 Years
Ongoing management of headcount in all regions
Increased presence
Strong PPG cost focus remains
47
Source: PPG Headcount Reports
PPG Industrial Coatings Business Customer Mix
Customer Orientation
Approx. % of Sales of Top 20 Customers
Approx. Total # of
Customers
Appliance
90%
250
Multi‐Nationals
Automotive Parts &
Accessories
35%
900
50/50
Coil Coatings
75%
150
Regionals
Consumer
Electronics
90%
100
Multi‐Nationals
Extrusion
Products
45%
450
Regionals
General
Finishes
20%
%
3,700
Regionals
i
l
Heavy Duty
Equipment
70%
750
50/50
Transportation
60%
350
Regionals
Wood
45%
1,200
Regionals
End‐Use Market
(Multi‐Nationals or Regionals)
48
24
Market Value Drivers
Coatings supplier collaboration from concept to consumer
Design
• Color design centers
• Color styling
• Artistic facilitators
• Speed to Product Development
D
l
t
• Coatings research
• Analytical testing capabilities
• Certified parts market
testing
• Customer • Formula specification development
• End‐user, Voice of Customer research
optimization
• Product customization
• OEM product approvals
Technology
•
•
•
•
•
•
•
•
Pretreatment
E‐coat
Liquid
Powder
Specialty products
Global ISO certification
EH&S
EH&S compliance
Resin design & production capability
Startup
• Secure Launch®
• Risk minimization
• Rapid ramp up to capacity
• Operator training
• Global supply chain
• Environmental permitting assistance
Operating Effi i
Efficiency
• Paint process design
• Inventory management
• Coating line troubleshooting
• Cost reduction projects
• Finish operations consultations
• Statistical analysis
Broad product and service offering delivered through established global organization
49
Industrial Coatings Customers
*Sampling of Industrial Coatings customers
50
25
Industrial Coatings Asia/Pacific Customers
*Sampling of Industrial Coatings customers
51
PPG Competitive Advantage
• Strong market position
– All geographies
– All technologies
– Customer mix
• History of sustained investment in capabilities and technology leadership
• Global customer support
52
26
PPG Service Culture
• Developing, deploying and demonstrating service culture over a very long period of time
• Consistently winning the service battle
• Recognition of commitment in the marketplace
Product Development
Customer Relationship
Technical
Service
• Innovative solutions to meet customer needs
• Resin synthesis capabilities
• Dedicated Coatings Research Center
• Next generation technology program
• Product formulated to paint line conditions
• Products with new colors or textures
• Customer & end‐
use market‐focused labs in each region
• Global and regional account coordination
• Sponsorship of customer interests
• Partnership focus on end‐user market
• Solving coating line issues
• Driving customer cost improvement and savings
• Ensuring coatings lines are running optimally
• Emergency response capability
Training (i.e., “Knowledge College”, in‐plant)
Service Foundations
Key Examples of Value
Service Areas
PPG Service Culture
Product Research
Leadership
Program Evolution
Cultural demonstration of commitment to key customer requirement
53
Customer Applied Paint Cost Model
Total Customer Applied Cost of Coatings
100%
% of Total Applied Cosst
90%
80%
70%
60%
50%
Application Cost
40%
30%
All Operating Costs to Run a Paint Line:
to Run a Paint Line:
• Labor
• Supervision
• Operating Supplies
• Utilities
• Depreciation
• Rework
20%
10%
0%
Coatings C
ti
Cost
Cost of Procured Paint & Pretreatment
• Non‐paint operating expenses 80%‐85% of t t l applied cost
total
li d
t
• Choice of technology, supplier and management of application process are all factors
• Overall productivity improvement
improvement opportunity is significant
Customer Coating Operation
Deliver value by understanding application process and improving it
54
27
PPG Customer Support / Technical Service
• Experts of customers’ application lines
• Knowledge of coatings technologies/properties
• Knowledge of manual & Knowledge of manual &
automated application techniques
• Skilled at troubleshooting
• Trained to identify operational cost savings opportunities
PPG Tech Service Rep in Barranquilla, Colombia
spot color verifying painted, fabricated, and staged for assembly extrusions for curtain wall
PPG Tech Service Rep inspecting finished product for surface defects
PPG Tech Service Reps ensuring customer is applying coatings at specified film thickness
Strong relationship / impact on customer production process
55
PPG Opportunities
56
28
Industrial Coatings Evolution
•
•
•
•
Emerging Regions
Market Consolidation Opportunities
Legislation & Environmental
Examples Discussed Today:
– General Finishes
– Heavy Duty Equipment
– Consumer Electronics
Evolution providing growth and opportunities
57
Macro‐Trends Point to Growth Opportunities
Auto Parts: Growth in Emerging Regions
Consumer Electronics: Segmented/Acceleration
MM
‘11-’16 CAGR
1,400
19%
1,200
1,000
(1)%
800
600
400
12%
200
24%
2%
0
2009 2010 2011 2012 2013 2014 2015 2016
Laptop
Desktop
Media Tablet
Featured Phone
Smartphone
Source: World Bank
Heavy Duty Equip.: Global Infrastructure Spend
$B
$1,400
$1,200
$
$1,000
$800
$600
$400
$200
$0
Heavy Duty Equip.: Global Food Processing Spend
$B
$120
2002‐2012 CAGR = 5%
2012‐2017 CAGR = 4%
2002‐2012 CAGR = 9%
2012‐2017 CAGR = 9%
$100
$80
$60
$40
USCA
EMEA
AP
LA
USCA
EMEA
PPG global footprint provides growth advantage
AP
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
$0
2002
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
$20
LA
58
29
Industrial Coatings Business Unit
Eastern Europe
Latin America
Asia Pacific
2007
2008
2009
2010
2011
PPG emerging region sales CAGR = 12%
59
Top 30 Growth Countries
3%
15%
15%
Russia, Belarus, Ukraine
2%
5%
Poland
6%
Korea
Czech/Slov
1%
Turkey
4%
16%
6%
North Africa
4%
Mexico
Colombia
China
8%
Middle East
Vietnam
India
8%
1%
Indonesia
16%
Argentina
Brazil
Market
PPG Participation
Blue area represents opportunity in growth countries
60
30
Industrial Coatings Competitive Landscape
Today
Akzo
Approx. % of Sales
of Top 10 Global
of Top 10 Global Competitors
Region
PPG
Others
65%
Competitors 3‐6
US & Canada
75%
EMEA
60%
Asia Pacific
30%
Latin America
30%
Top 6 = ~35%
Emerging markets are relatively unconsolidated
61
PPG Industrial Coatings Fixed Assets in Asia
Asia Fixed Assets ($MM)
140 Resin capabilities established in China
Resin expansion in Korea
in Korea
Acquisition of 2 liquid plants in Korea
120 100 80 Liquid production expansion in China
Liquid expansion in China
Powder capabilities established in China
60 40 20 ‐
2003
2004
2005
2006
2007
2008
2009
Full manufacturing footprint now established in Asia
2010
2011
62
31
Further Consolidation Potential
# of Significant Coatings Suppliers
Thousands
Emerging Regions 1980
Consolidation Drivers of Smaller Competitors:
p
Mature Regions 1980
g
• Technology evolution
• Legislation / Environmental
• Liquidity / Financial stability
• Raw material volatility
• Globalization of customers
Emerging Regions 2010
Mature Regions 2010
Tens
Consolidation in emerging regions to follow
63
Source: PPG illustration
Greening of the Global Coatings Industry
Sustainability is profitability
1950‐1960’s
Baked Enamels
1970’s
Solvent‐
Based High Solids
Market Driver
Product lifespan
VOC standards
Benefit
Durability & cure
& c re
Lower cost
1980’s
1990’s
Electrocoat
Waterborne & Powder
Rust
Corrosion resistance
VOC standards
pp
Appearance
2000’s
Next Gen Paints
Compact Very low VOC, BPA‐free and metal‐free
Processes
Bio‐based raw materials
Cost
Operating savings
sa in s
Regulatory standards
Environment compliance
li
PPG research and development providing green solutions in all technologies
64
32
Increasing Global Chemical Exposure Regulations
Increasing Regulations Will Continue to Drive Coatings Supplier Consolidation
North America: TSCA
Europe: REACH
Asia: IECSC, KECI, PICCS
•
•
•
•
•
•
•
Increasing difficult for small/local
small/local paint suppliers to meet requirements
# of EH&S Regulations Increasing (ex: MSDS, product stewardship)
Opportunity for paint suppliers
suppliers able to achieve compliance
Chemical Control Regulations Affect:
Coatings product formulation
Handling and storage of chemicals
Transport of chemicals
Transport of chemicals
Customer usage of products containing chemicals
Export and import of raw materials & finished goods related to chemicals
Documentation related to handling and content
Criminal penalties, business restrictions and fines for non‐compliance
PPG has necessary resources and infrastructure required for global compliance
65
Partial list
Industrial Coatings: General Finishes
General Finishes
New Products with Coatings Requirements
& &
Emerging End‐
Use Markets
Caskets
Electrical
Wire
Pipe
Military
Office Fabric
Recreation
Furniture
New Feature End‐Uses
LIC
Mirror
Toolboxes
Bath Fixtures
Fi
Solar
PPG Strategy
• “Feature” end‐use markets qualify with growth potential or critical mass
critical mass
• “Feature” end‐use markets receive strategic focus
• General Finishes is an incubator for “next end‐use” breakout
• Diminishing end‐uses return to General Finishes
– ex: Metal Office Furniture
Strategic management of end‐use markets
66
33
General Finishes: Light Industrial Coatings
Industry Overview (~$3B)
What They Buy
Three Types of Customers
• Liquid air dry or powder coatings & • OEM – Small to medium in size
pretreatment
• Custom Coater/Metal Fabricator ‐
• Hand spray or limited automation Typically supports large OEM outsource
Typically supports large OEM outsource systems
• Purchase ~$1K ‐ $500K annually
• Job Shops ‐ Local “one‐off” and small batch work Customer Requirements
Specifications
Products
• OEM Approvals
Technical Support
• Limited Problem Solving & Line Support
Customer Expectations
Responsiveness
Price
Value
Performance
• Fast Delivery
• Fast Color Match
• Consistent Quality
• Technology Breadth
• Environmental Environmental
Compliance
Relational Selling
• Local Presence
• Technical Expertise
• Price
PPG brings value to customers
67
PPG in Light Industrial Coatings
Customer Requirements
Why LIC Customers Buy From PPG
Specifications
• Relationships with large OEMs
Technical Service
Technical Service
• Trained sales staff who can help with line and application improvements
Responsiveness
• Quick color match, quick ship, quick response to questions
Products
• Excellent batch‐to‐batch consistency (color, viscosity, solids, etc)
• Excellent product application characteristics (good hiding, dries fast, good coverage)
Single source supplier (only supplier with all source supplier (only supplier with all
• Single
technologies)
Relational Selling
• Trusted sales individual • Global presence (infrastructure)
• Respected PPG reputation in industry
68
34
Heavy Duty Equipment
Accelerating Demand
Emerging Region Growth
Projected Market Demand Trend
Regions with Highest Construction Growth in 2012
2011
2009
4% CAGR
2015
5% CAGR
8.0%
6 0%
6.0%
7.3%
5.9%
4.0%
5.3%
3.9%
2.0%
0.0%
Source: IRFAB
Worldwide Market = $1B
Asia Pacific
Industry Overview
2012 Highlights:
• Tied to agricultural & construction markets
• Also includes lawn & garden, material handling, Also includes lawn & garden material handling
•
•
mining and forestry equipment
• Service intensive industry
• Coatings product requirements migrating to •
extended durability, appearance & weather resistance
OEM operations with significant Tier I & II outsource components
•
•
•
Latin America Middle East & Eastern Europe
Africa
Expansion of Panama canal
Reconstruction from earthquake damage in Reconstruction from earthquake damage in
Japan & New Zealand
China interior & western region development
Increased investment in infrastructure & housing in Saudi Arabia
World Cup and Olympics preparation in Brazil
Source: IHS Global Insight
Key drivers: Global infrastructure and improved standard of living
69
Global Infrastructure Expanding
Emerging Region Economies
•
•
Asia will require +$8 trillion USD in infrastructure upgrades over next 10 years (Source: IHS Global Insight & World Economic Forum)
• 68% new capacity; 32% maintenance & replacement
• In India, 11km of roads used to be constructed each Asia
year, now 10km are built daily
Brazil intends to invest ~$99B on maintenance on and new construction of roads.
• Only ~5‐10% of Brazil’s roads are paved (Source: Trading Economics)
OEM Capacity Activity
•
•
•
•
Latin America
CNH investing ~$320MM for new construction equipment plant in Brazil
CNH doubling investment commitment at Argentina plant (Agriculture)
CNH
doubling investment commitment at Argentina plant (Agriculture)
Deere making “substantial investment in new products and additional capacity . . . [to] more fully capitalize on world’s growing need for food, shelter and infrastructure . . .”
Deere expanding production capacity at Orenburg, Russia facility (~$32MM)
PPG well positioned to participate in global growth
Source: CNH & Deere Q1 Results report
70
35
Heavy Duty Equipment Value Drivers
Product Development
D
l
t
Design
•
•
•
•
•
• Color styling
• Certified parts • Speed to market
testing
Technology
•
•
optimization
• Product •
customization
Pretreatment
E‐coat
Liquid
Powder
Specialty products
EH&S
EH&S compliance
Operating Effi i
Efficiency
Startup
• Secure Launch®
• Global supply • Finish chain
operations consultations
PPG delivers consistent products, service and reliability across all regions
71
PPG Service & Development
Approx. # of Customer Mfg Facilities
Approx
US &
Canada
EMEA
Asia
Pacific
Latin
America
139
46
27
30
11
18
4
5
34
19
11
13
5
5
10
0
PPG positioned to service global customers
Outsource Coater Support
• HDE has a high # of outsourcers who coat parts for OEM facilities
– Larger regional OEMs, outsourcer network = 100s of suppliers
– Larger global OEMs, outsourcer network = 1,000s of suppliers
• Assembled units require uniform finish
Single
OEM
Source: Company websites
100s
Outsourcers
100s
Application Lines
Product Approvals
• All coatings used by OEMs or Tier I or Tier II outsource suppliers must meet global product specifications
– Durability, weatherability, appearance
• PPG has regional technical labs developing coatings to meet these specifications
Service Intensive Industry
PPG Partnership brings:
• Consistent product quality
• Reliability Reliabilit
– Products & service
– Established organization
• Ease of start‐ups
PPG – Supplier supporting all customers, lines and applications from design through execution
72
36
PPG Secure Launch® Excellence
Secure Launch®
•
•
Strictly regimented methodology to reduce risk of process change on a customer coating line
Invoked for new coatings product introductions and new line start‐ups
Phase IV:
Phase IV: Phase I: h
Phase II: h
Phase III: h
Documenting Customer Requirements
Product Development and Application Validation
Production Trial Planning and Execution
• What is the equipment?
• What is the coating supposed to do?
• What is the timeline?
• Development of coating
• Optimization of key performance requirements
• Preliminary performance verification
Product Commercialization and Production Review
• Planning for start‐up
• Semi‐works production trial
• Adjustments to product formulation
• Confirmation performance verification
• Full scale production start‐up
• Implement continuous improvement protocols
Customer Benefits
• First‐run capability – smooth transition without interruption to productivity
• Faster to market – prevents delay and cost associated with product adjustment iterations in production environment
• Global collaboration – no surprises / established expectations achieved
Execution ‐ Doing It Right. Doing It Faster.
73
Consumer Electronics
Competitive Landscape
Global Supply Chain
Worldwide Market ~ $1B 7% CAGR
PPG Interaction
PPG
0%
$1B
20%
40%
60%
80%
100%
Responsible for global coordination of accounts; ensure PPG coatings are specified on OEM products
New growth end‐use for last 10 years
Industry Overview
• Key stakeholders in multiple regions
• Truly global industry
Truly global industry
• High importance on design and aesthetics
• Fast paced industry with frequent new product/version introductions
• Coatings programs/jobs typically last 8 months
• Substrates can change from one job to the next increasing complexity
Facilitate and coordinate supply chain by managing ODM relationships
CE Device Value Chain
Location
Original Equipment Manufacturers (OEMs) – designs, specifies and designs specifies and
Global
markets products
Participants: (20‐30)
Original Design Manufacturers (ODMs) – coordinates outsourcing activities and assembles final device
Taiwan
Participants: (5
Participants: (5‐7)
7)
Develop coatings to ensure quality and performance requirements for applicator line conditions
Applicators – apply coatings to products
~95% in China
Participants: (hundreds)
Complex supply chain requires global coordination
74
37
Consumer Electronics Value Drivers
Design
• Color styling
• Speed to Product Development
D
l
t
• Certified parts market
testing
Technology
•
•
•
•
•
•
optimization
• Product customization
•
•
Pretreatment
E‐coat
Liquid
Powder
Specialty products
EH&S
EH&S compliance
Startup
• Secure Launch®
• Global supply chain
Operating Effi i
Efficiency
• Finish operations consultations
PPG delivers creative product solutions, speed to market & global coordination 75
PPG Industrial Design Center Network
Oak Creek, WI
Weingarten, Germany
Suzhou ,China
Los Angeles, CA
Taipei, Taiwan
O k J
Osaka, Japan
London, England
Global capabilities differentiates PPG
Seoul, Korea
76
38
PPG Color Design Process
• Global team with multiple interactive design centers
• Customer design partnerships
• Design innovation/creation
D i i
i /
i
• Multi‐market knowledge
• Multi‐input fashion‐color forecasting
• Product solutions for “fast to market”
Design, product quality & speed key factors
77
PPG Color Workshop
A High Impact Customer Experience
• Popular with customer designers
• Interactive color palette development in a facilitated environment
• Ability to create and demonstrate color and coating finish effects
78
39
Summary
• Industrial is the coating industry’s 2nd largest segment at ~$25B in sales
– PPG is the 2nd largest supplier in this market
• Multiple industrial end‐uses present complexity which provide opportunities for growth
– PPG has strong positions in all end‐uses
• Multiple end‐use markets, technologies and application methods require customer and supplier expertise
– PPG’s service capabilities provide high value coatings and p
p
g
g
application expertise to customers
• Emerging regions are a significant growth opportunity
–PPG has a strong position in Asia and also is the only global single source coatings supplier
–PPG is positioned to leverage emerging region supplier consolidation
79
Relationship with Harley
Harley Value
PPG Support
Color Styling
Custom color palette developments for all annual model introductions and maintenance of classic color palettes
Total Source Supply
Purge solvents, pretreatment, Ecoat, liquids and powders
Service
Strong operations support, product development, technical support, process optimization and onsite problem solving
1989
Original Harley Assembly Plant
PPG supplies Liquid primer/basecoat & Liquid clear
2012
23 Years
All 3 Harley Assembly Locations & Outsourcers (95% of total coatings buy)
PPG supplies all coatings technologies
80
40
PPG Paint on Harley‐Davidson Bikes
Front Fender
Rear Fender
Saddle Bag
Frame
Oil Tank & Cover
Engine
Gas Tank
81
Harley‐Davidson and PPG
The partnership continues . . .
PPG and Harley‐Davidson teaming for educational outreach
The Great Color Caper at the Harley‐
Davidson Museum sponsored by PPG
82
41
Appendix
83
PPG Executive Profiles
David B Navikas
David B. Navikas Viktoras R. Sekmakas R Sekmakas
Senior Vice President, Finance and Chief Financial Officer
Senior Vice President, Industrial Coatings, and President, PPG Europe
David B. Navikas is senior vice president, finance and chief financial officer of PPG Industries.
He joined PPG as controller in 1995 and was elected vice president in 2000. Navikas assumed his current position in June 2011 and serves on PPG’s executive and operating committees.
Prior to joining PPG, Navikas developed his career through 22 years with accounting firm Deloitte & Touche
ith
ti fi D l itt & T h LLP. He was lead client LLP H
l d li t
service partner for a number of major companies and educational institutions, audit partner and formerly partner in charge of the PPG account, and professional practice director of the Pittsburgh office.
Navikas received an undergraduate industrial management degree from Purdue University and a master's degree in accounting from Syracuse University. He is a native of Lancaster, Pa., and a member of the American Institute of Certified Public Accountants and the Pennsylvania Institute of Certified Public Accountants. Navikas also serves as a director on the board of Family House in Pittsburgh.
Viktor Sekmakas is senior vice president, industrial coatings, and president, PPG Europe, of PPG Industries.
Sekmakas joined PPG in 1997 with the acquisition of Lilly Industries’ electrocoat business and became market development manager, powder coatings. He became global director, automotive parts and accessories, in 2000, and then general manager, industrial coatings, Asia/Pacific, in 2001. In 2005, Sekmakas added responsibility as managing director, coatings, Asia/Pacific, to his industrial coatings responsibilities.
He was named vice president, coatings, and managing director, Asia/Pacific, i 2006 I 2008 S k k
in 2006. In 2008, Sekmakas was named president, PPG Asia/Pacific, and in d
id
PPG A i /P ifi
di
early 2010 he additionally assumed responsibility for PPG’s global industrial coatings business. Upon assuming the role of senior vice president in August 2010, Sekmakas added responsibility for PPG’s global packaging coatings business and became a member of the company’s Operating Committee. In September 2011, Sekmakas moved from PPG’s Asia/Pacific headquarters in Hong Kong to its European headquarters in Rolle, Switzerland, to assume his current role.
Prior to joining PPG, Sekmakas worked for Valspar as new business manager starting in 1990, and for Lilly Industries as electrocoat market manager starting in 1995.
Sekmakas earned a BS in chemical engineering from the University of Illinois.
84
42
PPG Executive Profiles
Richard J. Zoulek Vince J. Morales
Vice President, Industrial Coatings, Americas
Vice President, Investor Relations
Richard J. Zoulek is Vice President, Industrial Coatings, Americas of PPG Industries. Vince Morales is vice president, investor relations, of PPG Industries.
After joining PPG in 1989 as an Account Representative with the Adhesives and Sealants business group, Rick rapidly moved through a number of progressively responsible sales, technical development and marketing positions with the Automotive Coatings strategic business unit.
In 1996, he joined Industrial Coatings in the leadership role of Product Manager for Automotive Parts & Accessories. Afterwards, Rick assumed responsibility for the Transit & Light Rail coatings segment as Market Manager in 2000 and two years later was promoted to the position of Regional Sales Manager for the General Industrial North Region. He was assigned the role of Director, Transportation Coatings in 2004 and assumed global responsibility as General Manager, Consumer Electronics in 2008.
He joined PPG in the corporate controller’s office, Pittsburgh headquarters, in 1985. Progressive finance and accounting assignments with PPG facilities included supervisor, shared accounting services, in Chillicothe, Ohio, and director, information and financial services, in Mt. Zion, Ill.
Morales returned to Pittsburgh in 2000 as manager, chemical revenue recognition, then became director, internal financial reporting, in 2001. He d di
i
l i
i N
b 2004 d hi
was named director, investor relations, in November 2004 and to his current position in October 2007.
A native of Pittsburgh, Morales earned a bachelor’s degree in accounting from Robert Morris University and a Master of Business Administration degree from the Ohio State University.
Rick was appointed to the position of General Manager, Industrial Coatings for the United States and Canada in September of 2010. Then, in 2012, he was promoted to his current role of Vice President, Industrial Coatings, Americas.
A native of Michigan, Rick earned his BS in Information Science from the University of Michigan and his MBA from Wayne State University.
85
43

Industrial Coatings - Investor Center

Transcription

Similar documents

protint 751 update

DURANAR® Coatings Innovations

WESTERN STATES METAL ROOFING - VARI-Cool

Powder Coating Solutions for Every Architectural Specification

presentation

Vibrance Collection brochure here

Versatile Polyurea Coatings from PPG

prefinished lp® smartside® trim and siding

coatings performance