THE TREND OF DEMAND FOR PAINT AND THE CHALLENGE FACING THE INDUSTRY IN JAPAN 1. Analysis of Status of Japanese paint industry Annual shipment of paint The 10 year trend of the shipment due to the general economic development 1—2 The relationship of the national economic growth with paint demand in Japan The economic growth (GDP %) v a le period of 1986-1! y ina long run and changes a e growth period of 1.2-3.6 % r al production b; The economic condition a y Mizuho Research Institute is never optimistic (Figure 4). 1—3 The response of paint manufacturers as seen from their shipment The response of pa production, and conseque shipment (Figure §). ‘The n ose of previous y d increased employee:By looking the index of number of employees classified according to the size of company and adjusted to 100 of 1997, it is understood that companies of all sizes drastically decreased the number of employees more than the decrease of their sales. The large sized companies that have more than 300 employees decreased their employees by more than 25% (Figure 6). Accordingly the annual production/fabrication per capita has improved due to the decrease of employees (Figure 7). Also the change in their financial strength is observed indicated by various structure about asset (Figure 8), liability/equity (Figure 9), and depreciation/sales (figure 10) ‘The companies however are now entering the difficult time to prevent the reaction and exercise the transfer of technology and sales know-how countering the 2007 problems. —4 Improvement of management structure of manufacturers ‘The transition of various ratio representing profitability of each manufacturer, such as operating profit/asset (¥}, operating profit/sales (%), gross profit/ sales (6), net profit/equity (¥), and net profit/sales (%) shows V-shape improvement since 2002 as indicated by (Figure 11)—(Figure 15) ‘Dhe annual reports of 14 public companies in recent 4 years report the increase of sales and pretax profit as shown in (Figure 16) and (Figure 17) but shows a slight decline of net profit in the closing books of March, 2006. ‘This performance is slightly inferior to that of chemical and all manufacturers, but could be considered as fair. Rising raw material prices in 2005 and the extent of passing them through sales prices will affect the performance of the coming year. 2. The world paint production and overseas production by Japanese manufacturers 2-1 Paint production in major countries of the world Globally the restrictions over chemical substances, such as REACH, POPs, and GUIS, have been tightened and their influence on paint demand has been concerned, but paint production in 22 major countries has shown a gradual increase as seen in (Figure 18). It is not shown in (Figure 1), which shows the result till 2002, but China increased the production rapidly and produced 280,000 tons in 2004. The respective countries in HU either did not decrease but slightly increased their production, Overseas production by Japanese manufacturers increased steadily since 2001 in China, Southeast Asia (Thailand, Singapore, Malaysia, Philippines, Indonesia), and Far East (Taiwan, Hong Kong, Korea) because of aggressive expansion of demand in automobile and building application (Figure 19), It is expected likewise production will substantially increase in such countries as India, Brazil VietNam, Turkey, and Mexico, 2-2 Forecast of overseas economy It is not possible to see exact overseas economic forecast, but (Figure 4) indicates the growth is fhtly less than that of 2004 except in Hast Asian countries. The US seems to suffer from natural ters and military expenses for Middle Hast and, moreover, major national industries such as jon have not shown good performance, and consequently its economy will ai automotive and transporta remain same as this year at best. Germany, UK, France and other countries in HU do not necessarily keep pace and do not make headway in expansion of EU, and thus rapid recovery or growth of their economy may not be expected. 3. The result of paint production in 2004 3-1 Production for market segment Following is the abstract from the report published yearly relating to the paint consumption in market segments (Table 1) ‘he trend of consumption in monetary base (100 million Yen) in respective market, building,building material, structure, marine, automobile (new car and repair), electrical machinery, machinery metal product, wood, DIY, and lane marking, is shown from 1987 through 2004 (Figure 20-Figure31). 3-2. Shipment of paint category ‘The total shipment in quantity is shown in (Figure 1). That of each category, lacquer, alkydamino- alkyd.acryl air-drying, acryl baking, epoxy, urethane, unsaturated polyester, ship bottom, emulsion, emulsion thick-film, water based, powder, and traffic is shown in (Figure 32-45) by the moving average of 12 months from April 1994 through August 2006. 4. Challenge for paint industry In looking future of paint and its application, the tasks of the industry ranges to social, corporate and technical areas, 4-1 Social area Fore paint to be accepted by general society, the burden that paint and its application yields into atmosphere, water (river, lake and sea, etc), land, and living creature, including human, must be decreased. At present, although the extent of the burden that each industry yields, in terms of LCA llife cycle assessment) has not been fully analyzed, the industry endeavors to decrease major burden. ‘The dissemination and development of status of paint can only be achieved by appealing the added value and effect that paint and its application bring to society. 4-2 Corporate area As seen by the analysis of corporation classified according to number of employees, corporations need management strength suitable for world competition. Japan cannot anymore expect increase of populations due to the falling birthrate, and the annual report of fiscal 2005 points out the labor productivity is not ticking up. It is absolutely necessary to improve the combined productivity of manufacturing, technical, sales, and management departments, In view of coming 2007 problem, such productivity improvement can only be accomplished by handing down the technology including experiences and know-how. Manufacturers must continue to bring out new products and it is important to introduce such high value-added and environmentally friendly products that are much needed at present and in the future. 4-3. Technical area ‘The most discussed subject today is how to decrease emission of VOC (volatile organic compounds} including that from the end of pipe, and paint users have intense concern about the control. Immediate shift to water-based products could be conceived of, but step by step shift is technically more appropriate considering LCC (life cycle cost) including ease of application and durability cost, and avoidance of harmful chemical material, It is also important technical task to direct energy conservation society countering global warming. Saving energy necessary for painting and baking, and such product as high reflective coating to shield heat attract attention Specializing the particular function of the coating also is a future task. Immediate problem facing paint industry daily in the same way as all industry is to decrease industrial wastes arising from paint and its application and to enable their easier recycling and disposition, In the above article are introduced the trend of paint demand and the tasks facing the industry. To make the future of the industry bright, the strenuous effort of all concerned is expected. YUKIO NISHIMURA JAPAN PAINT MANUFACTURERS ASSOCIATION, Reproduction forbidden without permission