Us Elastomeric Coatings

U.S.
Elastomeric Coatings Markets F397-39
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Table of Contents
Chapter 1
Executive Summary
Market Overview
1-1 1-1 1-2 1-3 1-3 1-3
Introduction Competitive Analysis Market and Product Trends

Market Trends Product Trends
Major Research Findings
1-3 1-3 1-4 1-4 1-5 1-5 1 -5 1 -5 1-5 1 -5 1 -5 1-5 1 -5 1 -6 1-6
Opportunities and Forecasts

Market Drivers Market Restraints
Market Segment Analysis

Elastomeric Wall Coatings Market M a rk e t D r iv e rs M a rk e t R e s t r a in t s Elastomeric Floor Coatings Market M a rk e t D r iv e rs M a rk e t R e s t r a in t s Elastomeric Roof Coatings Market M a rk e t D r iv e rs M a rk e t R e s t r a in t s
Strategic Conclusions
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Chapter 2
Market Dynamics
Market Definitions
2-1 2-1 2-3
Glossary of Terms List of Abbreviations
Industry Challenges
2-3 2-3 2-3 2-4 2-4 2-4
Introduction Industry Challenges

Meeting Environmental Regulations Increasing Raw Material and Fuel Prices Affect Profitability Creating Bright and Darker Colors
Chapter 3
Overall U.S. Elastomeric Coatings Market
Introduction
3-1 3-1 3-3 3-4 3-4 3-5 3-5 3 -6 3 -6 3 -6 3-6 3-7 3-8
Market Overview
Market Overview and Scope of the Study
Market Engineering Measurements

Market Size Market Age Distribution Di r e ct Sa l e to C o n t racto rs Sa l e s t h ro u g h D i s t ri b u to rs Sa l e s t h ro u g h D i s t ri b u to rs as w e l l as D ir e c t Sal e to Co n t r ac to rs Competition Product Analysis
Construction Market Update
Forecasts and Trends
3-9 3-9 3-9
Market Drivers
Growth in Construction Fuels Elastomeric Coatings Demand
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Need for High-performance Coatings Boosts Demand For Elastomerics Elastomeric Coatings Experience Growth at the Expense of Other Coatings
3-10 3-10 3-11 3-11 3-11 3-12 3-12 3-13 3-13 3 - 13 3 - 15 3-15 3 - 15 3 - 16 3 - 16 3 - 16 3-16 3-16 3 - 16 3 - 17 3 - 17 3 - 17 3-17 3-17
Market Restraints
Higher Cost of Elastomeric Coatings Restrain Growth Competition from Other Coatings Affect Elastomeric Coatings Market General Complexity in Application Constrains Growth
Revenue Forecasts Market and Product Trends

Market Trends Re v e n u e S h a r e Tr e n d s by A p p l i cat i o n M ar k e t VO C R e g u l at i o n s P l ay a Ro l e i n Wi d e n in g t h e G a p B e t w e e n S m al l an d L a r g e M a n u fac t u r e rs Product Trends Cr e at in g C oat i n g s w i t h I m p rov e d P ro p e rt i e s Tr e n d towar d Z e ro VO C C oat i n g s G row t h i n Us e o f Acry l ic - bas e d E l as to m e r ic C oat i n g s In c o rp o r at io n o f C e r a m i c M i c ro s p h e r e s i n Ac ry l i c E l as to m e r i c C oat i n g s
Pricing Trends
Price Determinants Ch e m i s t ry o f t h e C oat i n g Re g i o n i n w h i c h i t i s S o l d S iz e o f t h e P ro je c t Pe r f o r m a n ce R e q u ir e m e n t s Pricing Pricing Trends
Competitive Analysis
3-18 3-18 3-19 3-20 3-20 3-21 3-22 3-22 3-22 3-22 3-22 3-22 3-23 3-23 3-23 3-23
Competitive Structure
The Size and Operation of the Company The Type of Company Distribution Structure Competitive Factors
Market Participants
Degussa Construction Systems Americas The Sherwin- Williams Company Dow Corning Corporation 3M ICI Paints Neogard, a division of Jones-Blair Company Elastomeric Roofing Systems, Inc. (ERSystems) National Coatings Corporation Tamms Industries, Incorporated
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Nationwide Chemical Coatings Manufacturers, Incorporated Henry Company
3-23 3-24 3-24
Market Share Analysis
Market Engineering Strategies
3-25 3-25 3-25 3-25 3-25 3-25 3-26 3-26
Introduction
What is a Market Engineering Strategy? Strategic Recommendations
Strategic Recommendations
Meeting Environmental Regulations Increased Raw Material and Fuel Prices Creating Brighter and Darker Coatings
Frost & Sullivan Awards
3-26 3-26 3-26 3-27 3-27 3-28 3-28 3-29 3-29 3-29 3-29 3-30 3-30 3-31 3-32 3-32 3-33 3-33 3-33 3-34 3-34 3-36 3-36 3-36 3-37
Market Leadership Award

Research Methodology Measurement Criteria Award Recipient: The Sherwin-Williams Company Strong Research and Development Focus Close Contact with Key Users Expansion Plans Strategic Acquisition
Growth Strategy Leadership Award

Research Methodology: Measurement Criteria: Award Recipient: Neogard Customized Product Line Creating Brand Value Strategic Partnership Efficient Distribution Channels
Product Line Strategy Leadership Award

Research Methodology Measurement Criteria Award Recipient: Degussa Construction Systems Americas Ability to Address Customer Requirements Major Presence in Two of the Three Market Segments Research and Development Focus Strong Brand Image
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Concluding Comments
3-37 3-37 3-37 3-38 3-38 3-39 3-39 3-40 3-40 3-40
Product Quality Leadership Award

Research Methodology Measurement Criteria Award Recipient: United Coatings Superior Research and Development Capapbilities Manufacture of Low Volatile Organic Compound (VOC) Products Contacts with End Users Strategic Partnership Conclusion
Chapter 4
U.S. Elastomeric Wall Coatings Market
Introduction
4-1 4-1 4-2 4-3 4-3 4-4 4-4
Market Overview Market Engineering Measurements

Market Size Market Age Competition Distribution Structure
4-5 4-5 4-5 4-5 4-6 4-6 4-6 4-7 4-7 4-8 4-8 4 -8 4 -9 4 -9
Market Drivers
Popularity of Tilt-up Concrete in Building Construction Fuels Demand for Elastomeric Coatings Product Functionality Increases Sales
Market Restraints
Increasing Interest Rates for New Home Starts Check Growth Tendency of Acrylic Elastomeric Coatings to Blister Impedes Growth Lack of Darker and Brighter Shades Affect Wall Coatings Market

Market Trends L a rg e C o m pa n i e s a r e G row i n g Fas t e r Th a n S m a ll e r C o m pa n i e s D e m an d f o r t h e A p p l i c at i o n o f a S in g l e Th i ck C oat Pro du c t Tr e n d s
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Pricing Trends
Prices of Elastomeric Wall Coatings Pricing Trends
4-9 4-9 4-9
4-10 4-10 4-11 4-11 4-11 4-11 4 - 11 4 - 12 4 - 12 4-12 4-12 4-12 4-13 4-13 4-13 4-13 4-13 4-13 4-14 4-14 4-14 4-14
Paint Companies Chemical Companies Specialty Companies Competitive Factors Br an d I m age Pr i c e Te c h n i c al As s i s ta n c e
Market Participants
The Sherwin-Williams Company Degussa Construction Systems Americas ICI Paints Dow Corning Corporation Sto Corporation Dryvit Systems, Inc. Benjamin Moore & Co. IPA Systems, Inc

Tier 1 Companies Tier 2 Companies Tier 3 Companies
Strategic Analysis by Products
4-15 4-15 4-15 4-15 4-16 4-16 4-16
Acrylic Elastomeric Coatings

Market Overview Competitive Analysis
Silicone Elastomeric Coatings

Overview Competitive Analysis
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Chapter 5
U.S. Elastomeric Floor Coatings Market
Introduction
5-1 5-1 5-2 5-3 5-3 5-3 5-3

Market Size Market Age Competition Distribution
5-5 5-5 5-5 5-5 5-6 5-6 5-6 5-7 5-7 5-8 5-8 5 -8 5 -8 5-9 5 -9 5 -9 5 -9 5-10 5-10 5-10
Market Drivers
High Performance Requirements Create Demand for Elastomeric Coatings Fast Setting Time of Polyurethanes and Polyureas Spurs Growth
Market Restraints
Higher Cost of Polyurethane and Polyurea-based Elastomeric Floor Coatings Affect Growth Use of Special Skills and Equipment to Apply Restrains Growth Competition from Epoxies, Cementitious Products Check Growth

Market Trends S m a l l M a n u fact u r ers a re G a i n i n g M a r ke t S h a r e M ov e towa rd D i s t r i b u t i o n o f Coat in g s t h ro u g h I n d e p e n d e n t D is t ri b u to rs Product Trends H i g h D e m a n d f o r P o lyu re a - ba s e d E l as to m e r i c C oat i n g s H y br i d P ro du c t s E m e r g i n g i n t h e C oat i n g s M a rk e t In c re as e i n Ac ry l i c R e in f o rc e d P ro du c t s
Pricing Trends
Pricing Pricing Trends
5-10 5-10 5-12 5-12 5-12
Competitive Factors
Market Participants
Neogard, a division of Jones- Blair Company
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3M Degussa Building Systems LymTal International Inc. Allied Waterproofing Inc.
5-13 5-13 5-13 5-13 5-14
5-15 5-15 5-15 5-16 5-16 5-16 5-16
Polyurethane Elastomeric Coatings

Polyurea Elastomeric Coatings


Chapter 6
U.S. Elastomeric Roof Coatings Market
Introduction
6-1 6-1 6-2 6-3 6-4 6-4 6-4

Market Size Market Age Competition Distribution
6-5 6-5 6-5 6-6 6-6 6-6 6-7 6-7 6-7
Market Drivers
Lesser Life-cycle Cost of Elastomeric Coatings Drives Demand Increasing Demand for Environmentally-Friendly Coatings Favors Elastomeric Coatings Government Encouragement to Use White Solar Reflective Coatings Drives Growth Trend in Roofing Material Favors Elastomeric Coatings
Market Restraints
Application Limitations of Elastomeric Coatings Restricts Growth Competition From Other Roof Coatings Limits Growth
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Market Trends Ro o f i n g C o m pan i e s E n t e ri n g t h e C oat i n g s M ar k e t Product Trends C o m pa n ie s C o n c e n t r at e o n M an u fac t u r i n g Fas t C u r e C oa t in g s Ac ry l i c a n d P o ly u r e a -bas e d E l as to m e ri c Ro o f C oat i n g s G row Fas t e r B r e a k t h r o u g h P r o du c t
6-8 6-9 6-9 6 -9 6-9 6 -9 6 - 10 6 - 10 6-10 6-10 6-10
Pricing Trends
Pricing Pricing Trends
6-11 6-11 6-11 6-12 6-12 6-12 6-12 6 - 12 6 - 13 6 - 13 6 - 13 6-13 6-13 6-13 6-14 6-14 6-14 6-14 6-15
Roofing Companies Specialty Companies Chemical Companies Paint Companies Competitive Factors Co m pan y Cr e d e n t ia l s E n e r g y Sta r s A p p rova l Wa r ra n t y Pr i c e
Market Participants
Henry Company United Coatings National Coatings Corporation Elastomeric Roofing Systems, Inc (ERSystems) Structural Elastomeric Products, Inc Aldo Products Company, Inc
6-16 6-16 6-16 6-16 6-17 6-17 6-17



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Chapter 7
Appendix
Decision Support Database Tables
7-1 7-1 7-2 7-3 7-4 7-5
Historical U.S. New Construction by Type U.S. New Onsite(Put in Place) Construction Forecast U.S. Residential Remodelling and Repair Forecasts U.S. Nonresidential Remodelling and Repair Forecasts U.S. Roof Renovation Spending Forecasts
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List of Figures
Chapter 1
Executive Summary
1-1 Elastomeric Coatings Market: Revenue Forecasts (U.S.), 2001-2011
1-4
Chapter 2
Market Dynamics
2-1 Elastomeric Coatings Market: Impact of Top Three Industry Challenges (U.S.), 2005-2011
2-3
Chapter 3
3-1 Elastomeric Coatings Market: Distribution Channel Followed by Key Suppliers (U.S.), 2004
3-5
3-2
Elastomeric Coatings Market: Market Drivers Ranked in Order of Impact (U.S.), 2005-2011
3-9
3-3
Elastomeric Coatings Market: Market Restraints Ranked in Order of Impact (U.S.), 2005-2011
3-11
3-4
Elastomeric Coatings Market: Revenue Forecasts (U.S.), 2001-2011

3-12
3-5
Elastomeric Coatings Market: Percent of Revenues by Product Type (U.S.), 2001-2011

3-14
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3-6
Elastomeric Coatings Market: Competitive Structure (U.S.), 2004

3-18
3-7
Elastomeric Coatings Market: Database of Key Industry Participants by End-User Market Participation (U.S.), 2004
3-19
3-8
Elastomeric Coatings Market: Elastomeric Coatings Manufactured by Degussa Construction Systems Americas
3-35
Chapter 4
4-1 Elastomeric Wall Coatings Market: Distribution Channel Followed by Key Suppliers (U.S.), 2004
4-4
4-2
Elastomeric Wall Coatings Market: Market Drivers Ranked in Order of Impact (U.S.), 2005-2011
4-5
4-3
Elastomeric Wall Coatings Market: Market Restraints Ranked in Order of Impact (U.S.), 2005-2011
4-6
4-4
Elastomeric Wall Coatings Market: Revenue Forecasts (U.S.), 2001-2011

4-7
4-5
Elastomeric Wall Coatings Market: Competitive Structure (U.S.), 2004

4-10
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Chapter 5
5-1 Elastomeric Floor Coatings Market: Distribution Channel Followed by a Few Key Suppliers (U.S.), 2004
5-4
5-2
Elastomeric Floor Coatings Market: Market Drivers Ranked in Order of Impact (U.S.), 2005-2011
5-5
5-3
Elastomeric Floor Coatings Market: Market Restraints Ranked in Order of Impact (U.S.), 2005-2011
5-6
5-4
Elastomeric Floor Coatings Market: Revenue Forecasts (U.S.), 2001-2011

5-7
5-5
Elastomeric Floor Coatings Market: Competitive Structure (U.S.), 2004

5-11
5-6
Elastomeric Floor Coatings Market: Company Market Share by Revenue (U.S.), 2004
5-14
Chapter 6
6-1 Elastomeric Roof Coatings Market: Distribution Channel Followed by a Few Key Suppliers (U.S.), 2004 6-2 Elastomeric Roof Coatings Market: Market Drivers Ranked in Order of Impact (U.S.), 2005-2011 6-3 Elastomeric Roof Coatings Market: Market Restraints Ranked in Order of Impact (U.S.), 2005-2011 6-4 Elastomeric Roof Coatings Market: Revenue Forecasts (U.S.), 2001-2011 6-5 Elastomeric Roof Coatings Market: Competitive Structure (U.S.), 2004 6-6 Elastomeric Roof Coatings Market: Company Market Share by Revenue (U.S.), 2004
6-15 6-11 6-8 6-7 6-5 6-4
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Chapter 7
Appendix
7-1 Decision Support Database: Value of New Construction by typeUSA (Million USD)
7-1
7-2
Decision Support Database: USValue of New Construction Put in Place (USD Million), 20012011
7-2
7-3
Decision Support Database: Spending on Remodeling and Repairs of all Residential PropertiesUS, 20012011
7-3
7-4
Decision Support Database: Nonresidential Remodeling and RepairsUS, 20002011

7-4
7-5
Decision Support Database: Money Spent on Renovating Roofs US, 20012011

7-5
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List of Charts
Chapter 3
3.1 Overall Elastomeric Coatings Market: Market Engineering Measurements (U.S.), 2004
3-4
3.2
Overall Elastomeric Coatings Market: Revenue Forecasts (U.S.), 2001-2011

3-13
3.3
Percent of Revenues by product type (U.S.), 2001-2011
3-14
3.4
Elastomeric Coatings Market: Strengths of Sherwin-Williams as a Market Leader (U.S.), 2004

3-27
3.5
Elastomeric Coatings Market: Key Strategies adopted by Neogard (U.S.), 2004

3-31
3.6
Elastomeric Coatings Market: Strengths of United Coatings (U.S.), 2004

3-39
Chapter 4
4.1 Elastomeric Wall Coatings Market: Market Engineering Measurements (U.S.), 2004
4-3
4.2

4-8
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Chapter 5
5.1 Elastomeric Floor Coatings Market: Market Engineering Measurements (U.S.), 2004
5-2
5.2

5-8
5.3
Elastomeric Floor Coatings Market: Company Market Share by Revenues (U.S.), 2004
5-14
Chapter 6
6.1 Elastomeric Roof Coatings Market: Market Engineering Measurements (U.S.), 2004
6-3
6.2
Elastomeric Roof Coatings Market: Revenue Forecasts (U.S.), 2001-2011

6-8
6.3
Elastomeric Roof Coatings Market: Company Market Share by Revenues (U.S.), 2004
6-15
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1
Executive Summary
Market Overview
Introduction
This study discusses the elastomeric coatings market in the United States. Elastomeric coatings have the ability to waterproof substrates and the ability to bridge cracks smaller than 1/16th of an inch. These coatings extend by about 200 to 400 percent, permitting them to expand and contract along with their substrates during summertime. They are made five to ten times thicker than conventional paints, which helps them to cover surface irregularities. The study identifies and discusses the trends in the U.S. elastomeric coatings market for the period 2001 to 2011, with 2004 as the base year. The forecast period is from 2005 to 2011. The study also discusses the key market drivers and restraints, provides in-depth market and competitive analysis, and offers strategic recommendations to succeed in this highly competitive market. In this study, the U.S. elastomeric coatings market has been divided into the following three broad application segments:
s s s
Elastomeric wall coatings market Elastomeric floor coatings market Elastomeric roof coatings market
The growth prospects of elastomeric coatings is heavily dependent on the construction industry, for the purpose of which decision support database (DSD) tables have been provided in the appendix. These tables highlight the historical and forecast construction data that provide a better understanding of the elastomeric coatings market in the United States. This study focuses on the building construction applications of elastomeric coatings and excludes industrial and automotive applications. Elastomeric sealants, adhesives, grouts, and so on are also excluded from consideration in the study. The estimated market sizes are based on the total sales of elastomeric coatings in the United States. They do not represent the amount of material produced in the country.
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1-1
The elastomeric coatings market in the United States is very fragmented with about 200 suppliers. Most of these companies participate in one, or a maximum of two end-user segments. The larger companies usually supply coatings to meet a variety of applications within a particular segment, while many of the smaller companies focus on very niche markets. Most companies also favor a particular chemistry for the manufacture of their elastomeric coatings, which could be due to their area of expertise. In this study, the participating companies have been classified in two ways depending on: The size and operation of the company:
s s
Large national suppliers Small regional suppliers
The type of company:

s s s s
Chemical companies Paint companies Construction companies Specialty companies
The following are the value chain members in a typical elastomeric coatings buying process:
s s s
Manufacturers or suppliers of elastomeric coatings Distributors that stock and sell elastomeric coatings to contractors Contractors or applicators that buy elastomeric coatings from distributors or source it directly from manufacturers Architects and engineers that play a vital role in selecting the elastomeric coatings Commercial or residential complex owners also play a role in the selection of the elastomeric coatings
s s
The following competitive factors were identified as being key to succeeding in this market:
s s s s s s
Price Quality of products Reputation of the company Warranty Environmental compliance Ease of application
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1-2
Market and Product Trends

The following are the major market trends and product trends which the elastomeric coatings market is witnessing in the United States. M a r k e t Tr e n d s
s
Elastomeric roof coating revenues are expected to overtake elastomeric wall coating revenues by 2011
Volatile Organic Compounds regulations are likely to play a role in widening the gap between small and large manufacturers
P r o d u c t Tr e n d s
s s s s
Manufacture of coatings with improved properties Trend toward zero VOC elastomeric coatings Growth in the use of acrylic-based elastomeric coatings Incorporation of ceramic microspheres in acrylic elastomeric coatings
Major
Research
Findings
Opportunities and Forecasts

Figure 1-1 represents the revenue forecasts of the U.S. elastomeric coatings market for the period 2001-2011.
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1-3
Figure 1-1

Revenue Revenues Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Compound Annual Growth Rate (2004-2011): 10.1%
Note: All figures are rounded; the base year is 2004. Source: Frost & Sullivan
Growth Rate (%) --7.5 8.5 10.0 10.6 10.6 10.3 9.7 9.9 9.8 9.8
($ Million) 483.0 519.4 563.8 620.0 685.8 758.6 837.0 918.2 1,009.3 1,108.0 1,216.7
Total revenues from this market for 2004 were $620.0 million and are projected to increase to $1,216.7 million in 2011, with a compound annual growth rate (CAGR) of 10.1 percent for the period 2004-2011. Market Drivers The key drivers for the U.S. elastomeric coatings market are:
s s s
Growth in construction fuels market demand Need for high-performance elastomeric coatings boosts market demand Elastomeric coatings experience growth at the expense of other coatings
Market Restraints The key restraints for the U.S. elastomeric coatings market are:
s s s
Higher cost of elastomeric coatings restrains growth Competition from other coatings affects elastomeric coatings market General complexity in application constrains growth
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1-4
Market Segment Analysis

E l a s t o m e r i c Wa l l C oa t i n g s M a r k e t
Market Drivers
s
Popularity of tilt-up concrete in building construction fuels demand for elastomeric coatings
Product functionality increases sales
Market Restraints
s s s
Increasing interest rates for new home starts check growth Tendency of acrylic elastomeric coatings to blister impedes growth Lack of darker and brighter shades affects wall coatings market
Elastomeric Floor Coatings Market

Market Drivers
s s
High performance requirements create demand for elastomeric coatings Fast setting time of polyurethane and polyurea spurs growth
Market Restraints
s
Higher cost of polyurethane and polyurea-based elastomeric floor coatings affects growth
s s
Use of special skills and equipments to apply restrains growth Competition from epoxies and cementitious products check growth
Elastomeric Roof Coatings Market

Market Drivers
s s s s
Lesser life cycle cost of elastomeric coatings drives demand Increasing demand for environment-friendly coatings favors elastomeric coatings Government encouragement to use white solar-reflective coatings drives growth Trends in roofing material favor elastomeric coatings
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1-5
Market Restraints
s s
Application limitations of elastomeric coatings restrict growth Competition from other roof coatings limits growth
Strategic Conclusions
The U.S. elastomeric coatings industry is faced with the following challenges:
s s s
Meeting environmental regulations Increasing raw material and fuel prices affects profitability Creating bright and darker colors
Some of the key strategies to counter these challenges could be:

s s s s
Continuous investment into research and development Development of cost-efficient coatings Internal cost reduction Working together with facility owners, applicators, or painting contractors
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1-6
2
Market Dynamics
Market Definitions
Glossary of Terms
Abrasion Resistance: It is the ability of a coating to resist degradation due to mechanical wear. Acrylic: Any plastic polymer that contains at least one version of methacrylate monomer, including but not limited to methylmethacrylate or butylmethacrylate Adhesion: The degree of attachment or bonding of one substance to another. Asphalt: A dark brown to black bituminous sticky substance, solid or semisolid in consistency, found in natural beds and also obtained as a residue in petroleum refining. It consists chiefly of hydrocarbons. The principal ingredient in asphalt is mastics. Breathable Coating: A coating with a perm rating above 0.5. It is the opposite of a vapor retarder. The higher the perm rating, the more breathable the coating. Coat: The paint applied to a surface in one application that forms a film when dry. Coating: A finish used to create a protective and/or decorative layer on a surface. Synonymous with the term paint. Coverage Rate: Quoted either as square feet covered by a gallon (50 ft2/gal ) or as gallons used per square (2 gal/square). A square is 100 square feet. Cure: The process by which a coating becomes a hard film. Dirt Pickup: The accumulation of dirt on the sealant surface during or after sealant cure. Elastomer: A material capable of elongating at least 100 percent and recovering its original dimensions. Elongation: Lengthening or stretching ability to accommodate movement.
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2-1
Epoxy: An adhesive containing epoxide groups, which may be cross-linked through a chemical reaction. Usually, these are two-part systems that need to be added together before the reaction will proceed. Film Thickness: The thickness of a membrane, normally measured in mils. Gloss: The luster or shininess in paints and coatings. Grout: Cement or mortar used to seal between precast concrete planks in a roof deck. Lining: A material used to provide corrosion protection to a container, and/or protect the contents of the container from contamination by the material of the container. Mil: A unit in measuring thickness, being 0.001 inch. Permeability: The degree to which liquid or gas can penetrate and pass through a coating layer. Polymer: A chemical compound or mixture of compounds formed essentially of repeating structural units. Polyurethane: Urethane is an organic compound formed by the reaction between an isocyanate and a polyol. Polyurethane coatings provide high levels of gloss retention, weatherability, flexibility, resistance to chemicals and solvents, and abrasion. Primer: A chemical material that improves the bond of the sealant or the coating of the substrate. Solids Content: The percentage of nonvolatile matter that may be measured in volume or weight. Solvent: Any substance, usually a liquid, that dissolves other substances. In coatings, normally a liquid organic compound used to make a fluid coating be applied more freely. Substrate: The surface to be painted. Tensile Strength: The force per unit area that is applied at the time of rupture of the specimen. It is calculated by dividing the breaking force in pounds by the cross-section of the unstretched specimen in square inches. UL Rating: A flammability rating system for materials tested by Underwriters Laboratories. UL classifies or lists material that pass specific tests. UV: Ultraviolet radiation or sunlight. Volatile Organic Compound (VOC): Solvent portion of a paint that evaporates while forming a dry film of paint. Volume Solids: The percentage of nonvolatile substance present in a coating material.
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2-2
List of Abbreviations
CMU: Concrete Masonry Unit EIFS: Exterior insulation and finish systems EPA: Environmental Protection Agency MDI: Diphenyl Methane diisocynate R&D: Research and Development SPF: Spray polyurethane foam UV. Ultraviolet radiation VOC: Volatile organic compound
Industry
Challenges
Introduction
A challenge is any issue that affects the industrys overall performance or influences competition and includes consumer issues, regulatory programs, economic trends, market measurement trends, competitive strategies, new technologies, sales and marketing strategies, new market opportunities, and market threats. It is a predicament which companies find difficult to face.
Industry Challenges
Figure 2-1 lists the impact of the top three challenges facing the U.S. elastomeric coatings industry during the period 2005 to 2011.
Figure 2-1
Elastomeric Coatings Market: Impact of Top Three Industry Challenges (U.S.), 2005-2011
Challenge Meeting environmental regulations Increasing raw material and fuel prices affect profitability Creating brighter and darker colors 1-2 Years High High Low 3-4 Years High High/ Medium Low 5-7 Years High High/ Medium Low
Source: Frost & Sullivan
These challenges have been identified and ranked in the order of their impact.
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Meeting Environmental Regulations Different state governments have different volatile organic compound (VOC) regulations. Hence, coating manufacturers are under pressure to manufacture environment-friendly products that are compliant with the regulations prevalent in respective areas. This serves as a challenge to companies participating in this market as the state governments continuously introduce newer and more stringent regulations periodically, forcing coatings manufacturers to be alert and ready to modify their product lines. Since the larger companies already have the research and development (R&D) set up in place, the VOC regulatory compliance does not to affect them to a large extent. The smaller participants and the midsize companies are particularly affected because they lack the resources and infrastructure. Most of the large companies provide effective solutions in advance to meet a particular regulation. Nevertheless, this issue continues to be a major challenge, with the impact being high, as the entire United States is moving towards zero VOC in coatings. Increasing Raw Material and Fuel Prices Affect Profitability All elastomeric coatings are dependant on crude oil and its derivatives for their manufacture. Since crude oil prices have been un-predictably exploding, manufacturers of elastomeric resins such as butyl acrylate and polymeric diphenyl methane di isocynate (MDI) have been unable to absorb these costs and have increased their prices by 10 to 30 percent accordingly. This in turn has led elastomeric coatings manufacturers to pass on a part of the costs to the end users, increasing prices by 5 to 10 percent on the entire range This challenge has a major impact on small- and medium-size companies. Larger organizations are able to better utilize their resources and avail raw materials at cheaper prices due to their superior bargaining power, making them better positioned to contain the hike in prices. Nevertheless the unpredictable nature of raw materials and fuel supply, combined with ever-increasing prices, presents a major challenge to all the manufacturers participating in this market. C r e a t i n g B r i g h t a n d Da r k e r C o l o r s Despite progressing enormously on the technology front, elastomeric coatings still come in few light shades when compared to ordinary latex/acrylic paints, which are available in numerous colors. This is because brighter and darker elastomeric coatings contain pigments that are UV-sensitive, leading the coatings to degrade and loose color when continuously exposed to sunlight. Elastomeric coatings mostly are applied over exterior walls, roofs, and floors, among which the walls and the roofs are most exposed to sunlight. This presents a serious challenge, more so, to elastomeric wall coatings manufacturers as they are under pressure to serve end users better, who sometimes demand unusually bright and dark shades, besides other superior properties.
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3
Introduction
Market Overview
Elastomeric coatings are a class of high performance, heavy-duty, and internally plasticized flexible coatings that have the unique ability to bridge cracks smaller than one-sixteenth of an inch. These coatings also provide a durable waterproof surface. The aforementioned qualities stem from the fact that these coatings are made up of a rubbery base, which permits them to extend by 200 percent and above and then recover. Different chemistries of elastomeric coatings are used in varying quantities in different end-user markets. Acrylicbased elastomeric coatings, for instance, are more widely used in wall and roof coating applications, while polyurethanes are more commonly used in flooring applications. These coatings usually find applications in both new construction and the renovation of high-rise commercial complexes, residential apartments and houses, sports complexes, and so on. A lot of confusion exists in the elastomeric coatings marketplace with regard to the definition of elastomeric coatings. A coating that possesses the crack-bridging capability, the waterproofing ability, and a stretchability ranging from 100 to 800 percent is referred to as an elastomeric coating. However, many of the products manufactured by the leading companies expand by about 200 to 400 percent. Elastomeric coatings entered the U.S. market in the late 1950s while they have been used in Europe post world war II. The need to seal cracks and waterproof old buildings in Europe led to the demand for a coating that would cater to these requirements. Earlier, manufacturers tried to incorporate plasticizers into their formulation to address this issue but the migration of plasticizers off the coating; besides loss of properties of the system a couple of years after application inhibited the markets growth. In the United States, Rohm and Haas Company and Union Carbide Corporation first began working on the creation of a 100 percent internally plasticized system.
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Elastomeric coatings are applied in thick films that are five to ten times thicker than normal acrylic paints, thereby they help cover surface irregularities. They are weatherproof and protect their substrate from wind-driven rain. They help rejuvenate weathered or cracked surfaces and last much longer than traditional paints. However, for best results, the surface on which the coating is to be applied should be well prepared and cleaned prior to the application. Elastomeric coatings are particularly useful in coastal areas as they already have high levels of moisture in the air. In addition, substrates such as concrete, masonry, and wood are porous and the absorption of moisture by these surfaces can significantly shorten their life. The ability of elastomeric coatings to bridge cracks that are formed by thermal expansion and their waterproofing qualities significantly contribute in extending the substrates life. Elastomeric coatings have many applications. In the building construction industry, being used to cover vertical walls, terraces, balconies, garages, parapets, roofs, sports stadiums, decks, bowling alleys, and so on. Industrial uses include reactor lining, equipment coating and piping and other cryogenic storage devices. Other uses include applications in swimming pools, flexible bumpers in automobiles, coolers and freezers. Elastomeric coatings can be classified into the following types based on chemistry:
s
Acrylics: Acrylics are single-component water-based elastomeric coatings and are the most widely used. Siliconized acrylics also fall under this category.
Urethanes: These elastomeric coatings are available in one or two component products. Urethane coatings generally find use in high traffic areas such as walkways and garages.
Silicones: Silicones also come in one or two component products. They are also very specialized and are being used in specific wall coating applications.
Polyureas: Polyureas are two component specialized products and find use in floor coatings. They are a relatively new class of product.
Neoprene: Neoprene coatings are composed of synthetic rubber polymers, which offer excellent elongation and recovery properties and find specialized used in some roof coatings.
Hypalons: Hypalons (a registered trademark of E.I. DuPont de Nemours Company) are chlorosulfonated polyethylene rubbers and specialize in roofing applications. Often, a neoprene-hypalon hybrid is used.
Butyl Rubber: Butyl rubber coatings have extremely low water vapor permeability. Hence, these coatings find use in freezers, coolers, and other cryogenic storage equipment and also in places subjected to ponding water.
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Market Overview and Scope of the Study The elastomeric coatings market in the United States was worth $620 million in 2004. The market is expected to grow at a compound annual growth rate (CAGR) of 10.1 percent to reach $1,216 million in 2011. The main driver for this market is the growth in commercial construction. The durability, elongation, waterproofing ability, and other features of elastomeric coatings are also contributing to the growth of this market. Elastomeric coatings are concentrated in the southern coastal areas of California and Florida rather than the interior and northern parts of the United States. This is due to the greater need to waterproof in these regions because of the high moisture content in the atmosphere. Since the building construction industry accounts for maximum usage of elastomeric coatings, the study is restricted to this industry only. Three main end uses of elastomeric coatings will be dealt with in detail in this study, which are as follows:
s
Wall coatingsAs the name suggests, these are coatings that cover vertical walls of any type of building
Floor coatingsThese coatings cover all kinds of horizontal surfaces such as garages, terraces, and decks
Roof coatingsThese coatings cover the roofs of residential, commercial, and industrial buildings
This study also includes the application of elastomeric coatings by Do It Yourselfers (DIYs) though their usage of these coatings is very limited. This research service is limited to acrylics, urethanes, silicones, and polyurea-based elastomeric coatings because these constitute the bulk of the market. Though neoprene, hypalons, and butyl urea coatings were greatly used in the 1980s, today, there are very few companies involved in these types of coatings and the market for these coatings has diminished. Coatings based on asphalt or bitumen, that are rubberized, are excluded from this study. Elastomeric membranes or elastomeric liquid membranes are terms commonly confused with elastomeric coatings. Sometimes, these terms are used interchangeably while at other times sheets that serve as coatings are called the membranes. At other times, the primer, the sub coat, and the topcoat are collectively referred to as elastomeric membranes. In this research service, only elastomeric membranes will be referred to, whose coatings or layers are liquid applied and are elastomeric in nature. Primers, surface conditioners, adhesives, and sealants that may or may not be elastomeric in nature are excluded from this study.
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Chart 3.1 represents the Market Engineering measurements for the U.S. elastomeric coatings markets in 2004.
Chart 3.1
Overall Elastomeric Coatings Market: Market Engineering Measurements (U.S.), 2004
Challenge Identification
Market Engineering Drives Market Strategy and Planning
Market Engineering System
Market Research
Market Engineer
Market Strategy
Implementation
Market Planning
Measurement Name Market age Revenues Potential revenues (maximum future market size) Base year market growth rate Forecast period market growth rate Average price Price range Price sensitivity Competitors (active market competitors in base year)
Measurement Growth $620 million $1,216.7 million 10% 10.1% $19 per gallon $10 to $50 per gallon High Around 200
Trend --Increasing Increasing Increasing Decreasing Increasing Stable Increasing Increasing
Note: All figures are rounded. Source: Frost & Sullivan
Market Size The elastomeric coatings market in the United States in 2004 was worth $620 million This is expected to grow at a compound annual growth rate (CAGR) of 10.1 percent to reach $1,216.7 million by the year 2011.
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Market Age The overall elastomeric coatings market in the United States is at a growth stage with a few national suppliers and a number of regional suppliers. The national suppliers cater to most parts of United States while the regional participants focus only on a particular region and manufacture coating customized to the regions requirements. The growth potential of these coatings are dependent on their end use and on the region of application in the United States. Forexample, in the state of California, the government is promoting the use of reflective roof coatings because of their high moisture levels. White elastomeric coatings, which can reflect the sunlight and can also waterproof, are an obvious choice for consumers. Distribution Figure 3-1 presents the modes of distribution followed by key suppliers in the U.S. elastomeric coatings market:
Figure 3-1
Elastomeric Coatings Market: Distribution Channel Followed by Key Suppliers (U.S.), 2004
Direct Sale to Company Benjamin Moore & Co. Degussa Constructions Systems Americas Dryvit Systems, Inc. Elastomeric Roofing Systems, Inc. (ERSystems) Henry Corporation ICI Paints M.A.B. Paints National Coatings Corporation Neogard, a division of Jones- Blair Company Pacific Polymers International, Inc. Sika Corporation Sto Corporation Textured Coatings of America, Inc. The Sherwin- Williams Company Tremco Sealants/ Waterproofing Division United Coatings 3M s s s
Sale through Distributors s s s Mix of Both
Contractors
s s s s s s s s s s s
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Direct Sale to Contractors
This is a more common mode of distribution followed in the elastomeric floor and roof coatings industry. This is as many projects in this industry require several gallons of coatings and also a good job specially in this market is very dependent on the skills of the applicator and so the manufacturers generally sell to authorized applicators. Comparatively smaller companies follow this mode of distribution as they have good local contacts. For example, Resin Technology Company, a division of Henry Company, manufactures elastomeric polyurea coatings and sells it only to approved applicators or contractors.
Sales through Distributors
This is a more common mode of distribution followed by the wall coatings industry where companies even sell its products through Home Depot and Lowes. Selling through distributors gives the manufacturer the advantage of greater geographical coverage and selling it to newer contractors. For example, The Sherwin-Williams Company sells its coating through its 2800+ company owned stores throughout the United States while United Coatings and Sto Corporation sells their products through independent distributors.
Sales through Distributors as well as Direct Sale to Contractors
Many companies are following this mode of distribution and there is a trend favoring this move. This is because this mode of distribution gives manufacturers the unique advantage of selling a few of their coatings through approved applicators as well as widening their reach through independent distributors. Forexample, Neogard and 3M sell their elastomeric coatings line though a mixture of both the modes of distribution. Competition Many companies sell elastomeric coatings in the United States. Most of the companies are regional and sell only to a particular area while there are comparatively fewer companies selling nationally. The regional companies compete on their ability to manufacture products that are customized for use in a particular area while the national participants dominate when it comes to the variety of products manufactured and the availability of technical help. The U.S. elastomeric coatings market is very fragmented with different market leaders in different segments. Most companies in this market focus on one or two end use markets, while there are very few suppliers who cater to all the three end use markets.The Sherwin-Williams Company dominates the elastomeric wall coatings market while Neogard, a division of Jones-Blair Company is the market leader in the floor coatings market. Innovative technology, market know-how and a good distribution network is what differentiates these companies from the rest.
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Product Analysis Elastomeric coatings can be classified based on their base resin. They are as follows:
s
Acrylics
Acrylics are single component water based elastomeric coatings. They adhere excellently to their substrates; have good flexibility, good weather resistance, and high moisture-vapor transmission rates and are also easy to apply. Acrylics are the most widely used elastomeric coatings and are also the least priced.
s
Urethanes
These elastomeric coatings are available in one or two component products. Urethane coatings find specialized use in high traffic areas such as walkways and garages. They offer excellent weather resistance and are highly resistant to chemicals and UV light. They are the most expensive coatings in this category.
s
Silicones
Silicones also come in one or two component products. They too are very specialized and have limited but specialty use.
s
Polyureas
Polyureas are two component products that are also very specialized. They usually find applications in floor coatings, which are subjected to high traffic. They are difficult to apply and hence quite expensive. Different applications have different requirements with respect to environmental conditions, abrasion resistance, chemical resistance amongst others. Any coating can be used regardless of the end use but in most cases specific end use markets have a particular type of coating dominating. For example, acrylic-based elastomeric coatings have a market share of 90 percent in the wall coatings market and polyurethane-based coatings have a market share of 90 percent in floor coatings market. This is because their chemical composition makes them specifically suited for a particular end use. Sometimes the elastomeric coatings based on the same chemistry are used for different end use. For example, acrylic coatings are used for wall coatings, roof coatings, and also floor coatings. In such circumstances, the coatings are engineered and slightly modified to match the end use requirement it is not best suited for. The substrate plays one of the important roles in determining whether a particular coating is suitable for the particular end use or not. This is because of adhesion compatibility between the substrate and the coating. For example, acrylics will adhere better to concrete/masonry surfaces while silicones will go over exterior insulation and finish systems (EIFS) surface better, both as a roof coating.
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Construction Market Update

The elastomeric coatings market is heavily dependent on the construction industry. Hence, elastomeric coatings market grows when construction industry flourishes. Exterior walls, floors and roofs come directly under the residential and nonresidential construction. The construction industry is seeing high growth. The key factor responsible for this growth is nonresidential construction. Nonresidential construction is expected to grow at the rate of five to six percent throughout United States in the next few years. This is because of increase in corporate profits which has resulted in increase in office construction and employment. Higher employment has resulted in increased wages and higher consumer spending on leisure activities and recreation. health care construction has also been growing steadily due to the increasing demand to serve the elderly. Hotel construction is increasing in tourist areas. All of this is leading and resulting from an overall improvement in the economy. The residential construction market is seeing growth, but with a different driver. The years 2001 to 2004, almost until the third quarter, were very good for the residential construction market. Since the interest rates were down to historic levels, there was a flurry in new housing starts but toward the end of 2004 and early 2005 the interest and mortgage rates started climbing and hence the new housing starts began to decline. However, with the decline in new starts, there started a flurry of renovation and home improvements began to increase. Total spending on home improvement, renovation, and repair is witnessing growth and is expected to grow by 5.5 percent in the next couple of years. Construction of condominiums and conversion of apartments into condos is expected to maintain its momentum at least in a few places in the United States. This multi-family housing segment witnessed a boom during 2003 as young professionals were buying new properties. The low interest rates permitted them to buy a property rather than rent one, hence there was a flurry in this market. However, with the increase in interest rates, though the condominium construction is expected to dip, states in the South East, for instance, Florida, Georgia, North Carolina and South Carolina are still experiencing growth. This may probably be due to the fact that an independent house is more expensive than a condominium. The elastomeric wall coatings market is expected to get a surge with the greater usage of tiltup and precast concrete in construction. According to the Tilt-Up Concrete Association, the use of tilt-up concrete in the year 2004 has risen by 23 percent as compared to the previous year. Since concrete structures are prone to cracking, the increase in use of concrete for building construction promotes the usage of elastomeric wall coatings. Also, the increase in the construction of condominiums is responsible for elastomeric wall coatings growth. The construction of conominiums provides the opportunity to construct greater high-rise buildings. Thus, higher the number of high-rise buildings, the greater is the surface area of the exterior walls and hence this provides an opportunity for greater use of elastomeric exterior wall coatings in a single project. Also, the growth in the number of new office buildings, recreation centers, and industrial workshops and buildings are all and will be responsible for the elastomeric wall, floor, and roof coatings market to increase. Home improvements, such as renovation of the parking garage, building walls, terrace, roof, and so on are facilitating the elastomeric floor and roof coatings market to grow.
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Forecasts
and
Tr e n d s
Market Drivers
Figure 3-2 shows the drivers of the U.S. elastomeric coatings market ranked in the order of impact for the period 2005-2011.
Figure 3-2
Elastomeric Coatings Market: Market Drivers Ranked in Order of Impact (U.S.), 2005-2011
Rank Driver 1 2 3 Growth in construction fuels elastomeric coatings market demand Need for high-performance coatings boosts market demand Elastomeric coatings experience growth at the expense of other coatings 1-2 Years 3-4 Years 5-7 Years High High Medium High Medium Medium Medium Medium Low
Growth in Construction Fuels Elastomeric Coatings Demand The growth in construction is the biggest driver for growth of the elastomeric coatings market. The nonresidential building construction industry that includes construction of office buildings, healthcare buildings, educational complexes, and so on is expected to grow by five to six percent and also the home repair and renovation industry is expected to grow by 5.5 to 6.5 percent in the coming years. 2004 was the juncture at which growth in residential construction began to fall and growth in nonresidential construction began to pick up. New housing starts after a decade long of growth began to slow down. This decline in growth of new housing starts was due to the rising interest rates. However, the home repair and renovation industry has picked up and is expected to grow by 5.8 percent in the next couple of years. The nonresidential new building construction segment has already gained momentum and has grown by 4.7 percent in 2004. This segment is further expected to grow by 1 to 2 percent in the next few year due to several reasons. Higher corporate profits have increased spending on office buildings and recruitment. Higher recruitment has led to higher wages and hence increased spending power on leisure activities. This is resulting in newer recreation and retail centers being opened. Hotel construction in tourist areas is also seeing growth. All this is due to and is resulting in the overall growth in economy. Hence, the elastomeric coatings industry is being fueled by the high growth in construction. This driver is expected to have a high impact in the near and mid-term future.
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Need for High-performance Coatings Boosts Demand For Elastomerics Many people in different regions of the United States are experiencing a need for high-performance coatings. This is especially true of coastal areas that experiences strong winds and carry moisture with them. These areas require a coating that will protect their walls, roofs, and floors and will prevent moisture from penetrating into them. Elastomeric coatings are hence favored. Their ability to stretch by about 300 percent and their waterproofing characteristics are unmatched. These coatings are durable and long lasting and can withstand heavy rainfall and snowfall. They are also dirt, mildew, and chemical resistant. All these factors, along with end users realizing that applying an elastomeric coating is much more cost-effective than carrying out renovation or replacement work, make these coatings increasingly sought after. This factor is expected to drive the market throughout the forecast period. Elastomeric Coatings Experience Growth at the Expense of Other Coatings Elastomeric coatings are generally over five times thicker than conventional latex/acrylic paints when dry. This gives these coatings the ability to hide surface imperfections and bridge hairline cracks while traditional paints and coatings are not as effective in concealing surface imperfections. Another factor is that new buildings are warranted for one year in the United States. Hence, the building contractors tends to use traditional paints. Once these paints peel, many building owners are swayed toward elastomeric coatings as they provide superior protection. Also the fact that elastomeric coatings are warranted for a longer period, for instance, many elastomeric roof coatings manufacturers give ten years warranties, and light or white coatings help conserve energy in summer, consumers are convinced that they are best choice. This driver is expected to have medium impact throughout the coming years, since many end users see only the initial costs.
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Market Restraints
Figure 3-3 shows the market restraints of the U.S. elastomeric coatings market ranked in their order of impact for the forecast period 2005-2011.
Figure 3-3
Elastomeric Coatings Market: Market Restraints Ranked in Order of Impact (U.S.), 2005-2011
Rank Restraint 1 2 3 Higher cost of elastomeric coatings restrain growth 1-2 Years 3-4 Years 5-7 Years High High Medium Low High Low Low
Competition from other coatings affects elastomeric coatings market Medium General complexity in application constrains growth Medium
Higher Cost of Elastomeric Coatings Restrain Growth Elastomeric coatings cost about 350 percent more than that of conventional latex/acrylic paints. On an average, a gallon of acrylic elastomeric coating for wall coating applications costs $21, while an ordinary acrylic paint costs about $6/gallon. The coverage area per gallon of elastomeric coatings are much lower than ordinary coatings. Generally, on a porous surface, elastomeric coatings cover 50 to 60sqft/gallon while conventional paints and coatings spread at the rate of 200 to 250sqft/gallon. However, elastomeric coatings have many benefits like being able to effectively waterproof and bridge cracks smaller than 1/16th of an inch. These coatings also have good chemical, abrasion, and UV resistance and are long lasting. Despite all these benefits, contractors are deterred by the pricing, thus, making it the single most important restraint, which has and will continue to impact the market in a major way. Competition from Other Coatings Affect Elastomeric Coatings Market Though elastomeric coatings are a unique product with excellent features, conventional coatings gain an upper hand in a few circumstances. States like Idaho in the United States have low moisture in the air and also experience lower temperature variations. In these areas ordinary paints and coatings offer stiff competition to their elastomeric counterpart. This is because these traditional paints are cheaper and the elastomeric coatings functionality is not entirely utilized in such areas. Hence, homeowners and building contractors are often swayed to go in for the traditional paints.
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General Complexity in Application Constrains Growth Many of the elastomeric coatings such as polyurethanes, polyureas, and silicones often come in two component coatings that require effective mixing of the two components before their application. This necessitates expensive and cumbersome equipment for their effective mixing and complicates their application. However, coatings which are polyurethane and polyurea-based offer exceptional durability and a shorter cure time. Hence, this factor is a medium restraint to this market. Since the elastomeric coatings market is getting more competitive, many companies are increasing their R&D expenditure to come up with better technology so as to reduce the impact of this restraint.
Revenue Forecasts
Figure 3-4 and Chart 3.2 show the revenue forecasts for the total elastomeric coatings market in the United States for the period 2001 to 2011.
Figure 3-4

Growth Rate (%) --7.5 8.5 10.0 10.6 10.6 10.3 9.7 9.9 9.8 9.8
($ Million) 483.0 519.4 563.8 620.0 685.8 758.6 837.0 918.2 1,009.3 1,108.0 1,216.7
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Chart 3.2
Overall Elastomeric Coatings Market: Revenue Forecasts (U.S.), 2001-2011
1,400 Revenues ($ Million) 1,200 1,000 800 600 400 200 0
Revenues ($ M illion)
Growth Rate (% )
12% 10% 8% 6% 4% 2% 0% Growth Rate
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
In 2004, the revenues from the total elastomeric coatings market were $620 million. The market is forecast to grow to $1,216.7 million by 2011 at a CAGR of 10.1 percent. The growth in the total market is likely to be driven by the high growth in nonresidential construction. Also, the coatings unique features favor its growth. The factors that are likely to support the revenue growth of the total elastomeric coatings market over the forecast period include:
s s s
Strict environmental regulations Demand for greater performance and durability New technology development

M a r k e t Tr e n d s
Revenue Share Trends by Application Market
Figure 3-5 and Chart 3.3 present the percent of revenues by application markets in the total U.S. elastomeric coatings market for the period 2001-2011.
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Figure 3-5
Elastomeric Coatings Market: Percent of Revenues by Product Type (U.S.), 2001-2011

EWC Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 (%) 52.2 51.2 50.0 48.4 46.7 45.1 43.8 42.9 42.2 41.6 41.1 EFC (%) 22.2 21.4 20.5 19.4 18.3 17.3 16.4 15.8 15.1 14.6 14.1 ERC (%) 25.7 27.4 29.6 32.3 35.0 37.6 39.8 41.3 42.7 43.9 44.8
Key:
EWC = Elastomeric Wall Coatings EFC = Elastomeric Floor Coatings ERC = Elastomeric Roof Coatings
Chart 3.3
Percent of Revenues by product type (U.S.), 2001-2011

EW C 100% 90% 80% Percent of Revenues 70% 60% 50% 40% 30% 20% 10% 0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 EFC ERC
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In 2004, the elastomeric wall coatings dominated the elastomeric coatings marketplace by contributing 48.4 percent to the total market. The elastomeric floor and roof coatings market contributed 19.4 percent and 32.3 percent respectively. This segmentation is expected to change with the elastomeric roof coatings slowly moving to the top spot. This is because end users are paying more attention to their roofs than the floors and the walls. They are realizing the importance of a leakproof and a damage free roof. Consumers are understanding that a surface which has to withstand natures fury, deserves a better and a high performance coating. Hence, they generally do not want to compromise on the roof. Also, government encouragement to use white reflective coatings is greatly favoring the elastomeric roof coatings than anything else. Hence, it is expected that the elastomeric roof coatings are eventually going to lead the elastomeric coatings market.
VOC Regulations Play a Role in Widening the Gap Between Small and Large Manufacturers
The U.S. environmental protection agency (EPA) and the different regional boards/ organizations responsible for prevention of environmental pollution, continuously introduce more stringent VOC regulations with time. So coating suppliers have to manufacture coatings that adhere to the VOC regulations as prevalent in the region in which they plan to sell. The larger companies have excellent R&D capabilities and are able to supply different products to suit different needs and markets much more easily than the small manufacturers. Also these large companies have a good distribution network, thereby, making it easier to reach out different markets. Hence, they are able to market their products aggressively when a new regulation has come in place because most of the times they are already prepared. While many times the smaller companies find this task of modifying their formulation slightly difficult because they lack the resources and the expertise. This widens the gap. Larger companies are easily able to expand into newer regions, while the smaller companies find it difficult to align their products in order to suit the new regions requirements. This factor serves as a competitive advantage for the large organizations while being a roadblock for their smaller counterparts. P r o d u c t Tr e n d s
Creating Coatings with Improved Properties
Coating manufacturers are continuously working toward creating products with improved UV resistance, enhanced durability, better chemical resistance, and so on. This is because of the heated competition prevalent in the entire market. Hence manufacturers are forced to find newer and better ways to improve their products with an aim to differentiate their products from their competitors.
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Trend toward Zero VOC Coatings
While the federal government is constantly lowering the VOC limits in coatings, state governments are one step ahead, for instance, in California and the Eastern Block states, the governments are heading in the direction of enforcing a zero VOC finally. Hence, manufacturers are constantly working on their technology to move completely from solventbased coatings to waterborne elastomeric coatings that have low VOCs.
Growth in Use of Acrylic-based Elastomeric Coatings
Since the coatings market is moving toward zero VOC and cost being a major factor in this market, many companies are concentrating on their acrylic waterborne line of elastomeric coatings. Also, a lot of new companies are emerging in this line of business. Acrylic coatings are the most versatile of all coatings. They can be used in all the end use markets. Manufactures only need to modify their formulation slightly in order to accommodate the requirements of different end use markets. These coatings offer the advantage of being waterborne, having low VOC content and being cheaper than the other elastomeric coatings. All this is favoring the growth in acrylic-based elastomerics.
Incorporation of Ceramic Microspheres in Acrylic Elastomeric Coatings
The introduction of white acrylic coatings impregnated with ceramic microspheres is a new trend which has emerged in this market. These coatings are used over roofs and also on exterior walls. The ceramic microspheres help in insulating the roof against heat and sound besides assisting in waterproofing. These ceramic particles reflect, refract, and dissipate a great amount of heat flow to the interior of the structure, thereby helping the roof or wall stay cooler, which ultimately helps the building/ home owner reduce his cooling bills. A few innovative companies which are differentiating themselves from the rest by this technology are Nationwide Chemical Coating Manufacturers, Inc. Acry-Tech Coatings, Inc. and Advanced Coatings Systems, Inc.
Pricing Trends
Price Determinants The prices of elastomeric coatings depend on the following factors:
Chemistry of the Coating
The price of elastomeric coatings are heavily dependant on the base resins used. Some base resins such as acrylics are cheaper while others such as polyurethanes and polyureas are expensive. This variation comes about from the method of synthesis of the base resins as the primary source is the same for all which is crude oil.
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Region in which it is Sold
The elastomeric coatings market is very fragmented with numerous manufacturers in every region or state. Also, the government regulations vary from region to region. So if a regional manufacturer wants to sell his product in another state, he has to customize his product to meet the regulations of the other region besides finding a suitable source to distribute. One must note that in the new region there might be another local manufacturer manufacturing a similar product at a lower price. The larger manufacturers have a better control over their prices as they have many manufacturing centers, dedicated R&D labs, and an exhaustive distribution network. Demand also drives manufacturers to produce coatings at a lower price. All these factors play an important role in determining the cost of the product.
Size of the Project
Contractors for larger projects can avail elastomeric coatings at a much lower price than that for smaller products. Manufacturers are always looking for wholesale customers and so give a discount. Discounts up to 20 percent are offered on huge projects.
Performance Requirements
Elastomeric coatings are priced depending on the performance requirements of the end use and thus, price differs even in the same application market. They have different warranties as well. Coatings have to be engineered to meet these requirements, which comes at a cost. Pricing Prices vary by base resin and also by the end user segment. The average price of a gallon of elastomeric coating in the United States costs $19. Acrylic elastomeric coatings cost anywhere between $10 a gallon to $30 a gallon depending on the end user segment. The silicone variety comes next with the prices ranging from $25 to $30 per gallon. Both urethanes and polyureas are very expensive elastomeric coatings which could cost anywhere between $20 per gallon to $50 per gallon. P r i c i n g Tr e n d s The prices of elastomeric coatings, in general, have been increasing in the past three to four years. Most of the companies have increased their prices for the elastomeric coatings line by 5 to 15 percent as compared to the previous year. This is because of the ever increasing prices of raw materials and fuel supply, which are all derived from crude oil. The instability in supply is adversely affecting the manufacturing costs, due to which manufacturers profits are being squeezed Hence, these coatings manufacturers are not left with much choice than to pass on their increased costs to their customers.
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Competitive
Analysis
Figure 3-6 presents the competitive structure of the total U.S. elastomeric coatings market for 2004.
Figure 3-6
Elastomeric Coatings Market: Competitive Structure (U.S.), 2004

Number of Companies in the Market Types of Competitors 200 Large national suppliers Small regional suppliers Distribution Structure Sale through contractors Sale through distributors A mixture of both Key End User Groups Competitive Factors Exterior walls, floors, and roofs Price, quality of the product, reputation of the company, warranty, environmental compliance, ease of application
Around 200 companies participate in the elastomeric coatings market in the United States. Most suppliers have products based on two or more base resins, which is dependent on the end use market. Also, many of these suppliers serve only one or two of the three main application areas in this market. For instance, Pacific Polymers Company manufactures elastomeric coatings based on acrylics and urethanes and serve only the floor coating market. Figure 3-7 shows the major participants by end-user markets in the U.S. elastomeric coatings market in 2004.
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Figure 3-7
Elastomeric Coatings Market: Database of Key Industry Participants by End-User Market Participation (U.S.), 2004
Company Benjamin Moore & Co. Degussa Dryvit Systems, Inc. Elastomeric Roofing Systems, Inc. (ERSystems) Henry Corporation ICI Paints M.A.B. Paints National Coatings Corporation Neogard, a division of Jones- Blair Company Pacific Polymers International Inc. Sika Corporation Sto Corporation Textured Coatings of America, Inc. The Sherwin- Williams Company Tremco Sealants/ Waterproofing Division United Coatings 3M s s s s s s s s
Exterior Walls s s s s
Floors
Roofs
s s s s s s s s s s s
s s s
The companies participating in this market can be classified in the following two ways depending on: Th e S i z e a n d O p e r at i o n o f t h e C o m pa n y Elastomeric coating manufacturers are either large national participants or are small and regional participants who cater only to a particular area. The larger participants are characterized by their good product line, liberal R&D expenditure, and an extensive distribution network while the smaller and regional participants do business based on their knowledge of the local area, thereby, having products that are customized to the regions needs. These companies also have good contacts with the contractors in their region who enable their business to grow.
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T h e Ty p e o f C o m p a n y The classifications based on the type of companies participating in this market are chemical companies, paint companies, construction companies, and specialized companies. Large chemical companies such as Degussa and Dow Corning, who have varied and multiple products catering to many different markets, participate in this market. Paint Companies such as Sherwin-Williams and Benjamin Moore also have a major presence in this market but is mostly restricted to the exterior wall coatings applications. These companies manufacture several types of paints and coatings besides elastomeric varieties. Many companies such as Sto Corporation and ERSystems have a major presence in this market. These companies also sell elastomeric coatings as a part of the final product. A lot of small construction companies, who already do panelling, cladding, and so on, find it easy to incorporate elastomeric coatings in their product line. Lastly, there are a few specialized companies that manufacture a few coatings and adhesives for only a specialized end use. A very limited elastomeric coatings line characterizes them. They are very regional and they cater to niche and highly specialized markets. Many companies private label i.e. they buy their elastomeric coatings from other manufacturers and sell it under their brand name as elastomeric coatings can easily form a part of their existing product portfolio. Distribution Structure Elastomeric coatings are distributed in mainly three ways. They are either sold through distributors, who may be independent or may be company owned, or directly to contractors or a mix of both. Large companies have several products and so may have distribution centers in various parts of the country where contractors can go and purchase their products. These companies have the advantage of getting closer to the contractors region of operation besides providing technical guidance. For instance, The Sherwin Williams Company has over 2600 company owned stores all over the United States. The mid-sized companies either sell directly to contractors or have a mix of both as their distribution channel. Advanced Coatings Systems, Inc. sells its products through both independent distributors as well as direct to the contractors. Only large contractors who buy several thousands of gallons are generally attended to directly. Small companies are mostly regional and hence supply directly to contractors. The advantages of having an extensive network of distributors is that companies are able to reach out to all parts of the country while on the other hand the products that are sold via distributors are slightly more expensive. Smaller companies are always keen to cut out on all overheads; hence they prefer to approach the contractors directly through a dedicated team of sales representatives.
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Following are the value chain members in a typical elastomeric coatings buying process:
s s s
Manufacturers of coatings that are the suppliers Distributors that stock and sell these coatings to the contractors Contractors or applicators that buy these coatings from distributors. Sometimes, they obtain it directly from the manufacturer.
s s
Architects and engineers that play a vital role in selecting the coatings. Commercial or residential complex owners that also play a role in the coatings selection.
Competitive Factors Price: Price is the most competitive factor based on which a coating manufacturer is finally selected. The elastomeric coatings market is a very fragmented and a competitive market. It is given utmost importance during the bidding process. Quality of the Product: The durability, the solids content, water penetration resistance, weather resistance, and so on play a crucial role in the products selection. The same products having been used elsewhere in the same locality serves as a testimony to the products quality and these factors influence final selection. Reputation of the Company: The name of the company significantly influences sales in this market. Companies such as 3M, The Sherwin-Williams Company, and Degussa have the reputation for supplying quality products and have a good brand image. Big contractors prefer products manufactured by these companies with whom they have associated for several years This is because they are sure about the timely delivery of the product besides other technical support. Hence, reputed companies have an edge over their competitors. Warranty: Long warranties are typical of elastomeric coatings suppliers. This industry standard is five years but there are some roofing companies, which give warranties for as long as 20 years. Consumers and architects/engineers prefer using products that have long warranties. Environmental Compliance: As environmental regulations are becoming increasingly strict, a key success factor for coating manufacturers is to develop products that comply with the regulations where the product is to be sold. Manufacturers who anticipate regulations and develop elastomeric coatings have a competitive edge while bidding for large projects. Ease of Application: The ease of application has an influence on the final selection of the elastomeric coating. Acrylic products are easy to apply than the polyurea-based elastomeric coatings that are two-component products. This is because a two-component product will require expensive equipment to mix the two components in the correct ratio.
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Market Participants
The following are a few company profiles who participate in this market Degussa Construction Systems Americas Degussa is one of the leading participants in the elastomeric coatings market, besides being one of the largest chemical companies in the world. They participate primarily in the floor coatings market with their urethane and polyurea-based coatings. They are also a major participants in the wall coatings market with their acrylic, silicone and siliconized acrylic products. Degussa takes pride in being technical innovators and have several products which are patent protected. Degussa also has an extensive distribution network. Th e S h e r w i n - Wi l l i a m s C o m pa n y Sherwin-Williams is one of the largest paint companies and is also a leader in the elastomeric coatings market. It makes acrylic and a few polyurea-based elastomeric coatings for exterior wall coating applications. The company also has a minor presence in the floor and roof coatings market. Sherwin-Williams R&D focus and its impressive nationwide distribution network is responsible for making it such a major participant in this market. Dow Corning Corporation Dow Corning is a joint venture between Corning, Inc. and The Dow Chemical Company pioneering in silicon-based technology and products. The company sells the largest amount of silicone-based elastomeric coatings for wall coating application. The company serves several industries including automobile, construction, health care, and so on. 3M 3M is a major participant in the elastomeric coatings market participating primarily in the floor coatings market. 3M sells its Scotch-Clad range of products both direct to contractors and through its extensive distribution network. The company makes high quality products and has a very good line of solvent-free, waterborne elastomeric coatings. IC I Pa in t s ICI is a major participant in the wall coating market and one of the leading paint companies in the world. The company also makes roof coatings. The companys brand name coupled with their research focus and extensive distribution network helps them market their products successfully.
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Neogard, a division of Jones-Blair Company Neogard is one of the leading suppliers of elastomeric coatings. The companys primary focus is urethanes for floor coating applications. The company also has a major presence in roof coatings with its acrylic, polyurethane, and silicone coatings. Many products are certified by international organizations such as Underwriters Laboratories and Factory Mutual. The company differentiates itself by its job and performance history. Elastomeric Roofing Systems, Inc. (ERSystems) ERSystems takes pride in being a leader in cool roofing technology. The company manufactures a complete line of high quality reflective coatings, membranes, sealants, and adhesives specifically designed for single ply membrane, spray polyurethane foam (SPF), asphalt, and metal roofing. The company has acrylic, silicone, and polyurethane-based coatings in its elastomeric line. ERSystems is a charter member of the energy star roof products program and was instrumental in developing the cool roof coating council. National Coatings Corporation National Coatings is an innovative participants of elastomeric coatings market in the Californian region. The company participates both in the roof coatings and wall coatings market with its waterborne acrylic product. The company has a strong R&D focus and has been in this line of business for about 25 years. These two factors make National Coatings a leader in this market. Ta m m s I n d u s t r i e s , I n c o r p o r a t e d Tamms Industries offer a broad scope of concrete repair, waterproofing, and protection products to the concrete industry. It is a leading manufacturer of curing, coating, grouting, traffic deck systems, waterproofing products etc., and can serve as a single source supplier of concrete restoration and protective products for any type of construction project. The company offers acrylic-based elastomeric decorative and protective coatings under the brand Tammolastic for exterior wall surfaces. Nationwide Chemical Coatings Manufacturers, Incorporated Nationwide Chemical Coatings is a small but innovative company operating in Florida. They make paints, coatings, adhesives, primers, and so on. Within their elastomeric range, they have acrylic-based and acrylic with urethane-based coatings for both exterior wall and roof applications. The company has ceramics incorporated in most of their coatings, which lends higher insulation (both heat and sound). Most of these coating also have fire retarding properties and come in variety of finishes. Nationwide Chemical Coatings is approved by the Energy Star, Cool Roof Rating Council.
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Henry Company Henry is one of the largest roofing companies in the United States. They primarily make acrylic coatings.They also manufacture silicones, polyurethane and polyureas-based coatings. The companys continued focus on R&D combined with its strong distribution network makes it a leading participant in the elastomeric coatings market.

The elastomeric coatings market is very fragmented with most of the companies having a major presence only in one or a maximum of two end-user segments considered in the study, which made the market share analysis for the total market far more complicated than the same at the segment level. Also, a lot of companies are regional and do not operate at the national level, though they have a sizeable market share. Hence, market share analysis for the leading manufacturers for the total U.S. elastomeric coatings market is not undertaken in this study as it will be misleading and will dilute the impact of the market leaders at the segment level. However, in 2004, some of the leading manufacturers of elastomeric coatings in the United States were Neogard, Degussa, Henry Company, The Sherwin- Williams Company, 3M, United Coatings, National Coatings Corporation, Sto Corporation, and ERSystems. All these companies do business worth more than $8 million in the elastomeric coatings segment alone. Amongst these, only Neogard and The Sherwin-Williams Company have at least an elastomeric coating for the three end-user segments considered in this study. Companies such as Degussa and United Coatings participate in more than one segment while companies such as Henry Company, National Coatings Corporation, Sto Corporation, 3M and ERSystems are leaders in their respective segments. The key manufacturers in the wall coatings segment are Sherwin Williams, Degussa, and Sto Corporation. The major participants in the floor coatings market are Neogard, 3M, and Degussa and the same for elastomeric roof coatings market are Henry Company, United Coatings, and National Coatings Corporation. The elastomeric coatings market has many companies which operate only in specific regions of United States. These companies manufacture products which are customized to the local area. There are many small companies which operate in niche applications with just a few products. This gives an opportunity for mergers and acquisitions to take place so that the companies can pool in their resources, manufacture better products, and extend beyond their traditional boundaries. Since a lot of construction companies also participate in this market, there exists ample opportunity for a coatings manufacturer to merge with a construction company so that the company together can manufacture complete systems for any particular application.
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Market
Engineering
Strategies
Introduction
What is a Market Engineering Strategy? The key advantages of Market Engineering strategy development over theoretical, university, or expert-developed strategies are that:
s s
It is based on measurements, therefore, can be easily communicated within the company. It provides a measurement system in which the effectiveness of the chosen strategy can be evaluated.
The strategy drives action that provides return on investment from the market research process.
Strategic Recommendations Researchers at Frost & Sullivan have developed strategic recommendations based on their analysis of this market. The strategic recommendations are designed to address the challenges that exist throughout the U.S. elastomeric coatings industry.
Strategic Recommendations
The following strategic recommendations are made to address each of the industry challenges: Meeting Environmental Regulations Since the government is moving towards a zero VOC policy, coating manufacturers should invest and work toward creating elastomeric coatings that are waterborne and contain the minimum VOCs. Companies should invest in their R&D so that they not only anticipate and create coatings in advance of the new regulations, but also to come up with newer and better products that will give them an edge in this highly competitive market.
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Increased Raw Material and Fuel Prices The only way to counter this challenge is to use ones bargaining power, eliminate overhead costs, operate at maximum efficiency and find the best possible way to distribute the products and thereby increase sales. Mergers and acquisitions could be considered to pool in resources, reduce overheads, and to capture newer markets. Backward integration of coating companies with resin manufacturers could also help. This would eliminate one step in the product chain and hence would result in higher profits. C r e a t i n g B r i g h t e r a n d Da r k e r C oa t i n g s Elastomeric coating manufacturers should invest in R&D so as to synthesize UV stable pigments, which do not degrade under continuous exposure to sunlight. Since other ordinary coatings are available in several shades and colors, creating elastomeric coatings in many colors need to be addressed.
Frost
&
Sullivan
Awar ds
Market Leadership Award

The Frost & Sullivan Market Leadership Award is presented to the company that has exhibited market share leadership through the implementation of market strategy. The recipient has displayed excellence in all areas of the market leadership process, including the identification of market challenges, drivers and restraints, as well as strategy development and methods of addressing these market dynamics. Furthermore, the Award recipient has continually demonstrated solutions for monitoring market changes and for implementing superior market strategies. By utilizing these strategies for success, the company has established itself as the market share leader in its respective industry. Research Methodology To choose the recipient of this Award, the analysts track competitor revenue and market share within the industry. This is achieved through interviews with all market participants and extensive secondary research of proprietary data sources. Finally, the competitors are compared and ranked for relative position. Frost & Sullivan then presents the Award to the company that received the number one industry rank.
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Measurement Criteria In addition to the methodology described above, there are specific criteria used to ascertain final competitor ranking in this industry. The recipient has excelled by substantially increasing one or more of the following criteria:
s s s s
Market share Revenue growth rates Profitability Market and technology innovation
Awa r d R e c i p i e n t : Th e S h e rw i n - Wi l l i a m s C o m pa n y The Frost & Sullivan Award for Market Leadership is presented to The Sherwin-Williams Company. The company is the largest supplier of elastomeric wall coatings in the United States. The companys ability to better meet customer requirements and its ability to better extend support to the contractors by educating them on new products and technologies are factors that clearly differentiate The Sherwin-Williams Company from the other companies participating in this market. Chart 3.4 clearly shows the strengths of The Sherwin-Williams Company as a market leader.
Chart 3.4
Elastomeric Coatings Market: 2004
Strengths of Sherwin-Williams as a Market Leader (U.S.),
Product Innovation
Strong R&D Focus
Ability to Address of M arket Drivers, Restraints and Industry Challenges
Strategic Acquisition
The SherwinW illiams Company
Ability to Better Support Contractors
M ore than 2,800 company owned stores
Strong Distribution Network
M ore than 1,200 Sales Representatives
Note: The Sherwin-Williams Company is the recipient of 2005 Frost & Sullivan Market Leadership Award.
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The Sherwin Williams Company was founded in the year 1866 and since then it is known for the high quality paints and coatings it supplies. The company manufactures a wide variety of coatings including aerospace coatings and automotive finishings. Within the elastomeric coatings product line, the company offers acrylic coatings under the brand names of SherLastic, ConFlex XL and EnviroLastic. Sherwin Williams has a network of over 2,800 company-owned stores and over 1,200 sales representatives, which help the company to successfully distribute its products throughout the United States. Strong Research and Development Focus The Sherwin-Williams Company is committed to supplying high-quality products and investing heavily in research and development (R&D). The company has identified that high R&D investment is the best solution to flourish in this highly competitive market. This would enable the company to manufacturer newer and better products that are in accordance to the Volatile Organic Compound (VOC) regulations prevalent in the intended region of sale, thereby better meeting customer expectations. Loxon XP is one such result of the companys R&D. This coating can be directly applied over new concrete that is less than 28 days old. This coating can withstand the high alkalinity of new concrete and thus eliminates the need for a primer. Hence, this product helps the contractor improve his productivity by cutting down one step in the coating application process. Close Contact with Key Users The Sherwin-Williams Company maintains close working relations with contractors. It takes initiatives to educate contractors and specifiers and on new technologies and application methods. This end-user link provides a twofold benefit to the company. Firstly, contractors tend to favor The Sherwin Williams Companys products for their projects and secondly, it enables the company to better understand the requirements and concerns of their end users, thus enabling them to tailor their products accordingly. Therefore there is a mutual benefit that arises from this relationship.
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Expansion Plans The Sherwin-Williams Company has plans to introduce complete concrete restoration systems, which will help it to serve the building construction industry better. The company believes that by supplying concrete systems in addition to their coatings, it could better serve the renovation market where many times customers prefer using elastomeric coatings on completion of the wall restoration. This would also help customers to buy all their products from a single company as against buying different products from different manufacturers. The company would also consider an entry in the roof coatings market, as this market is experiencing high growth. Strategic Acquisition The Sherwin-Williams Company acquired Duron Inc. in September 2004. This strategic acquisition enables The Sherwin-Williams Company to serve coating contractors and the Do-It-Yourselfers better, especially in the eastern parts of the United States where Duron Inc. had a strong presence. Duron Inc. manufactures acrylic elastomeric wall coatings under the brand name Maxflex. This acquisition gives the company an additional manufacturing capability and helps it reach its customers through an additional 230 stores. In conclusion, Sherwin Williams continues to build on its core capabilities, which include strong technical capabilities and excellent customer focus. The company is constantly analyzing the elastomeric coatings market and is evaluating newer business models to improve profitability. The companys brand name, along with the support of contractors, makes it the coating manufacturer of choice. Hence, The Sherwin-Williams Company is the deserving recipient of the Frost & Sullivan Market Leadership Award in the year 2005 for the U.S. Elastomeric Coatings Market.
Growth Strategy Leadership Award

The Frost & Sullivan Award for Growth Strategy Leadership is given each year to the company that has demonstrated an exceptional growth strategy within their industry. Research Methodology: A recipient is chosen to receive the Frost & Sullivan Award for Growth Strategy Leadership based on specific criteria. Through primary and secondary research methods, all companies market revenues are tracked and those exhibiting significant growth are noted for their strategy implementation. Revenues are then compared year to year to monitor growth patterns. When a company continues to show high growth rates, it is a candidate for the Frost & Sullivan Award Growth Strategy Leadership.
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Measurement Criteria: This Award is given to the company that has bolstered their position in the market during the base year and whose strategy will have a lasting impact on the market. The Award criteria is based on the following:
s s s s s s s
Ability to grow in a saturated or maturing market Implementing a unique sales strategy Technological innovation and leadership Discovering new venues for an established product Effective Internet strategy Strategic mergers, acquisitions, or joint ventures to penetrate new markets Reorganization structured around growth strategy
Awa rd R ec ip i en t : Ne o g ard The 2005 Frost & Sullivan Growth Strategy Leadership Award is conferred upon Neogard, a division of Jones-Blair Company. Neogard has displayed exceptional competence by adopting growth strategies, which has led the company to grow by 30 percent in 2004. Also, Neogard has consistently churned higher profits in the last few years that are much above the industry average. This has led the company to become one of the leading suppliers of elastomeric coatings, especially in the area of elastomeric floor coatings Neogard participates in the elastomeric roof and wall coatings market, besides the elastomeric floor coatings market. The company possesses 75 years of experience in the coatings segment and has earned reputation as a supplier of high quality coatings. Neogard manufactures an extensive product line under the brand names Auto-Gard, Peda-Gard, PoolGard, Perma-Gard III, Neoflex and Elasta-Gard. The company supplies to new construction as well as to retrofit projects throughout the country through its extensive distribution network.
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Chart 3.5 shows the key strategies adopted by Neogard that has helped the company to grow at the current rate.
Chart 3.5
Elastomeric Coatings Market: Key Strategies adopted by Neogard (U.S.), 2004
Neogard
Strategic Partnership
Experiencing High Growth
Technological Leadership
Creating Brand Value
Distribution Channel M ix
Note: Neogard is the recipient of 2005 Frost & Sullivan Growth Strategy Leadership Award.
Customized Product Line Neogard manufactures quality coatings that are engineered differently to meet different requirements within the same end use. For instance, within the elastomeric floor coatings segment, Neogard manufactures three products, which can withstand pedestrian traffic. Standard Peda-Gard is the one, which is recommended for most applications. Fast Cure PedaGard Elastomeric coating helps in minimizing shutdown time and enables fast turnaround times while Decorative Peda-Gard coating is used where aesthetics is a concern. The company also manufactures roofing systems, which includes elastomeric-coated Spray Polyurethane Foam (SPF) roofs and other flooring systems, which helps the company to serve its customers better. These products clearly demonstrate the companys technological leadership.
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C r e a t i n g B r a n d Va l u e Neogards products have been used in many prestigious and demanding projects. For instance, the parking garage of White Flint Mall in North Bethesda, Maryland and the Bellagio Resort in Las Vegas, California have been two major challenging projects undertaken by Neogard. Auto-Gard, the companys vehicular traffic bearing waterproof coating, was chosen to cover the area of 600,000 sq. feet of concrete parking structure at White Flint Mall. Auto-Gards customer friendly features include its ability to withstand heavy vehicular traffic, resist natural forces such as rain and wind and prevent staining due to chemicals such as brake fluids and battery acids. For the Bellagio resort project, AutoGard, Peda-Gard, and Neoflex coating systems were used to provide protection to the parking garages, balconies, and domes of the resort against the high-speed abrasive winds in Mojave dessert. Having accomplished many such demanding projects, and also having highlighted these projects as case studies on its web site and other publications, Neogard has successfully created a brand-value. This helps to foster business relationships with architects/contractors who work on governmental and other important projects such as religious buildings, shopping malls, hotels, resorts and so on. This gives rise to many new business opportunities besides repeat business. Str ate g ic Pa r tn e rs h ip Neogard has partnered with BASF Corporation and many fine contractors such as Wattle & Daub Contractors, Inc., Dallas Urethanes, Inc. and so on to provide the Alpha roofing system. The Alpha roof offers a quantifiable and a verifiable roofing solution for building owners who want to minimize the risks of a roofing job. It combines polyurethane elastomeric coatings manufactured by Neogard and SPF, manufactured by BASF Corporation. Also, the most skillful contractors are hired to install the roofing system. Alpha contractors have a performance history of installing roofs of which at least 98 percent are leak proof. The manufacturers issue a 15-year joint warranty that covers the performance of the system without the exclusion of damage caused by severe hail, 90 mph wind forces, ponding water and so on. This partnership has aided Neogard to reinforce their position as a leading supplier of polyurethane elastomeric roof coatings.
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Efficient Distribution Channels Neogard has correctly identified the distribution channel required to sell successfully into a particular segment. The company mostly relies on direct sale to approved contractors for the floor and roof coatings segment. This is because the company has realized that the application of the coating is as critical as the quality of the product. Neogard has a good network of approved contractors with several years of experience. Supplying through independent distributors gives the company the ability to serve customers located in different geographical regions. Neogard has a regional manager for different regions of United States, under whom there are several area representatives to coordinate the sales in the particular region. In conclusion, Neogard is a company committed to excellence. The companys manufacturing capabilities and a dedicated R&D department is responsible for many of their products like Elasta-Gard Roof Coatings to be Underwriters Laboratories and Factory Mutual Approved. Also the companys enviable job and performance history provides it a competitive edge. Neogard is growing significantly in a period where many of its competitors participating in the floor coatings market are loosing market share. Hence, Neogard is a deserving recipient of the 2005 Frost & Sullivan Award for Growth Strategy Leadership in the U.S. Elastomeric Coatings Market.
Product Line Strategy Leadership Award

The Frost & Sullivan Market Award for Product Line Strategy Leadership is presented each year to a company that has demonstrated the most insight into customer needs and product demands. The recipient company should have optimized its product line by leveraging products with the various price, performance, and feature points required by the market. Research Methodology To select the Award recipient, the analyst team tracks all end-user requirements and market dynamics within the industry. This process includes interviews with suppliers, end-users, and industry experts. The product lines are compared with customer base demands, and the top-ranking supplier is then presented the Award.
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Measurement Criteria In addition to the methodology described above, there are additional criteria used to determine the final competitor rankings in this industry. The recipient of this Award should have excelled in one or more of the following criteria:
s s
Introduction of new products, strategically positioned to balance the product line Ability to accommodate different market segments, or different markets within an industry by repurposing technology
Enhancement of product offerings through optimization of packaging, service, delivery, financing, and/or other value-added services
Strategic technology or marketing acquisitions or alliances
Awa rd R ec ip i en t : D e gu s sa C on s t ru ct io n Sys t em s Americas The 2005 Frost & Sullivan Award for Product Line Strategy Leadership is presented to Degussa Construction Systems Americas for its outstanding contribution to the U.S. Elastomeric Coatings Market. The company has an exceptional product line to suit different end-user requirements. For instance- the product IC2480, which is a polyurea based elastomeric coating, enables a surface to be serviced within one hour and Silflex coating, which is a silicone modified acrylic coating that can elongate by 700 percent. These products are a result of the companys research prowess and technical expertise, which is responsible for making it one of the leading manufacturers participating in the U.S. elastomeric coatings market. Degussa is one of the worlds leading specialty chemical companies with offices/centers at more than 300 locations and nearly 45,000 employees worldwide. Degussa Construction Systems Americas, a division of Degussa Construction Chemicals, operates Degussa Building Systems, and Degussa Wall Systems, Inc. Degussa Building Systems manufactures elastomeric coatings under the Sonneborn and Thoro brands for the walls and floor coatings market while Degussa Wall Systems, Inc. manufactures elastomeric wall coatings under the Senerlastic brand name.
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Figure 3-8 outlines the elastomeric coatings the company manufactures.

Figure 3-8
Elastomeric Coatings Market: Elastomeric Coatings Manufactured by Degussa Construction Systems Americas
Product Name Base Resin Colorflex Acrylic Substrate of Application Characteristics
One finish coat application on most Stucco, Brick, Concrete, Concrete Block Masonry (CMU), Exterior installations, available in 463 colors Insulation and Finish Systems (EIFS) Stucco, Brick, Concrete, CMU, EIFS Suitable for high humidity climates Stucco, Brick, Concrete, CMU, EIFS Suitable for cool climates Concrete, Metal Serviceable within one hour
Flexcoat Flextex IC2480 Silflex
Acrylic Acrylic Polyurea
SiliconeStucco, Brick, Concrete, CMU, EIFS Superior ability to bridge cracks with modified acrylic total elongation of 700 percent Polyurea Concrete, Steel Withstands vehicular traffic within two hours
IC-5000
Thorogard
Acrylic
Previously coated surfaces, aged Designed for recoat applications stucco concrete and Portland cement plaster, EIFS Stucco, Concrete, Portland cement plaster, Brick, CMU, EIFS Stucco, Concrete, Portland cement plaster, Brick, CMU, EIFS Concrete, Stucco, Masonry, EIFS Concrete, Stucco, Masonry, EIFS Bridges crack movement up to 27mils
Thorolastic
Acrylic
Thorolastic A+ Senerlastic Senerlastic Plus
Acrylic
Engineered for use in humid conditions Low temperature flexibility Excellent weather ability, protects against wind-driven rain
Acrylic Siliconeenhanced Acrylic
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Ability to Address Customer Requirements Degussa Construction Systems Americas has identified that fast cure products are in great demand, as polyurethane/ epoxy coatings require a turnaround time of 24-48 hours. To address this need, the company manufactures two products, which are IC2480 and IC-5000. Both these products are 100 percent solids, zero Volatile Organic Compounds (VOCs), aromatic polyurea based elastomeric coatings, which necessitate a shutdown time of less than two hours. The company also manufactures Flexcoat and Flextex acrylic coatings. These coatings are both resistant to wind-driven rain and cover with one coat application on most substrates. These coatings are also available in 470 colors. Degussa Construction Systems Americas keeps the cost-conscious consumer in mind while manufacturing acrylic elastomeric coatings, which are comparatively lower priced coatings. M a j o r P r e s e n c e i n Tw o o f t h e T h r e e M a r k e t S e g m e n t s Degussa Construction Systems Americas has a strong presence in both the elastomeric floor coatings market as well as the elastomeric wall coatings market. The company ranks number two in terms of sales in the elastomeric wall coatings segment and number three in the elastomeric floor coatings segment. The companys strong product line and its ability to manufacture unique products are factors, which differentiates Degussa Construction Systems Americas from the other companies participating in this market. For instance, Senerlastic elastomeric wall coating is a unique product that shows remarkable flexibility, even at very low temperatures and IC2480 is a sprayable polyurea-based elastomeric floor coating, specifically engineered to withstand thermal movements besides being serviceable in one hour and containing Zero VOCs. Research and Development Focus Degussa Construction Systems Americas invests highly in research and development activities, which enables new product development. The strong link with end users provides it with information regarding the requirements of contractors and architects. Also, the companys technical capabilities ensure that its end users receive support at all times.
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Strong Brand Image Degussa is a global company known for its quality products. The companys brand image as a technical innovator helps the company gain favor from architects and engineers when exclusive and highly important projects are being considered. Also, the companys extensive distribution network, combined with its strong network of contractors, helps the company increase its brand-value, enabling better business opportunities. Concluding Comments In conclusion, Degussa Construction Systems Americas has well identified end user needs such as low price, fast cure products, enhanced product functionality and so on, and has products to meet these requirements. The companys enormous research and development capabilities make them one of the leading participants in the elastomeric wall and floor coatings market. The company continues to concentrate on its core capabilities that enable it to manufacture quality coatings, which adhere to the VOC regulations. Degussa Construction Systems Americas is a deserving candidate of the 2005 Frost & Sullivan Product Line Strategy Leadership Award for its outstanding contribution to the Elastomeric Coatings Market.
Product Quality Leadership Award

The Frost & Sullivan Award for Product Quality Leadership is bestowed upon the company that has demonstrated superior quality controlover their existing competitorsin product manufacturing. Quality control is an essential element of satisfying customers, increasing repeat buying behavior, and assuring long-term market survival. Research Methodology To choose the Award recipient, the analyst team tracks all products and research and development projects within the industry. This is accomplished through interviews with all market participants, end-users, distributors, and extensive secondary and technology research.
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Measurement Criteria In addition to the methodology described above, there are specific criteria used to determine final competitor rankings in this industry. The Award recipient has excelled based on one or more of the following criteria:
s s s s s
Lowest defect percentage per batch of units produced by suppliers in current base year Product ability to fulfill customer needs, in terms of functionality and user friendliness Number of breakdowns or services required per year Degree of connectivity Level of product support end-users receive from their vendors or suppliers
Awa rd R ec ip i en t : U n i te d C oat in g s The 2005 Frost & Sullivan Product Quality Leadership Award for the U.S. Elastomeric Coatings Market is presented to United Coatings. The award recognizes the companys pursuit for excellence and its ability to consistently manufacture high quality products, for instanceDiathon and Elastuff 101/102. The company's research efforts, its commitment to the environment and the technical support it extends to its customers are factors that clearly differentiate United Coatings form the rest of the companies participating in this market. United Coatings was founded in 1919 as a paint and hardware store. Today, it is a trusted source of high-quality and high-performance coatings for contractors, architects, and engineers worldwide. The company serves the architectural, roofing, industrial, and the Do-It-Yourselfers (DIYs) segment. The company has a wide range of products to meet different end-user requirements. United Coatings manufactures acrylic elastomeric coatings such as Diathon, Acron 60 and Acrycryl to primarily serve the roofing segment. The company serves both the renovation and the new construction market. It also sells to substrate manufacturing companies, which sell the coatings combined with their substrates as complete roofing systems. The company retains a presence in the wall coatings market as well. It manufactures products such as Aquathon and Marathon CWS coating systems. Marathon CWS is a unique acrylic coating system that incorporates ceramic microspheres to the acrylic topcoat for enhanced reflectivity. Chart 3.6 clearly shows United Coatings' strengths as a quality manufacturer of elastomeric coatings.
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Chart 3.6
Elastomeric Coatings Market: Strengths of United Coatings (U.S.), 2004
Contacts with End Users
M anufacture of Low VOC products
United Coatings
Superior Research & Development Capabilities
Strategic Partnership
Note: United Coatings is the recipient of 2005 Frost & Sullivan Product Quality Leadership Award.
Superior Research and Development Capapbilities United Coatings possesses tremendous research acumen with leading industry experts and chemists heading the R&D division of the company. The company has state-of-the-art production facilities and quality control laboratories, which are among the finest in the world. It also has certified quality control (QC) professionals and a highly experienced technical support team to answer querries about their products. The in-depth, and comprehensive research approach adopted by the R& D division of the company ensures that every product adheres to the highest quality standards. M a n u f a c t u r e o f L ow Vo l a t i l e O r g a n i c C o m p o u n d ( VO C ) Products United Coatings only manufactures 100 percent polyurethane products or water based acrylic coatings which are both low on VOC content and hence very safe. This demonstrates the companys ability to manufacture quality products which are compliant with government regulations. This ability has won the company many laurels including the environmental protection agencys Evergreen Award, which recognizes the companys continued environmental protection efforts. Also, United Coatings is the only company to win this award twice.
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Contacts with End Users United Coating believes that it is not only essential to manufacture and apply quality coatings, but to also improve its formulation and functionalilty. As a result, the company interviews its customers, on a regular basis by sending across questionnaires and thus assessing the performance of its coatings and customer requirements. This aids in the company obtaining a better understanding and insight as to how it can serve its customers better. United Coatings technical support team, which has over 90 years of combined experience, is ever receptive to questions about its products. Also, the companys field officers, warehousing representatives, and distributors ensure that assistance is available when required. Str ate g ic Pa r tn e rs h ip United Coatings has entered into a strategic partnership with Rohm and Haas Company to provide the Duraplus Roofing System. The Duraplus roofing system comprises of a Spray Polyurethane Foam substrate, topcoated with Diathon DP, a 100 percent acrylic elastomeric coating supplied by United Coatings. The roofing system is available with a ten year warranty from the Rohm and Haas Company, the worlds largest specialty chemicals company. This partnership is a clear indication of the high quality coatings that United Coatings manufactures. Conclusion United Coatings is committed to the development and manufacture of high-quality products that not only serves its purpose but also exceeds customer expectations. Its research focus and excellent technical support ensure complete support throughout the life cycle of a product. The company also ascertains that its products as well as the development process is environment friendly. Also, its partnership with Rohm and Haas Company is a clear testimony for the high performance of its products. Hence, these cumulative factors make United Coatings a deserving candidate for the 2005 Frost & Sullivan Product Quality Leadership Award in the U.S.Elastomeric Coatings Market.
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4
Introduction
Market Overview
Elastomeric wall coatings represents the largest segment of all elastomeric coatings market in the United States. They account for nearly 49 percent of the total market. These coatings are generally acrylic or silicone-based and they mostly go over concrete or masonry surfaces in commercial and industrial building walls. They also go over hard coat stucco which primarily serve as substrates of exterior walls in residential homes. They are used on both new and renovation projects. Elastomeric coatings are generally modified to go over different surfaces depending upon the material and adhesion characteristics. The same coatings are also used over different surfaces, but using an appropriate primer. The performance requirements of wall coatings are that they should:
s s s
Maintain their aesthetic features, that is, color, finish and gloss Be resistant to dirt and other particles Be durable and long lasting
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Elastomeric wall coatings are very well suited for exterior walls. Besides meeting the above aesthetic requirements, they also provide a uniform coating without cracking or peeling when exposed to climatic variations. Cracks smaller than 1/16th of an inch need not be filled and elastomeric coatings can directly be applied. Cracks larger than 1/16th of an inch need to be caulked either with an acrylic or a silicone caulk as appropriate before applying the coating. Elastomeric coating allows the substrate to "breathe", thereby permitting the moisture to escape. These coatings are also resistant to mold and mildew formation. Elastomeric wall coatings generally come in both smooth and textured finishes. The smooth coating can be spray or roller applied while the textured coating will generally require a trowel. Exterior walls are generally made up of masonry, concrete or stucco. Since these surfaces are porous, and prone to hairline cracks, applying an elastomeric coating would be a good choice. These elastomeric coatings when applied, would expand and contract along with the wall surface thereby, preventing water seepage. While all exterior building materials are susceptible to this expansion and contraction due to climatic changes, concrete and stucco are particularly vulnerable as they are made up dissimilar materials. Once the water migrates out during curing, the hard material left behind shrinks and cracks, leaving the surface exposed to moisture. Thus, elastomeric coatings are ideal for this kind of application. As with traditional paints, the ability of elastomeric coatings to perform to its optimum depends on proper surface preparation. Most exterior coatings i.e. elastomeric and normal paints, fail due to the presence of contaminants on weathered surfaces. Dirt, dust, grease, oil, rust, and chalk should be removed through pressurized water cleaning. Efflorescence may require the use of chemical cleaners and pressure washing. If the surface is new, an appropriate sealer must be used to seal out the alkalinity. Lastly, in renovation projects, old paint films that are not bonded properly to the substrate must be removed otherwise the curing stress of a newly applied elastomeric coating can cause the old coatings to come off. This will result in elastomeric coatings not fulfilling its intended purpose.

Chart 4.1 represents the Market Engineering measurements for the U.S. elastomeric wall coatings markets in 2004.
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Chart 4.1
Elastomeric Wall Coatings Market: Market Engineering Measurements (U.S.), 2004
Market Research
Market Engineer
Market Strategy
Implementation
Market Planning
Measurement Name Market age Revenues Potential revenues (maximum future market size) Base year market growth rate Forecast period market growth rate Average price Price range Price sensitivity Competitors (active market competitors in base year) Degree of competition
Measurement Growth $300 million $500.4 6.5% 7.6% $20 per gallon $12 to $30 per gallon High 100 High
Trend --Increasing Increasing Increasing Decreasing Increasing Stable Increasing Increasing Increasing
Market Size The elastomeric wall coatings market in the United States in 2004 was worth $300 million. This is expected to grow at a compound annual growth rate (CAGR) of 7.6 percent to reach $500.4 million by the year 2011. Market Age The elastomeric wall coatings market is at a growth stage and has been growing at the rate of 5.5 to 6 percent for the last three years. The growth in this market is dictated by the high performance requirements of end users and the growth in the usage of tilt-up concrete for building construction.
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Competition The elastomeric wall coatings market in the United States is fragmented and is at a mature stage with a few national suppliers and a number of regional suppliers. There are about a 100 suppliers. The top three manufacturers of elastomeric wall coatings are The SherwinWilliams Company, Degussa, and ICI Paints. Generally companies concentrate on elastomeric wall coatings as applied to either new or renovation building construction projects. Distribution Structure Many companies in the elastomeric wall coatings market sell their products through distributors. There are also a few products that are available in Home depot, Lowes and similar other places which are targeted at the Do-Iy-Yourself market. Figure 4-1 shows the distribution channel adopted by the top companies participating in this market.
Figure 4-1
Elastomeric Wall Coatings Market: Distribution Channel Followed by Key Suppliers (U.S.), 2004
Direct Sale to Company Benjamin Moore & Co. Degussa Construction Systems Americas Dryvit Systems, Inc. ICI Paints M.A.B. Paints Neogard, a division of Jones- Blair Company Sika Corporation Sto Corporation Textured Coatings of America, Inc. The Sherwin- Williams Company s s s s
Sale through Distributors s s s s s s Mix of Both
Contractors
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Forecasts
and
Tr e n d s
Market Drivers
Figure 4-2 shows the drivers, ranked in order of impact, for the U.S. elastomeric wall coatings market for the period 2005-2011.
Figure 4-2
Elastomeric Wall Coatings Market: Market Drivers Ranked in Order of Impact (U.S.), 2005-2011
Rank Driver 1 Popularity of tilt-up concrete in building construction fuels demand for elastomeric coatings Product functionality increases sales 1-2 Years 3-4 Years 5-7 Years High
Medium/ High High
Medium/ High Medium/ High Medium/ High

P o p u l a r i t y o f Ti l t- u p C o n c r e t e i n Bu i l d i n g Construction Fuels Demand for Elastomeric Coatings Tilt- up concrete is increasingly being used in building construction. This construction is gaining market share because of its speed of construction, low cost, and the architectural treatments that they can be given. As per Tilt-up Concrete Association, the usage of tilt-up concrete in 2004 has soared by 23 percent as compared to the previous year. With concrete/ masonry structures prone to cracking and elastomeric coatings known for its crack-bridging and waterproofing abilities, the usage of elastomeric coatings is on the increase. This driver is expected to highly impact the market in the near future. Product Functionality Increases Sales Elastomeric coatings are a unique product. Besides crack-bridging and waterproofing, they are also weatherproof and dirt and mildew resistant. These coatings, especially the acrylic and silicone coatings, are mostly used for wall coating applications and are easy to apply and are low on VOC content. Building owners and contractors, particularly in the coastal areas, use these coatings as they have the ability to protect the substrate against wind-driven rain and the moisture in the air. However, due to their high costs, this driver is expected to have only a medium impact throughout the forecast period.
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Market Restraints
Figure 4-3 shows the restraints, ranked in order of impact, for the U.S. elastomeric coatings market for the period 2005-2011.
Figure 4-3
Elastomeric Wall Coatings Market: Market Restraints Ranked in Order of Impact (U.S.), 2005-2011
Rank Restraint 1 2 Increasing interest rates for new home starts check growth Tendency of acrylic elastomeric coatings to blister impedes growth Lack of darker and brighter shades affect wall coatings market 1-2 Years 3-4 Years Medium Low 5-7 Years
Medium/ Low Medium/ Low Low Low
Low
Low
Low
Increasing Interest Rates for New Home Starts Check Growth After witnessing historically low interest rates in 2004, lending rates for new housing starts has begun to increase. But an overall improving economy, combined with an increase in employment, is responsible for the high interest rates. This will result in fewer houses being constructed which will check the growth of elastomeric wall coatings as well. This restraint is expected to have a medium impact in the short term future and a lower impact in long term as housing starts are expected to pick up. Te n d e n cy o f Ac ry l i c E l as t o m e r i c C oat i n g s t o B l i s t e r Impedes Growth Acrylic elastomeric wall coatings could sometimes blister if applied on moist masonry/ concrete substrate or if water has seeped through the coating and the coating has low water vapor permeability. This moisture brings alkalinity along with it, which may blister or separate the acrylic coating from the surface it is intended to adhere. Sometimes alkalinity, as high as pH 10-11, is seen at the interfaces which affects the acrylic coating. The impact of this restraint is low as most licensed contractors apply these coatings after the application of a suitable primer or apply as per manufacturers instructions.
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L a c k o f Da r k e r a n d B r i g h t e r S h a d e s A f f e c t Wa l l Coatings Market Though resin technologies have advanced and a wide range of colors are available today, darker and brighter colors can still be a problem. Creating these colors would need high pigment loading which are UV sensitive and but these may decompose when exposed to sunlight. Also, these colors are susceptible to moisture, which slows down curing time. End users rarely wants dark or bright colors for their walls and hence this restraint is expected to have a minor impact on this market for the next few years.
Revenue Forecasts
Figure 4-4 and Chart 4.2 show the revenue forecasts for the U.S. elastomeric wall coatings market for the period 2001 to 2011.
Figure 4-4

Growth Rate (%) --5.5 6.0 6.5 6.8 6.9 7.1 7.5 8.1 8.1 8.7
($ Million) 251.9 265.7 281.7 300.0 320.4 342.3 366.5 393.9 425.9 460.5 500.4
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Chart 4.2

600 500 Revenues ($ Million) 400 300 200 100 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 10% 9% 8% 6% 5% 4% 3% 2% 1% 0% Growth Rate 7%
Growth Rate (% )
In 2004, the revenues from the U.S. elastomeric wall coatings market were $300 million. The market is forecast to grow to $500.4 million by 2011 at a CAGR of 7.6 percent. The key driver for this is the increasing use of tilt-up concrete for residential and nonresidential construction. Acrylic coatings, which constitute 90 percent of the elastomeric wall coatings market, are the environment friendly and therefore, is also responsible for this high growth.

The following are the market and product trends seen in the elastomeric wall coatings market M a r k e t Tr e n d s
Large Companies are Growing Faster Than Smaller Companies
The U.S. elastomeric wall coatings market has a few large national participants and several small regional participants who serve the local market. Though the smaller companies capitalize on local knowledge of what works and what doesnt, its the large companies that are seeing high growth in this market. The larger companies are gaining mainly because of their wide distribution network coupled with the technical support they are able to provide their contractors/customers. Contractors prefer using reputed brands as they are confident that it will bring them repeat business. Also, large companies are in touch with their contractors or end users all the time, and therefore, get a better understanding of their needs. They invest heavily in R&D and have a broad product line. All these factors make companies such as Sherwin-Williams, Dow Corning, Degussa and others perform better than their smaller counterparts in the market.
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Demand for the Application of a Single Thick Coat
Contractors are demanding the formulation of an elastomeric coating which can be applied in just one coat. Most of the current elastomeric coatings available in the market are to be applied in two coats, which would ultimately dry down to a 15-25 mils. The application of a single coat that would dry down to about 10 mils but will still retain all the properties of an elastomeric coating.Contractors favor this as it would save them a lot in terms of time and cost.
Product Trends
Every product in the elastomeric coatings market is moving toward lower VOCs so as to meet government regulations in different regions of the United States. Hence companies are moving toward creating more waterborne products. Besides these, there have been some interesting product launches which suggest that a new product trend could emerge. One of them is Loxon XP, launched by Sherwin-Williams in 2004 and it aims to cut down a step during the application of an elastomeric coating. Loxon XP is an acrylic elastomeric coating which can directly go over a concrete/masonry surface, thus eliminating the need for a primer. This probably heralds a new trend in the elastomeric wall coatings market where new products are created to counter the alkalinity of the concrete/masonry substrate directly reducing the number of steps in the process and helping to increase the contractors productivity.
Pricing Trends
The following are the prices and the pricing trends in elastomeric wall coatings market. P r i c e s o f E l a s t o m e r i c Wa l l C oa t i n g s The average price for a gallon of elastomeric wall coating in the United States is $20. Acrylic wall coatings are cheaper and are priced between $12 to $30, while the silicone elastomeric coatings are priced between $25 and $30. P r i c i n g Tr e n d s The prices of elastomeric wall coatings have been on the rise as a result of uncertainty and shortage in crude oil supplies and elastomeric resins. The monomer, butyl acrylate, which is used in the manufacture of the acrylic elastomeric coatings, has been in shortage and so resin manufacturers are faced with the dilemma of finding newer ways to meet this demand. Hence, resin manufacturers have increased their prices which in turn has lead to elastomeric wall coatings manufacturers to increase their prices by 5-10 percent in 2004. Though the prices are unlikely to increase at the current rate in future, they are completely governed by the crude oil supplies.
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Competitive
Analysis
Figure 4-5 presents the competitive structure of the total U.S. elastomeric wall coatings market for 2004.
Figure 4-5
Elastomeric Wall Coatings Market: Competitive Structure (U.S.), 2004

Number of Companies in the Market Around 100 Types of Competitors Paint companies Chemical companies Specialty companies Distribution Structure Direct sale to contractors Sale through distributors A mixture of both Key End Users Nonresidential buildings, industrial buildings, residential homes and buildings Price, quality of the product, reputation of the company, warranty, environmental compliance, ease of application
Competitive Factors
In 2004, there were about a 100 elastomeric wall coatings suppliers. The top suppliers were The Sherwin-Williams Company, Degussa, and ICI Paints. These three companies accounted for more than 15 percent of the elastomeric wall coatings market. Besides these companies, there are a few of other large companies such as Sto Corporation and Dow Corning Corporation who have a major presence in this market. Several medium and small sized regional suppliers also participate in this market who cater only to a particular region based on their local knowledge. The companies participating in this market could be classified based on their type as paint, chemical, and specialty companies. A brief description of each type of suppliers in this market is provided below.
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Pa i n t C o m pa n i e s Paint companies such as Sherwin-Williams, ICI Paints, Benjamin Moore, and M.A.B. Paints constitute a big segment in this market. Also, there are a lot of traditional paint companies trying to cash in the elastomeric coatings market. These companies are typically small and have a few products in their product line. With elastomeric coatings gaining importance, especially in coastal areas, many companies are buying these products from other companies, rebranding it, and selling it as theirs. By this, the company can have a wider product offering and can also meet the requirements of the contractors. The company also might want to try selling these products before deciding to set up a manufacturing facility as being a paint manufacturer, its easy to incorporate these elastomeric coatings into their product offering. Hence, a large number of traditional paint manufacturers are playing an active role in this market. Chemical Companies The other type of companies participating in this market are the chemical companies such as Degussa, Dow Corning Corporation, and Sika Corporation that have an arm in the elastomeric coatings market. Besides elastomeric wall coatings, these companies manufacture adhesives, sealants, membranes, reinforcements, and the like. Hence, these companies are characterized by their ability to cater better to a building construction. Specialty Companies The specialty companies include companies such as Neogard, specializing in elastomeric waterproofing products and companies such as Edison Coatings Inc. and IPA Systems Inc, in elastomeric wall coatings besides a few other restoration products, sealants, and adhesives. These companies are characterized by the fewer number of markets they participate in. Most of these companies are small because of the nature of their business as they participate in niche markets. Competitive Factors The following are a few competitive factors based on which companies compete amongst each other in the elastomeric wall coatings market:
Brand Image
Companies participating in this market make use of their already existing brand name and image to penetrate this market. End users rely on the brand name for quality products,which also provides them with some proof of work in the local region. This serves as a testimony to the customer for purchasing a particular brand.
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Price
The elastomeric wall coatings market is very closely fought on price. Large commercial projects require many hundreds of gallons of the coating and therefore, favor companies with a good brand name selling at a competitive price. Hence companies are always on the lookout to keep their prices as low as possible to lure these projects.
Technical Assistance
Technical assistance is also an important aspect to the contractor, especially the smaller ones. Manufacturers who give good information about the product, their method of application, etc. are always favored. Good technical assistance helps a contractor grow and gain reputation making it an important factor while choosing a manufacturer for the elastomeric coatings.
Market Participants
The following are a few companies that participate in this market: Th e S h e r w i n - Wi l l i a m s C o m pa n y Sherwin-Williams is the market leader in the elastomeric wall coatings market. The company manufactures acrylic elastomeric coatings and markets their products under the brand names- Loxon XP, SherLastic, Conflex XL, and VIP. The companys high investment in R&D coupled with its extensive distribution network and technical support has enabled it to gain the largest market share. Degussa Construction Systems Americas Degussa is another major participant in the elastomeric wall coatings market. The company participates in this market through its Construction System Americas business unit. The elastomeric wall coatings are marketed under the brand namesColorflex, Flexcoat, Silflex, Thorogard, Thorolastic, Sonneborn, and Senerlastic. Degussa supplies both acrylic-based and silicone enhanced or siliconized acrylic coatings for exterior wall applications. The company's products are sold mostly through independent distributors across the country. Degussa is one of the leading chemical companies in the world with their extensive product line and their image as technological innovators helps them market their products successfully.
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IC I Pa in t s ICI paints is another important participant in this market. The company sells its Decra-Flex elastomeric coatings line in three textures that are smooth, coarse, and fine. The company being a major paints manufacturer worldwide, has a good reputation and an established distribution channel which enables them to sell their products in large volumes. Dow Corning Corporation Dow Corning Corporation is a pioneer in the development and manufacture of silicone-based high performance products. This company plays a very specific and an important role in the elastomeric wall coatings market. The company manufactures the one component, 100 percent AllGuard elastomeric silicone coating for use over exterior walls. The AllGuard coating has been used in many prestigious retrofit projects and can also be used in new construction projects. Besides elastomeric coatings, the company manufactures over 7000 products for use in several industries. Sto Corporation Sto Corporation is another major participant in the elastomeric wall coatings market. The company manufactures both acrylic and silicone elastomeric wall coatings through their brand names StoLastic and Sto Silco Lastic. Besides these coatings, the company also makes exterior wall claddings, concrete repair products, and air and moisture barrier products. Sto invented the Exterior Insulation & Finish System (EIFS) and is a global participant. Dryvit Systems, Inc. Dryvit Systems Inc., a subsidiary of RPM International Inc., is another major supplier of elastomeric coatings that find applications over stucco, masonry, concrete, CMU, and EIFS substrates. The company promotes its elastomeric coatings under Whetherlastic brand. Benjamin Moore & Co. Benjamin Moore sells acrylic elastomeric wall coatings under Moorlastic brand. These products are sold through independent paint dealers throughout the United States. The company banks on its technical capabilities and its reputation to sell into this adjoining market. IPA Systems, Inc IPA is a niche company which is involved in repair and restoration of masonry/concrete structures, besides manufacturing a few specialty products for new construction. The
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company manufactures IPALastic which is a 100% acrylic elastomeric coating. The company takes pride in being able to provide quality products and meeting its customers needs.

The elastomeric wall coatings market in the United States was very fragmented and comprised around 100 suppliers in 2004. The market was characterized by a handful of big suppliers and a number of regional or niche coating manufactures. For the purpose of market share analysis the competitors in this market are classified in the following three tiers. Ti e r 1 C o m pa n i e s Companies with market shares in the range of five to ten percent of the total segment revenue fall under this category. The Sherwin-Williams Company, Degussa, and ICI Paints were identified as Tier 1 suppliers of elastomeric wall coatings in the United States. SherwinWilliams was the leading supplier, followed by Degussa in the second position, and ICI Paints in the third position. Ti e r 2 C o m pa n i e s Companies with market shares in the range of two to five percent of the total segment revenue fall under this category. Sto Corporation, Dryvit Systems, Inc., Benjamin Moore & Co., Dow Corning Corporation, Sika Corporation, and Textured Coatings of America, Inc., were identified as Tier 2 companies in this market. Ti e r 3 C o m pa n i e s Tier 3 companies have market shares less than two percent of the total segment revenue. A large number of paint manufacturers with a few elastomeric products in their portfolio participated in this market. Some notable suppliers in this category include Neogard, United Coatings, Tremco Inc., National Coatings Corporation, DeHaven Construction, Edison Coatings, Inc., Everest Coatings, Inc., Metacrylics, Nationwide Chemical Coatings Manufacturers, Inc., Rainguard Products Company, and Tamms Industries, Inc. among others.
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Strategic
Analysis
by
Products

Market Overview Acrylic-based elastomeric coatings are the most popular coatings used in exterior wall applications. They constitute 90 percent of the elastomeric wall coatings market as elastomeric acrylic resins offer good adhesion characteristics, high degree of flexibility and elasticity, high tensile strength, and superior alkali and dirt resistance. Acrylic coatings are generally water-based and have low VOC content, thus in line with the government regulations. Also these coatings being one component coatings, can be easily applied with a roller brush or can be spray applied, thus saving trouble for the applicators. Acrylic elastomerics can also be applied by do-it-yourselfers, but to obtain better results, manufacturers recommend the coatings to be applied by the authorized contractors. Most companies also give a 5 year warranty period. Another class of products which are sold in the market are the siliconized acrylics. These Siliconized acrylics, comparatively a newer product, which combine the benefits of bothacrylics and silicone elastomerics. These products have better adhesion and are easily cleanable as the acrylics while at the same time have better UV resistance as that of the silicones. Competitive Analysis Most of the elastomeric wall coatings suppliers compete in this arena and they offer a 100 percent acrylic elastomeric coating. This is because of the growing popularity of acrylic coatings which comes across as a good and clean waterproof coating to most end users. Almost all of these coatings are compatible with concrete stucco, masonry, and EIFS. Though the market is dominated by the same major manufacturers- The Sherwin-Williams Company, Degussa, ICI Paints, and Sto Corporation, there are more than 75 medium and small coatings manufacturers. Companies such as M.A.B. Paints and Textured Coatings of America Inc. or Texcote are major participants in their local region. These companies compete on their knowledge of the local market and weather conditions and their ability to manufacture such suitable coatings. These companies mainly sell their products to contractors who then use it.
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Ov erv iew Silicone elastomeric coatings were introduced in the early 1990s and since then Dow Corning Company has been a pioneer in this field. Silicone coatings have exceptional water vapor permeability and alkaline resistance. They have the ability to withstand high pH without the need of a primer. These coatings could hence be used after a two day cure period over concrete stucco or masonry surfaces. Elastomeric silicones also have high UV resistance and have the inherent ability to withstand light, heat, and most chemicals. Many of these coatings are one component coatings and hence are easy to apply. They have the ability to function at extreme temperatures. One of the concerns which most building owners have is that once silicone elastomerics are applied, they generally cannot be recoated with another elastomeric coating. Elastomeric silicone coatings contribute 10 percent to the elastomeric wall coatings market. Competitive Analysis The elastomeric silicone coatings market is dominated single-handedly by Dow Corning Corporation. There are also other companies such as GE Silicones, Everest Coatings, and Gaco Western Inc. who also participate in this market but Dow Corning is the undisputed market leader with its AllGuard Silicone Elastomeric Coating. Dow Corning has successfully waterproofed many buildings throughout the United States with its AllGuard Elastomeric Coatings, for instance- the Barton Oaks Plaza at Austin, Texas. This has saved many buildings from water leakage and expensive re-cladding without disturbing work within and all this within a reasonable period of time.
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5
Introduction
Market Overview
The elastomeric floor coatings contribute over 19 percent to the total elastomeric coatings market. These coatings are used on decks, parking garages, terraces, parapets, walkways, stadium surfaces and other similar surfaces.The bulk of these floor coatings are polyurethane-based. Polyureas and acrylics also have a small share in this market. The performance requirements of floor coatings are listed as below:
s
The coated floor should be capable of withstanding the traffic over it. This includes both vehicular and foot. Certain areas have very high traffic such as parking decks and driveways. Abrasion and chemical resistant Dirt and dust resistant. Areas with high traffic accumulate dirt quickly. Durable and long lasting. The floor must be weatherproof. This mostly applies to exposed surfaces. The coated floor should maintain its color and finish.
s s s s s
Elastomeric floor coatings are well engineered to handle these requirements. Their weatherproofing and waterproofing qualities contribute to their durability and long lasting properties. The polyurethane coatings which comprises the majority of the coating sold in this market come in both one and two components, while the polyureas are two component systems. Coatings are engineered differently to meet each of the different performance requirements. For instance, in case vehicular traffic decks, these coatings are engineered to offer additional strength and skid resistance on areas such as ramps and curves and in the case of specialty decks as in mechanical equipment rooms, suitable coatings provide protection over and around equipment pads and protrusions. Elastomeric coatings are also widely used for recreational purposes such as decks surrounding swimming pools, tennis courts where these coatings offer an attractive and a skid resistant surface.
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Elastomeric floor coatings are applied both new construction as well as renovation projects. These coatings are sold accordingly to building contractors or restoration/ waterproofing contractors and applied at the job site.

Chart 5.1 presents the Market Engineering measurements for the U.S. elastomeric floor coatings markets in 2004.
Chart 5.1
Elastomeric Floor Coatings Market: Market Engineering Measurements (U.S.), 2004
Market Research
Market Engineer
Market Strategy
Implementation
Market Planning
Measurement Name Market age Revenues Potential revenues (maximum future market size) Base year market growth rate Forecast period market growth rate Average price Price range Price sensitivity Competitors (active market competitors in base year) Degree of competition Market concentration (percent of base year market controlled by top three competitors)
Measurement Growth $120 million $171.1 million 4.0% 5.2% $30 per gallon $15 to $45 High 40 Medium 42%
Trend --Increasing Increasing Increasing Decreasing Increasing Stable Increasing Increasing Increasing Decreasing
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Market Size The elastomeric floor coatings market in the United States in 2004 was worth $120 million. This is expected to grow at a compound annual growth rate (CAGR) of 5.2 percent to reach $171.1million by 2011. Market Age The elastomeric floor coatings market is at a growth stage and has been growing steadily at the rate of 3.5 to 4 percent for the last three years. In the next 5 to 7 years the market is expected to grow by four to six percent. The growth in this market is dictated by the different performance requirements of various end uses and the ability of elastomeric coatings to meet the requirement. Competition The elastomeric floor coatings market comprises of a few national suppliers and many regional suppliers. There are about 50 suppliers in all in the United States. The top three manufacturers of elastomeric floor coatings are Neogard, 3M, and Degussa Building Systems. These companies alone account for 42 percent of the entire elastomeric floor coatings market. Distribution One of the following distribution channels are followed by elastomeric coatings manufacturers in the United States:
s s s
Direct sale to contractors Sales through independent distributors Mix of both of the above
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Figure 5-1 shows the distribution channel followed by a few key suppliers in this market.
Figure 5-1
Elastomeric Floor Coatings Market: Distribution Channel Followed by a Few Key Suppliers (U.S.), 2004
Direct Sale to Company Degussa Construction Systems Americas Neogard, a division of Jones- Blair Company Pacific Polymers International Inc. Sika Corporation Tremco Sealants/Waterproofing Division 3M s s s
Sale through Distributors s s s Mix of Both
Contractors
Many of the elastomeric coating manufacturers sell their products directly to contractors. This is because elastomeric floor coatings when applied in certain areas have to meet a few performance requirements which only when applied by an authorized contractor, can the manufacturer ensure its longevity and durability. Also for large projects such as parking decks, it is more economical for the contractor to buy directly from the manufacturers than through the distributors. Hence, in these cases both manufacturers as well as contractors prefer dealing directly with each other. A lot of coating manufacturers are also selling through a mix of both the distribution channels. Selling through distributors enables them to widen their reach within the country thereby enabling them to make newer contacts and do greater business.
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Forecasts
and
Tr e n d s
Market Drivers
Figure 5-2 shows the drivers, ranked in the order of impact, for the U.S. elastomeric floor coatings market for the period 2005-2011.
Figure 5-2
Elastomeric Floor Coatings Market: Market Drivers Ranked in Order of Impact (U.S.), 2005-2011
Rank Driver 1 High Performance Requirements create demand for elastomeric coatings Fast setting time of polyurethane and polyurea 1-2 Years High 3-4 Years 5-7 Years High High
Medium/ High High
High
High Performance Requirements Create Demand for Elastomeric Coatings Areas such as parking decks and parking garages would require coatings that can withstand the vehicular or foot traffic while areas such as aircraft hangars or mechanical rooms where heavy industrial equipment are placed, will need a coating that can withstand the vibration of equipment without rupturing or delaminating. Elastomeric coatings have high traffic bearing capacity and excellent impact, chemical, and abrasion resistance. These coatings can extend by 200 to 400 percent as the situation demands and can waterproof the surface. These coatings are designed to be turned up at the walls and columns so as to maintain one integral waterproofing membrane. All this contributes to these elastomeric coatings being widely used in situations which demand high performance. Fa s t S e t t i n g Ti m e o f P o ly u r e t h a n e s a n d P o ly u r e a s S p u rs Growth Polyurethanes and polyureas cure rapidly to form a monolithic waterproofing membrane. On an average, polyurethane-based coatings cure in 48 hours at suitable temperatures and humidity levels polyurea-based coatings cure in 30 minutes as against other traditional systems which are both time and labor intensive. This reduces shutdown time and enables work to commence immediately, which is very critical in industrial work floors. Hence, the use of elastomeric polyurethanes and polyureas for floor coating applications are increasing. The impact of this driver is expected to be high for the next two to three years.
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Market Restraints
Figure 5-3 shows the restraints, ranked in the order of impact, for the U.S. elastomeric floor coatings market for the forecast period 2005- 2011.
Figure 5-3
Elastomeric Floor Coatings Market: Market Restraints Ranked in Order of Impact (U.S.), 2005-2011
Rank Restraint 1 Higher costs of polyurethane and polyurea- based elastomeric coatings affect growth Use of special skills and equipments to apply restrains growth Competition from epoxies and cementitious products check growth 1-2 Years High 3-4 Years Medium/ High 5-7 Years Medium/ High
Medium
Medium/ Low Low
Very Low Low
Low
Higher Cost of Polyurethane and Polyurea-based Elastomeric Floor Coatings Affect Growth Though the polyurethane and polyurea-based elastomeric coatings offer superior surface properties, they come at a premium price. Both polyurethane/polyurea-based elastomeric coatings are priced between $20 and $45.Hence, this factor is always considered before building contractors make the final choice. This restraint is expected to have a high impact in the short term future. Use of Special Skills and Equipment to Apply Restrains Growth Polyurethane coatings are available as both one component as well as two component systems. The two component systems combined with polyurea-based elastomeric coatings, which are two component coatings, necessitate the use of pumps and special spray delivery equipment besides special skills to apply. Although their fast setting properties will favor their application in large open areas, industrial setups with a lot of machinery will require pre-installation masking, protection, and detailing which may exceed the time savings. Hence this factor serves as a roadblock when polyurethanes or polyureas are being considered for application.
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Competition from Epoxies, Cementitious Products Check Growth Epoxies and polymer modified cement coatings compete with elastomeric coatings for use in decks, industrial floors, and so on. These materials adhere well to common construction surfaces such as masonry, concrete, metal, and wood, are easy to apply, and have good chemical resistance. Since, elastomeric coatings possess a few superior properties such as their ability to waterproof and are more durable and long lasting, the impact of this restraint is low.
Revenue Forecasts
Figure 5-4 and Chart 5.2 show the revenue forecasts for the U.S. elastomeric floor coatings market for the period 2001 to 2011.
Figure 5-4

Growth Rate (%) --3.7 3.8 4.0 4.3 4.7 5.0 5.2 5.5 5.8 6.0
($ Million) 107.2 111.2 115.4 120.0 125.2 131.1 137.6 144.7 152.6 161.4 171.1
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Chart 5.2

180 160 Revenues ($ Million) 140 120 100 80 60 40 20 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 7% 6% Growth Rate 5% 4% 3% 2% 1% 0%
Growth Rate (% )
In 2004, the revenues from the U.S. elastomeric floor coatings market were $120 million. The market is likely to grow to $171.1 million by 2011 at a CAGR of 5.2 percent. This growth will be due to the high performance requirement in several areas such as parking garages, industrial workshops, hangars and so on. The fast setting time which these elastomeric coatings offer will further favor its growth.

The following are a few trends in the elastomeric floor coatings market: M a r k e t Tr e n d s
Small Manufacturers are Gaining Market Share
The elastomeric floor coatings market has got is a mix of large national manufacturers such as Neogard and 3M as well as small regional suppliers such as Metacylics and Allied Waterproofing, Inc. Since these small regional companies cater mostly to local needs they have the competitive advantage of knowing many contractors locally and being located close to the job site enables instant delivery of products. Their familiarity with the local weather conditions and ability to sell their products at a much more competitive price than large national suppliers helps them gain market share quickly.
Move toward Distribution of Coatings through Independent Distributors
Many elastomeric floor coatings manufacturers sell directly to contractors as the general size of the project is large.Projects such as parking decks, airplane hangars require several gallons of coatings and hence the contractor would prefer buying it directly from the manufacturer as this would save costs. Many manufacturers have realized selling through distributors enables them to sell to new areas and to newer people. This enables them to establish contacts with newer contractors and so a lot of companies are now selling through distributors as well.
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The following are a few product trends in the elastomeric floor coatings market: P r o d u c t Tr e n d s The following product trends are observed in the elastomeric floor coatings
High Demand for Polyurea-based Elastomeric Coatings
Polyurea-based elastomeric coatings are experiencing high demand because of its fast curing time. Typically, polyurea-based coatings cure fully in 30 minutes and hence help in minimizing shutdown time. These coatings can also be applied over a wide temperature range. They are also abrasion and chemical resistant besides possessing the ability to waterproof. Hence, in places where there is a high performance waterproofing requirement with minimum shutdown time, for example, industrial work floors, parking decks and other similar surfaces, polyureas seem to be in great demand.
Hybrid Products Emerging in the Coatings Market
Since both polyurethanes and polyureas have similar chemistry and comparable physical and chemical properties, scientists are working toward creating a polyurethane-polyurea hybrid elastomeric coating. This will combine the benefits of both polyurethanes that are available at a lower cost and polyureas which have excellent properties such as wider application temperatures and fast cure.
Increase in Acrylic Reinforced Products
Acrylic coatings have a small share in this market. One of the major reasons for this is that these coatings have lower tensile strength as compared to the polyurethanes and polyureas. However, acrylics are the most versatile of all coatings and possess outstanding flexibility and adhesion characteristics. Also, they come at a lower cost than the polyurethane and polyurea-based coatings. It is for this reason, a lot of manufacturers are reinforcing acrylic coatings with some other external material so as to increase its strength. Hence, the companies market these reinforced-acrylic coatings as coating systems. For instance- ElastoTex Deck Coating manufactured by Pacific Polymers International, Inc. uses fiberglass to strengthen the acrylic coatings.
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Pricing Trends
The following are the pricing and the trends in pricing seen in the elastomeric floor coatings market. Pricing The average price for a gallon of elastomeric floor coatings is $30. The price of a gallon of acrylic elastomeric floor coating varies from $15 to $30, the same amount of polyurethane floor coating will range between $20 to $40 and polyurea-based elastomeric floor coating will range between $25 and $45. P r i c i n g Tr e n d s The prices of elastomeric floor coatings have remained almost flat over the past two to three years with very little variation. Though crude oil prices continued to escalate, the manufacturers mostly absorbed these costs so as to be more competitive in the market but now it has reached a situation where manufacturers are no longer able to contain the prices and are passing on the increasing costs to the end users. The average prices of elastomeric floor coatings were estimated to have increased by three percent during the year 2004. The prices of these coatings in future depend entirely on the crude oil supply.
Competitive
Analysis
Figure 5-5 presents the competitive structure of the U.S. elastomeric floor coatings market in 2004.
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Figure 5-5
Elastomeric Floor Coatings Market: Competitive Structure (U.S.), 2004

Number of Companies in the Market 40 Types of Competitors Chemical companies Specialty companies Paint manufacturers Distribution Structure Direct sale to contractors Sale through distributors Mix of both Key End-Uses Competitive Factors For application over parking garages, mechanical rooms, stadium surfaces, walkways, parapets, terraces and so on Price, ease of application, company credentials, speed of application
In 2004, there were around 20 suppliers of elastomeric floor coatings in the United States. The top three suppliers- Neogard, 3M, and Degussa Building Systems accounted for 42 percent of the total sales in the elastomeric floor coatings market, which clearly shows the high level of concentration in this market. The companies participating in this market could be classified into three typeschemical, specialty, and paint companies. Chemical giants such as Degussa, 3M, and Sika Corporation participate in the coatings market, at the same time specialty companies such as Neogard and Carlisle Coatings & Waterproofing Inc. also participate. The large chemical companies serve several markets and have presence in many countries. These companies have high R&D expenditure and an extensive distribution channel. The specialty companies, on the other hand, can be further split into two segments which are large national companies and small niche companies. Large national companies such as Neogard and Carlisle serve the elastomerics market in many parts of the country. These companies are specialized and participate in only a few markets where all their efforts are focussed. These companies have high R&D expenditure, a good brand name, and manufacture competitive products. The small niche suppliers are very focussed in a particular area. For instance, Allied Waterproofing Inc participates in the concrete restoration market. This company also sells elastomeric deck coatings, membranes, and some caulks and sealants. Their knowledge of local environment conditions, purchasing trends of customers, and their local contact with contractors enables them to customize their products better to their region of focus.
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A few paint companies such as Sherwin-Williams and Life Paint Company also participate in this market. Sherwin-Williams is one of worlds leading paints and coatings companies while Life Paint company is a small paints and coatings company operating only within California. Paint companies have a limited presence in this market. Competitive Factors The following are a few competitive factors in the elastomeric floor coatings market. Building Contractors consider each of these factors before finalizing in on the most appropriate coating. Price: The elastomeric floor coatings market is a very price competitive market. This factor is at the top of the list while deciding a coating manufacturer for a particular project. Ease of Application: This is another major factor while deciding on the coating especially, when these coatings are to be applied over large areas. Acrylic elastomerics are the easiest to apply while polyurea-based elastomerics are the most difficult, requiring expensive equipment. Company Credentials: The brand name, number of years the company has been in service, job history, performance history are all important factors while deciding on the coating manufacturer. Speed of Application: This is a very important factor that is dependent on the urgency of the job. Industrial work floors generally need the application of coatings in the shortest possible time so that shutdown time is minimal and work is resumed immediately after. There is usually a trade-off while deciding the type of coating. Depending on the priorities, the contractor makes his final choice.
Market Participants
The following are a few companies that participate in this market Neogard, a division of Jones- Blair Company Neogard is the largest company operating in the floor coatings market accounting for 20 percent of total sales. The company makes polyurethane-based elastomeric floor coatings for parking decks, walkways, sports stadiums, pavements etc., through its Auto-Gard, Peda-Gard, Pool-Gard, and Perma-Gard 3 brands. Neogard also makes seamless polyurethane and epoxy flooring systems. The company procures its products based on performance. has a strong brand name and supplies throughout the country.
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3M 3M is also a major participant in this market accounting for 12 percent of the total market, though participating only in floor restoration systems. The company makes polyurethane-based elastomerics and markets its products under the Scotch-Clad name. 3M has the largest solvent free line of polyurethane elastomeric coatings. 90 percent of the companys urethane coatings are used for coating parking garages. 3M is a global chemical company manufacturing a range of products for many industries. Its brand name coupled with an excellent supply chain management reinforces its position at number two in the elastomeric floor coatings market. Degussa Building Systems Degussa Building Systems, another important participant in this market, sells polyurethane, polyurea, and acrylic-based elastomeric floor coatings and contributes ten percent of the total sales in this market. The company sells its products under the ThoRoc and Sonneborn brand. Degussa relies on its technical expertise to manufacture newer and better products. Their latest offering, IC 2480, is a fast setting polyurea-based elastomeric coating which can be serviceable within one hour. Ly m Ta l I n t e r n a t i o n a l I n c . LymTal International is mid-sized and an important participant in the elastomeric floor coatings market. The company manufactures polyurethane floor coatings for decks, stadiums, plazas etc. Besides elastomeric coatings the company manufactures a range of epoxy coatings, sealants, grouts and other similar coatings. The company manufactures an extensive product line of polyurethane coatings, under the IsoFlex brand name, with many of them being one component and low in VOC content. The company takes pride in providing high quality products, product development, and the technical support it can offer to its end users. A l l i e d Wa t e r p r o o f i n g I n c . Allied Waterproofing is a small company participating in the concrete waterproofing and repair industry. The company supplies elastomeric deck coatings for parking garages, sun decks, pool decks, and balconies. The company also supplies some expansion joints, caulks, and sealants. Allied waterproofing operates from Lyons, Illinois, and caters mostly to the local region.
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Figure 5-6 and Chart 5.3 represent the market shares by revenues of major participants in the U.S. elastomeric floor coatings market in 2004.
Figure 5-6
Elastomeric Floor Coatings Market: Company Market Share by Revenue (U.S.), 2004
Company Neogard 3M Degussa Others TOTAL 2004 (%) 20 12 10 58 100
Note: Others include Carlisle Coatings and Waterproofing Inc., Tremco Sealants/Waterproofing Division, LymTal International Inc., Pacific Polymers International Inc, The Sherwin- Williams Company, United Coatings, Edison Coatings, Inc., DeHaven Construction Company.
Chart 5.3
Elastomeric Floor Coatings Market: Company Market Share by Revenues (U.S.), 2004
Neogard 20%
3M 12% Others 58% Degussa 10%
The top three suppliers namely Neogard, 3M, and Degussa Building Systems together accounted for 42 percent of the total market. This shows that unlike the wall coatings market, the floor coatings market is concentrated and is dominated by a few manufacturing powerhouses. These companies have excellent R&D centers and the best distribution networks. Neogard and 3M have a mix of both distribution channels, which gives them the competitive edge.
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Other notable companies which also have a major presence, though locally, in this market include Carlisle Coatings and Waterproofing Inc., Tremco Sealants/Waterproofing division, LymTal International Inc., and Pacific Polymers. These companies have an extensive line of products and they are major suppliers in their respective areas.
Strategic
Analysis
by
Products

Polyurethane-based elastomeric coatings have 90 percent of the floor coatings market share. This is because these coatings have very high tensile strength and abrasion resistance and hence can withstand heavy vehicular and pedestrian traffic. These coatings have been there in the market for the last 20 years and have gained wide acceptability. They have excellent chemical and sunlight resistance and suit public areas. Polyurethane coatings come in both single and two-component systems. The two-component systems require the components to be mixed in the correct ratio for their best performance. The presence of moisture can cause foaming and can thus hinder curing. Many polyurethane-based elastomeric coatings are solvent-based and companies are slowly moving toward water--based urethanes since they are environment friendly and better comply with the VOC regulations. Polyurethanes are also priced attractively when compared to its closed competitor polyureas. Competitive Analysis Almost all the companies participating in the floor coatings market have at least a polyurethane product suitable for floor coatings. The leading manufacturers are Neogard, 3M, and Degussa. Neogard, and 3M manufacture only polyurethane coatings while Degussa makes polyurethane, polyurea, and acrylic-based coatings. Neogard and 3M sell most of their coatings for application on parking decks and since parking decks are huge projects, the contractors prefer to buy it directly from the manufacturers. Hence, these companies sell a lot of their coatings directly to manufacturers. While, Degussa sells a lot into other flooring applications as well and sell their coatings through their distributors. Neogard and 3M sell through distribution as well. Besides these companies Tremco Sealants/ Waterproofing division, Pacific Polymers and LymTal International also play a key role in this market.
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Polyurea Elastomeric Coatings

Polyurea-based elastomeric coatings contribute seven percent to the elastomeric floor coatings market. They are fast setting and are insensitive to moisture. They have excellent adhesion characteristics, chemical resistance, abrasion resistance, and also have high tensile strength. They are easy to apply and contain low or zero VOCs. These coatings are the most expensive of all elastomeric coatings we are considering in this study. For applications such as industrial work floors where work has to resume as quickly as possible, polyurea-based coatings are the best alternative. Competitive Analysis Fewer companies participate in the polyurea-based elastomeric coatings market as compared to the polyurethane elastomeric coatings market. This is because polyureas are a newer product and also they are the most expensive of the elastomeric coatings. Also a lot of hype has been created about these products which has deterred many companies from entering into this line. However, the features polyurea-based coating offer are unmatched, for example, their fast setting times, their moisture insensitivity, and their ability to perform in extreme conditions. Degussa is a major participant in this market. Sherwin Williams markets its EnviroLastic, polyurea-based elastomeric coatings for use on decks and floors. There are also a few small companies participating in this market such as Polyurea Coatings Systems Incorporated and VersaFlex Incorporated.

Acrylic elastomeric coatings constitute three percent of the elastomeric floor coatings market. Though they have excellent adhesion characteristics, high degree of flexibility, and elasticity, these coatings are of lower tensile strength than polyurethanes and polyureas. Since flooring applications require very high tensile strength to withstand the traffic above it, polyurethanes and polyurea-based coatings are preferred. However, acrylic coatings are generally water based and have low VOC content, thus in line with the government regulations. These coatings being one component coatings, can be easily applied with a roller brush or can be spray applied and are the least expensive of all coatings. Competitive Analysis A few companies manufacturing acrylic elastomeric coatings for floor coating applications include Degussa, Pacific Polymers International Incorporated and United Coatings. Many companies are reinforcing these coatings with other materials or are creating hybrid products in order to make them stronger while retaining all the other beneficial properties of acrylics. For instance, Pacific Polymers Elasto-Tex deck coating is a fiberglass reinforced acrylic deck system while Degussa manufactures Son-No-Mar under the Sonneborn brand which is a polyurethene-acrylic hybrid coating.
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6
Introduction
Market Overview
Elastomeric roof coatings contribute over 32 percent to the total elastomeric coatings market. These coatings are made to protect roofs of commercial, residential buildings, and houses. Roof coatings are a very important system as a damaged or a leaking roof could completely disrupt the work within. The different substrates over which elastomeric coatings can be applied include asphalt, modified bitumen, metal, spray polyurethane foam(SPF), built-up roof (BUR) amongst others. The elastomeric roof coatings mostly include acrylic, silicone, and polyurethane besides a few polyurea-based coatings. The selection of a particular type of elastomeric coating depends primarily on the roofing substrate. For instance- Silicone-based elastomerics adhere well to SPF roofs. The polyurethane and polyurea-based coatings would be mostly used in places which would have some pedestrian traffic. Most of these coatings are used in retrofit or renovation type projects.
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Since roof coatings are a very important system, there are a few performance requirements these coatings are expected to meet. They are:
s
Roof coatings should have good adhesion characteristics. If these coatings are unable to adhere to the substrates well, one will have to replace these coating sooner or later. To ensure good adhesion, the application of a primer is usually recommended.
Since roof coatings are exposed to the brunt of nature, these coatings should have the ability to withstand variations in temperature, that is, should not crack or peel due to varying temperatures.
They should have high water resistance as sometimes these coatings would be expected to handle waterlogging and in some cases, snow logging and therefore, the roofs are generally sloped.
s s s s
They should maintain their reflectivity for long. They should be resistant to dirt and other dust particles. They should be durable and long lasting. They should maintain their color/finish.
Elastomeric coatings are very well engineered to meet these requirements. In addition to all this, these coatings also offer excellent waterproofing, thereby ensuring that the roof lasts long. A proper white reflective elastomeric coating could offer reduction in temperature and hence reduction in cooling costs. Temperature reduction up to 50 degree Fahrenheit and reduction in cooling costs by 20-25 percent is quite common. This would further translate into reduced fuel usage and lower power-plant emissions. In addition to landfill usage, to which roofing materials are a major contributor, in urban areas, the cumulative effect of multiple cool roof systems will also reduce the urban ambient temperature.

Chart 6.1 represents the Market Engineering measurements for the U.S. elastomeric roof coatings markets in 2004.
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Chart 6.1
Elastomeric Roof Coatings Market: Market Engineering Measurements (U.S.), 2004
Market Research
Market Engineer
Market Strategy
Implementation
Market Planning
Measurement Name Market age Revenues Potential revenues (maximum future market size) Base year market growth rate Forecast period market growth rate Average price Price range Price sensitivity Competitors (active market competitors in base year) Degree of competition Market concentration (percent of base year market controlled by top three competitors)
Measurement Growth $200 million $545.1 million 20.0% 15.4% $17 per gallon $10 to $50 per gallon High 75 High 23.3%
Trend
Increasing Increasing Increasing Decreasing Increasing Stable Increasing Increasing Increasing Decreasing
Market Size The elastomeric roof coatings market in the United States in 2004 was worth $200 million. This is expected to grow at a compound annual growth rate (CAGR) of 15.4 percent to reach $545.1 million by 2011.
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Market Age The elastomeric roof coatings market is at a high growth stage where it has been growing at a CAGR of 17 percent from 2001 to 2004. The growth in this market is dictated mainly by the lower life cycle costs of the roof experienced by its usage. Competition The elastomeric floor coatings market in the United States is at a growth stage with nearly 75 companies participating in this market. Among these, there are a few national suppliers and the others mostly catering to few regions. The top three manufacturers of elastomeric roof coatings are Henry Company, United Coatings, and National Coatings Corporation accounting for 23.3 percent of the entire elastomeric coatings market. Distribution One of the following distribution channels are followed by elastomeric coating
manufacturers in the United States:

s s s
Direct sale to contractors Sales through independent or company owned distributors Mix of direct sale to contractors and sale through distributors
Figure 6-1 gives the distribution channels followed by a few key companies in this market.
Figure 6-1
Elastomeric Roof Coatings Market: Distribution Channel Followed by a Few Key Suppliers (U.S.), 2004
Direct Sale to Company Elastomeric Roofing Systems, Inc. (ERSystems) Henry Corporation National Coatings Corporation Neogard, a division of Jones- Blair Company United Coatings s s s
Sale through Distributors Mix of Both
Contractors s
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Many of the elastomeric roof coating manufacturers sell their products directly to contractors. This is because these coatings meet the performance requirements only when applied by an skilled contractor making it important for many large companies such as National Coatings Corporation to sell their coating through approved applicators. A lot of coating manufacturers also sell these roof coatings through distributors. Selling through distributors enables them to widen their reach within the country thereby enabling them to make newer contacts and do better business. Companies such as United Coatings sell through both the channels which gives them the competitive edge.
Forecasts
and
Tr e n d s
Market Drivers
Figure 6-2 shows the drivers, in their order of impact, for the U.S. elastomeric roof coatings market for the period from 2005 to 2011.
Figure 6-2
Elastomeric Roof Coatings Market: Market Drivers Ranked in Order of Impact (U.S.), 2005-2011
Rank Driver 1 Lesser life cycle cost of elastomeric coatings drives demand Increasing demand for environment-friendly coatings favors elastomeric coatings Government encouragement to use white solar-reflective coatings drives growth Trend in roofing material favor elastomeric coatings favor elastomeric coatings
1-2 Years
3-4 Years
5-7 Years Very High
Very High Very High
Very High Very High
High
High
Medium/ High Medium/ High
Medium
Med/High
Medium/ High
Lesser Life-cycle Cost of Elastomeric Coatings Drives Demand The lesser life cycle cost encountered when elastomeric coatings are applied onto the roofs is the strongest driver for this market. People are realizing the application benefits of elastomeric coatings such as reduced frequency of a roofing job and high energy savings for several years if a light colored roof coating is applied. With ordinary coatings, there is a greater possibility for the water seeping through the substrate and damaging the roof. An ordinary coatings has to be replaced every two to three years. With elastomeric roof coating, manufacturers offering long warranties (10 to 15 years), people are realizing that white or light colored elastomeric roof coatings are the best alternatives.
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Increasing Demand for Environmentally-Friendly Coatings Favors Elastomeric Coatings The U.S. environmental protection agency (EPA) also has driven change in the coatings industry by continually tightening the solvent volatile organic compound (VOC) emission regulations. These regulations require roof coating manufacturers and raw-material suppliers to produce products that meet the lower VOC regulations. Since asphalt-based coatings contain solvents and are high VOC coatings, people are favoring solvent free and water based elastomeric coatings. This drives the growth of these environmentally friendly elastomeric roof coatings. This driver is expected to highly impact the market in the next few years. Government Encouragement to Use White Solar Reflective Coatings Drives Growth Energy-efficient roofing systems are in demand as a result of rising energy costs, evolving building codes, and greater sensitivity to the effects of urban heat islands. The use of energy-efficient roofing materials results in cooler roof surfaces thus, less energy is spent on air conditioning. As a result of this demand and media focussing on ENERGY STAR ratings and reflectivity, acrylic coatings frequently are specified as finish coats for built-up and modified bitumen roof systems and maintenance coatings for existing roof systems, including built-up, modified bitumen, metal, spray polyurethane foam, and concrete. Tr e n d i n Ro o f i n g M a t e r i a l Fav o r s E l a s t o m e r i c C o a t i n g s In the 1980s, asphalt, bitumen, and metal roofs constituted most of the roofing substrates but now the trend is changing. Roofing contractors are installing a lot of ethylene propylene diene monomer (EPDM), SPF, single ply, and other roofing membranes. This gradual change taking place in the roofing market is driving the growth for elastomeric roof coatings since asphalt-based coating mostly go only over asphalt/bitumen roofs, while elastomeric roof coatings could be applied over a wider range of substrates. This driver is expected to have a low impact in the short term future though the roofing trends promise a higher impact in the long term future.
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Market Restraints
Figure 6-3 shows the market restraints in their order of impact for the U.S. elastomeric roof coatings market for the forecast period 2005 to 2011.
Figure 6-3
Elastomeric Roof Coatings Market: Market Restraints Ranked in Order of Impact (U.S.), 2005-2011
Rank 1 Restraint Application limitations of elastomeric coatings restrict growth 1-2 Years High 3-4 Years 5-7 Years
Medium/ High Medium/ High
Competition form from other roof coatings limits growth Med/High
Med/High
Med/High
Application Limitations of Elastomeric Coatings Restricts Growth Elastomeric coatings have a few application requirements which restrict its usage. For instance, these roof coatings should be applied over 45 degree Fahrenheit and therefore, can be applied mostly during summer. Acrylic elastomeric coatings require two physical changes to occur for complete curing:
s s
Water must evaporate first for initial drying to occur Acrylic polymers must fuse together.
The first process occurs quickly while the second takes about two to four weeks sometimes. Climatic conditions such as cold weather, rainstorms, high humidity and/ or fog and reduced daylight hours during winters can hamper this process. Hence, in regions such as the pacific northwest, these coating can be mostly applied only from May through October. This factor, hence, significantly affects the elastomeric coatings market. Competition From Other Roof Coatings Limits Growth Ordinary roof coatings are cheaper, have been in the market for a greater period of time and are generally more acceptable to most people. Also with asphalt/bitumen roofs still occupying a significantly greater market share in the roofing market, asphalt/ bitumen coatings represent a cheaper and acceptable option.
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Revenue Forecasts
Figure 6-4 and Chart 6.2 show the revenue forecasts for the U.S. elastomeric roof coatings market for the period 2001 to 2011.
Figure 6-4

Growth Rate (%) --15.0 17.0 20.0 20.1 18.7 16.7 14.0 13.5 12.8 12.1
($ Million) 123.9 142.5 166.7 200.0 240.3 285.2 332.9 379.5 430.8 486.1 545.1
Chart 6.2

600 500 Revenues ($ Million) 400 15% 300 10% 200 100 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 5% 0% 25% 20% Growth Rate
Growth Rate (% )
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In 2004, the revenues from the U.S. elastomeric roof coatings market were $200 million. The market is forecast to grow to $545.1 million by 2011 at a CAGR of 15.4 percent. The key driver responsible for this high growth is the lower life cycle costs associated with the usage of elastomeric coatings. Acrylic coatings, which constitute 80 percent of the roof coatings market, are the most environment friendly of all the other elastomeric coatings leading to increase in demand and thereby, a higher growth.

The following are the market and product trends seen in the elastomeric roof coatings market. M a r k e t Tr e n d s
Roofing Companies Entering the Coatings Market
Many roofing companies are now participating in the coatings market. These companies typically sell roofing membranes, some sealants, and adhesives. Since elastomeric roof coatings are witnessing a high growth rate, a lot of roofing companies have entered and are considering to enter this lucrative market. Many times these companies do not have the required infrastructure and equipment to manufacture these coatings and hence indulge in private labelling. These roof restoration companies purchase the elastomerics from another major manufacturer and sell it along with their roofing products with their label on them. P r o d u c t Tr e n d s Apart from the elastomeric roof coating, manufacturers moving toward waterborne coatings which have low or no VOCs within them. The following are a few product trends.
Companies Concentrate on Manufacturing Fast Cure Coatings
Since the application of elastomeric coatings is greatly dependant on weather conditions, companies are working toward the creation of fast cure products. Typically acrylic coatings take two to four weeks to cure completely and to acquire their actual tensile strength and flexibility characteristics. The emergence of fast cure products will greatly help this market grow as elastomeric products are a superior product and fast curing products will increase its usage in seasons other than summer. Polyureas are one class of elastomeric coatings which can cure completely in 30 minutes.
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Acrylic and Polyurea-based Elastomeric Roof Coatings Grow Faster
Acrylic and polyurea-based elastomeric coatings are growing faster than silicone and polyurethane-based elastomerics as acrylics are cheap, easy to apply, and offer good tensile strength and durability. Also, with the state governments promoting the cool roofing technology, white acrylic elastomeric coatings market is growing faster. Polyurea-based elastomerics are growing fast as these coatings cure fast and offer excellent weatherproofing and durability characteristics.
Breakthrough Product
National Coatings Corporation has come up with an innovative and a breakthrough product for the SPF market. The company has manufactured AcryLock Base Coat A140 which is an acrylic elastomeric coating which can go over silicone coatings. Earlier, only expensive and solvent borne silicone coatings could be used over worn out silicone coated SPF roofs, but now homeowners and contractors have the choice of using a high performing, less expensive, and a waterborne acrylic coating.
Pricing Trends
The following are the pricing and the trends in pricing seen in the elastomeric roof coatings market. Pricing The average price for a gallon of elastomeric roof coating in the United States is $17 and varies from $10 to $45. The price for a gallon of acrylic elastomeric roof coating falls between $10 to $20. A gallon of elastomeric silicone coatings cost between $25 to $30. The price range of the polyurethane and polyurea-based elastomeric roof coatings is $25 to $50. P r i c i n g Tr e n d s The prices of elastomeric roof coatings have been going up in the last two to three years due to the overall increase in the fuel and raw material prices. In 2004, the overall prices went up by 10 to 15 percent though the prices of polyurea-based coatings have mostly remained steady. This is probably because the manufacturers are realizing that the high costs are restraining its growth and hence, they want to price it competitively. In future, though it is unlikely that the prices continue to increase at the current rate, the costs are entirely dependant on the crude oil supplies.
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Competitive
Analysis
Figure 6-5 presents the competitive structure of the U.S. elastomeric roof coatings market in 2004.
Figure 6-5
Elastomeric Roof Coatings Market: Competitive Structure (U.S.), 2004

Number of Companies in the Market 75 Types of Competitors Roofing companies Specialty companies Chemical companies Paint companies Distribution Structure Direct sale to contractors Sale through distributors Mix of both Competitive Factors Company credentials, Energy Star approval, warranty, price
In 2004, there were around 75 suppliers of elastomeric roof coatings in the United States. Out of these around 75 percent of the companies concentrate on the roof restoration market. The top three suppliers- Henry Corporation, United Coatings, and National Coatings Corporation accounted for 23.3 percent of the total sales in the elastomeric roof coatings market. The companies participating in this market could be classified into four types- Roofing, Specialty, Chemical and Paint companies. A short briefing about each of these are as follows: Roofing Companies These companies are basically involved in manufacturing roofing materials, roof restoration, and roof protection products. They have a good line of products which include elastomeric coatings, roofing membranes, adhesives, and a few other products. These companies serve their customers through contractors. Since the application of roof coatings is specialized, the large companies generally have a few approved contractors, through whom they ensure that a good job has been done. For instance- Henry Company is a leading roofing company participating in this segment.
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Specialty Companies These companies are generally focussed and manufacture a few products to suit a particular industry. This could include elastomeric coatings, a few reinforcement membranes, adhesives and so on. There are large companies as well as small companies which would fall into this segment. Companies such as United Coatings manufacture coatings for architectural, industrial, roofing, and do-it-yourself applications. These companies are characterized by a good distribution network and a high R&D investment while smaller companies like Aldo Products Company, Inc. have a few products for limited end uses. These companies are regional and they do good business because of their strong business contacts. Chemical Companies These companies make several products, serving many industries and are usually characterized by a good distribution system. Companies like Tremco participate in this market but have limited presence in this market. Pa i n t C o m pa n i e s Paint companies such as Sherwin-Williams and ICI paints have a limited presence in this market as well. These large companies have a good distribution system in place coupled with a strong brand name, which helps their products to do well in this market. A lot of private labelling too takes place in this market. Many roofing companies sell elastomeric coatings since its in line with their business. However, some of them get these coatings from another manufacturer, rebrand them and then sell it. Some companies also have approvals from associations such as Underwriters Laboratories and Factory Mutual. Underwriters Laboratories is a world leader in testing and safety of products while Factory Mutual is a leading organization in property loss prevention and risk management. Companies like United Coatings, Henry Company, Everest Coatings, and Conklin Company Inc. have got such approvals and are hence expected to gain market share. Competitive Factors The following are a few competitive factors in the elastomeric roof coatings market. Building Contractors consider each of these factors before finalizing in on the most appropriate coating.
Company Credentials
The brand name, job history, performance history, and the number of years the company has been in service are important factors that influence architects/contractors while deciding on the coating manufacturer in this industry.
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Energy Stars Approval
Many contractors these days are looking at coatings that have Energy Stars approval before using them. Energy Star is a government backed initiative that recognizes products and businesses that help conserve energy. Energy Star approved elastomeric coatings can provide temperature reduction of about 50 Fahrenheit and 10 to 15 percent energy savings. Hence, building contractors and home owners are more and more conscious about using an Energy Star approved elastomeric coating.
Warranty
Contractors prefer using coatings, which have long warranties. Companies give warranties anywhere from 5 years up to 20 years. Long warranties help contractors gain recognition for their work as much as for the coatings and hence, this factor is another key consideration before selecting the manufacturer.
Price
Though not the most important factor while choosing a roof coating, the cost of the coating is also of consideration while deciding on the type of coating and the manufacturer.
Market Participants
The following are a few companies that participate in this market Henry Company Henry Company is the leading manufacturer of elastomeric roof coatings. The company accounts for 12 percent of the total sales in the elastomeric roof coatings market. The company manufactures acrylic elastomeric coatings, a silicone-based coating and several other roof maintenance and restoration products. Henry company is committed to R&D and is known for the quality of their products. The companys brand name backed by the experience of its approved contractors is what makes Henry hugely successful in this market. United Coatings United Coatings is another leading participant in this market. The company retains seven percent of the market. The company manufactures a range of products for architectural, industrial, roofing, and do-it-yourself applications. United Coatings offer a complete line of acrylic, silicone, and polyurethane elastomeric coatings for SPF roofs under the Diathon, Acron, Unisil, and Elastuff brands. Another unique product is the Roof Mate, which is an acrylic, high solids elastomeric coatings system which is designed to extend the life of both new and existing roof substrates. The companys technical expertise and their reputation for manufacturing environment friendly coatings sets them apart from their competitors.
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National Coatings Corporation National Coatings is another major participant in this market. The company has a market share of 4.3 percent. National Coatings have earned the reputation of being technical innovators besides manufacturing environment friendly products. The company mostly manufactures one component waterborne acrylic elastomeric coatings under the brand name AcryShield besides some reinforcements to extend the lives of the roofs. The companys technical knowledge, job history, and performance history gives it the competitive edge in this market. Elastomeric Roofing Systems, Inc (ERSystems) ERSystems is a leader in cool roofing technology. The company provides customized high performing restoration systems to suit different substrates. The company manufactures a complete line of high quality elastomeric coatings, membranes, sealants, and adhesives. The elastomeric coatings include acrylic, polyurethane, and silicone-based coatings. The company leads in restoring single-ply membranes and asphalt-based roofs. ERSystems is a charter member in the Energy Star roof products program and was instrumental in developing the Cool Roof Rating Council. Structural Elastomeric Products, Inc Structural Elastomeric Products, Inc makes the Elastek line of elastomeric coatings. This company is comparatively small and regional but has an extensive product line to suit different roofing substrates. The companys success is attributed to its knowledgeable and friendly staff and the ability to customize every project, thereby serving the end user better. A l d o P ro d u c t s C o m pa n y, I n c Aldo products is a specialty roof coating company that manufactures energy efficient elastomeric roof coatings and a few primers and sealers. The company markets acrylic and polyurethane elastomeric coatings under the brand name Aldocoat. The Aldocoat products are Underwriters Laboratories and Factory Mutual approved. The company markets its products through approved contractors as well as distributors.
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Figure 6-6 and Chart 6.3 represent the market shares by revenues of major participants in the U.S. elastomeric roof coatings market in 2004.
Figure 6-6
Elastomeric Roof Coatings Market: Company Market Share by Revenue (U.S.), 2004
Company Henry Corporation United Coatings National Coatings Corporation Others TOTAL 2004 (%) 12.0 7.0 4.3 76.7 100.0
Note: Others include ERSystems, Gaco Western Inc, Everest Coatings Inc., Tremco Sealants/ Waterproofing Division, Neogard, The Sherwin- Williams Company and Textured Coatings of America, Inc.
Chart 6.3
Elastomeric Roof Coatings Market: Company Market Share by Revenues (U.S.), 2004
Henry Corporation 12.0% United Coatings 7.0% National Coatings Corporation 4.3%
Others 76.7%
The top three suppliers namely, Henry Company, United Coatings, and National Coatings Corporation together accounted for 23.3 percent of the total market. Other major participants in this market include ERSystems, Gaco Western Inc., and Everest Coatings. These companies besides investing heavily in R&D and manufacturing high quality products, have the most experienced and skilled contractors which gives them the competitive advantage.
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Strategic
Analysis
by
Products

Acrylic elastomeric coatings represent the most important class amongst all elastomeric coatings used for roof coating purposes. Acrylics constitute 80 percent of all elastomeric coatings used in this market. This is because these coatings are waterborne, one component coatings that have excellent adhesion characteristics, flexibility, dirt and mildew resistance, and are easy to apply. These coating also have good tensile strength and durability. White colored acrylic elastomeric coatings are most widely used although other lighter shades are available. These coatings gain a competitive edge due to their lower costs, as compared to the other elastomerics, and their environment friendly characteristics. Competitive Analysis Almost every company that participates in this segment manufactures acrylic elastomeric coatings. These coatings have become synonymous with roof coatings as they are used for most roofing projects. The companies leading in manufacturing acrylic coatings would be the same companies leading the roof coatings market segment namelyHenry Company, United Coatings, and National Coatings. These companies gain their competitive edge due to their high R&D investment, superior products, brand name, and their good network of approved contractors. Most of the small companies too make many acrylic-based elastomeric coatings for roofing purposes. This is because these coatings are versatile i.e. they can go over most substrates and are competitively priced. A good roof coating is quite dependant on good workmanship and hence most companies have their approved contractors.

Polyurethane elastomeric roof coatings represent an important class of roof coatings which need to withstand some foot traffic. These coating have a market share of 6 percent.They are usually solvent-based and they come in one component as well as two component mixtures. These coatings are superior to the acrylics as these coatings have higher tensile strength and a better UV resistance. These coatings have the ability to withstand water and snow logging for extended periods of time and are more resistant to weathering. Despite such superior properties, polyurethanes are witnessing more or less a flat growth owing to their high cost and their comparatively higher VOC content. Many companies are manufacturing fabric or mesh reinforced acrylic elastomeric coatings, which are checking its growth.
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Competitive Analysis There are not many companies involved in the manufacture of polyurethane elastomeric roof coatings. Polyurethanes are a preferred product for floor coating applications and hence, many companies that manufacture these floor coatings are involved in polyurethane roof coatings. A few of them are Neogard, Tremco Sealants and Waterproofing division, General Coatings Corporation, and Gaco Western, Inc.

Silicone elastomeric roof coatings constitute a small but prominent segment in this market. They have a market share of 14 percent. They are one or two component solvent-based coatings. They have the inherent ability to withstand harsh environmental conditions and are capable of handling water and snow logging. They are also strong, flexible, and have good resistance to mold and mildew. All these factors make them an excellent roofing material which are highly durable and long lasting. Silicone coatings are more expensive than acrylic coatings but they have superior properties. Silicone coatings are mostly applied over SPF substrates. Competitive Analysis There are fewer companies in the roofing arena which sell silicone-based elastomeric roof coatings when compared to acrylic elastomeric coating. A few leading companies that sell silicone coatings are Dow Corning, Henry Company, United Coatings and Gaco Roof, a division of Gaco Western, Inc.
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7
Appendix
Decision Support Dat a b a s e Ta b l e s
Historical U.S. New Construction by Type

Figure 7-1presents the historical value of new construction for the period 1999 to 2004.
Figure 7-1
Decision Support Database: Value of New Construction by typeUSA (Million USD)

Years Types Residential Industrial Official Hotels, motels Other Commercial Religious Educational Hospital and institutional Miscellaneous Farm nonresidential Total 1999 350,562 32,639 47,582 15,951 54,317 7,371 9,645 13,530 10,301 5,059 546,957 2000 374,457 31,801 55,605 16,293 58,067 8,030 11,375 14,434 10,332 5,988 586,382 2001 388,324 29,521 52,260 14,490 58,471 8,393 12,591 14,910 9,418 5,135 593,513 2002 421,912 16,403 37,578 10,443 53,397 8,335 12,841 17,423 8,269 5,786 592,387 2003 476,143 14,231 32,579 9,928 52,396 8,481 13,096 17,716 7,508 5,284 637,362 2004 544,424 14,750 34,296 11,744 55,396 8,073 12,549 18,796 7,568 5,702 713,298
Definition: Above figure represents the value of private construction residential and nonresidential buildings only Note: All figures are in terms of current dollar
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U.S. New Onsite(Put in Place) Construction Forecast

Figure 7-2 presents the value of New Onsite (Put in place) Construction in the United States for the period 2001 to 2011.
Figure 7-2
Decision Support Database: USValue of New Construction Put in Place (USD Million), 20012011
Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 CAGR % (20042011) Total 858,291 871,342 915,742 999,601 1,092,264 1,195,068 1,310,201 1,439,484 1,585,217 1,748,727 1,933,865 Growth Rate (%) 1.52 5.10 9.16 9.27 9.41 9.63 9.87 10.12 10.31 10.59 9.89
Definition: Above figure represents the value of construction installed or erected at the site during a given period Note: 1.All figures are in terms of current dollar. 2.Values include installed cost of normal building service equipment & site fabricated industrial production equipment 3.Values do not consider cost of land, shipbuilding and machinery & equipment 4.Different from building permit and construction contract data in terms of timing & coverage
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U.S. Residential Remodelling and Repair Forecasts

Figure 7-3 presents the spending on residential remodelling and repair forecasts for the period of 2001 to 2011.
Figure 7-3
Decision Support Database: Spending on Remodeling and Repairs of all Residential PropertiesUS, 20012011
US Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 CAGR % (20042011) Mn USD 627,300 689,700 707,000 745,885 788,400 834,916 885,011 939,882 1,000,974 1,068,340 1,141,628 Growth Rate (%) 9.95 2.51 5.50 5.70 5.90 6.00 6.20 6.50 6.73 6.86 6.27
Definition: Above figures represents total expenditure for maintenance, repairs, improvements, additions & alterations and major replacements of all US residential properties.
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U.S. Nonresidential Remodelling and Repair Forecasts

Figure 7-4 presents the spending on nonresidential remodelling and repair for the period 2000 to 2011.
Figure 7-4
Decision Support Database: Nonresidential Remodeling and RepairsUS, 20002011

Year US Bn USD 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 CAGR (2004-2011) 161.5 158.8 155.9 159.6 164.9 170.8 177.2 184.2 191.8 200.3 209.9 220.2 Growth Rate (1.67) (1.83) 2.37 3.32 3.58 3.75 3.95 4.13 4.43 4.79 4.91 4.22
Definition: Figures indicate total expenditure for maintenance, repairs, improvements, additions & alterations and major replacements of all US nonresidential properties. Note: Above figure represent the expenditure incurred for maintenance, repairs and improvements of Commercial buildings only
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U.S. Roof Renovation Spending Forecasts

Figure 7-5 presents the roof renovation spending forecasts in the United States for the period 2001 to 2011.
Figure 7-5
Decision Support Database: Money Spent on Renovating Roofs US, 20012011

Year US Mn USD 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 CAGR (2004-2011) 1,449 1,869 2,662 2,759 2,870 2,997 3,143 3,306 3,489 3,707 3,962 Growth Rate 28.99 42.43 3.64 4.02 4.43 4.87 5.19 5.54 6.25 6.88 5.31
Definition: Above figure represents the money spent on renovating roofs of owner-occupied properties. Note: 1. Figures for 2004 are Frost & Sullivan estimates 2. Figures include expenditure on Total Maintenance & Major Replacement
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2005 Frost & Sullivan

Introduction Competitive Analysis Market and Product Trends

Major Research Findings

1-3 1-3 1-4 1-4 1-5 1-5 1 -5 1 -5 1-5 1 -5 1 -5 1-5 1 -5 1 -6 1-6

Opportunities and Forecasts

Market Segment Analysis

2005 Frost & Sullivan

Glossary of Terms List of Abbreviations

2-3 2-3 2-3 2-4 2-4 2-4

Introduction Industry Challenges

Market Engineering Measurements

Construction Market Update

Forecasts and Trends

3-9 3-9 3-9

2005 Frost & Sullivan

Revenue Forecasts Market and Product Trends

2005 Frost & Sullivan

Nationwide Chemical Coatings Manufacturers, Incorporated Henry Company

3-23 3-24 3-24

Market Share Analysis

Market Engineering Strategies

3-25 3-25 3-25 3-25 3-25 3-25 3-26 3-26

Frost & Sullivan Awards

Market Leadership Award

Growth Strategy Leadership Award

Product Line Strategy Leadership Award

2005 Frost & Sullivan

Product Quality Leadership Award

Market Overview Market Engineering Measurements

Forecasts and Trends

Revenue Forecasts Market and Product Trends

2005 Frost & Sullivan

4-9 4-9 4-9

Market Share Analysis

Strategic Analysis by Products

4-15 4-15 4-15 4-15 4-16 4-16 4-16

Acrylic Elastomeric Coatings

Silicone Elastomeric Coatings

2005 Frost & Sullivan

Market Overview Market Engineering Measurements

Forecasts and Trends

Revenue Forecasts Market and Product Trends

5-10 5-10 5-12 5-12 5-12

2005 Frost & Sullivan

3M Degussa Building Systems LymTal International Inc. Allied Waterproofing Inc.

5-13 5-13 5-13 5-13 5-14

Market Share Analysis

Strategic Analysis by Products

5-15 5-15 5-15 5-16 5-16 5-16 5-16

Polyurethane Elastomeric Coatings

Polyurea Elastomeric Coatings

Acrylic Elastomeric Coatings

Market Overview Market Engineering Measurements

Forecasts and Trends

6-5 6-5 6-5 6-6 6-6 6-6 6-7 6-7 6-7

2005 Frost & Sullivan

Revenue Forecasts Market and Product Trends

6-8 6-9 6-9 6 -9 6-9 6 -9 6 - 10 6 - 10 6-10 6-10 6-10

Market Share Analysis

Strategic Analysis by Products