Ax­alta Coat­ing Sys­tems is re­new­ing its fo­cus on In­dia by dou­bling the pro­duc­tion ca­pac­ity and in­creas­ing OEM ac­tiv­ity

Auto components India - - CONTENTS - Text: Bhushan Mhapralkar

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The Car­lyle Group ac­quired Dupont’s Per formance Coat­ings busi­ness in Fe­bruar y 2013 for USD 4.9 bil­lion and rechris­tened it as Ax­alta Coat­ing Sys­tems. The In­dian oper­a­tions, as part of the global ac­qui­si­tion, also changed their name to Ax­alta. Po­si­tion­ing it­self as a global sup­plier of coat­ings to the trans­porta­tion and in­dus­trial sec­tors, Ax­alta, in In­dia, is plan­ning to dou­ble the pro­duc­tion ca­pac­ity at its Savli plant ( Vado­dara), and in­crease the OEM thrust. Work­ing with a clear ob­jec­tive to de­liver per formance that ex­ceeds ex­pec­ta­tion, it creates con­sis­tently, qual­ity prod­ucts that keep oper­a­tions mov­ing smoothly and ap­pli­ca­tion pro­ce­dures sim­ple. As a re­sult of it, the com­pany bagged a sup­plier ex­cel­lence award from Volvo Buses In­dia last year.

Apart from dou­bling ca­pac­ity at Savli, Ax­alta will also in­vest in an au­to­mo­tive OEM coat­ings de­vel­op­ment lab­o­ra­tor y at the same lo­ca­tion. The project is sched­uled to go on stream by the third quar­ter of 2017, and re­sult in the ca­pac­ity ex­pan­sion of both, high and low tem­per­a­ture bake coat­ings. Of the 2, the low tem­per­a­ture bake coat­ings find use in the paint­ing of light­weight plas­tic and com­pos­ite ma­te­ri­als, which is cur­rently used widely in pas­sen­ger ve­hi­cles and two-wheel­ers to re­duce fuel consumption. Such com­po­nents are un­able to with­stand tra­di­tional high bake tem­per­a­ture cur­ing ovens.

While the coat­ings that find use in au­to­mo­biles are largely clas­si­fied as high bake and low bake, they are also clas­si­fied as primers, basecoats, and clearcoats, and are made from the use of high solids, high solids 3-wet, and high solids mono­coat tech­nolo­gies. Ax­alta is also keen to lever­age its re­la­tions as a global sup­plier of coat­ings to OEMs like Ford and Daim­ler. Ac­cord­ing to Charles W Shaver, Chair­man and CEO, Ax­alta Coat­ing Sys­tems, a part of the com­pany’s ex­pan­sion ini­tia­tive is the plan to scale up the pro­duc­tion of wa­ter borne paints. OEMs in­cline more to­wards wa­ter borne paints, for en­vi­ron­men­tal and cost rea­sons. Th­ese coat­ings, ac­cord­ing to Shaver, are formulated to re­duce volatile or­ganic com­pound ( VOC) emis­sions. They also help to re­duce the en­vi­ron­men­tal im­pact of coat­ings while pro­vid­ing su­pe­rior fin­ishes and im­proved OEM pro­duc­tiv­ity.

Eye­ing 25% growth over the next 5 years, Ax­alta in the Asia-Pa­cific re­gion has in­vested a good deal in China and has rooted its sig­nif­i­cant pres­ence there. “Be­fore join­ing hands with Dupont, In­dia was a main­tained mar­ket as far as the coat­ings busi­ness was con­cerned. We changed the strat­egy 2 years ago. We are be­com­ing ac­tive; re­view­ing our strat­egy and plans. We are meet­ing a lot of cus­tomers in In­dia, es­pe­cially on the trans­porta­tion side. We did not do much with OEMs in In­dia be­cause we had a ca­pac­ity con­straint. The sit­u­a­tion is rapidly chang­ing as we in­vest; we will con­tinue to in­vest in this coun­try. We were look­ing at the econ­omy to sta­bilise. We also see some ‘macros’ go­ing our way,” as­serted Shaver.

He drew at­ten­tion to the fact that they want to sup­port the com­plete spec­trum of au­to­mo­biles in In­dia in their pur­suit for growth, es­pe­cially at the OEM end of the busi­ness. In the In­dian af­ter­mar­ket (refin­ish mar­ket), Ax­alta has had a suc­cess­ful run.

For the In­dian mar­ket, the ca­pac­ity ex­pan­sion and set­ting up of the OEM lab are ex­pected to help at­tract OEMs. Ex­pected to be op­er­a­tional by the sec­ond quar­ter of 2016, the OEM lab will fea­ture con­tem­po­rary ro­botic spray ap­pli­ca­tors that can pre­cisely repli­cate line ap­pli­ca­tion con­di­tions. Even the equip­ment is de­signed to fa­cil­i­tate the de­vel­op­ment, ap­proval, qual­ity con­trol and cus­tomer line sup­port re­quired by OEMs. Ad­di­tional new ca­pa­bil­i­ties would in­clude color mea­sure­ment tools and ac­cel­er­ated paint test­ing equip­ment. Ex­pressed Shaver, “The mar­ket is chang­ing. It is mov­ing from sol­vent borne coat­ings to high solids and wa­ter­borne coat­ings. We have the best tech­nol­ogy in the world for that, and we are bring­ing some of it to In­dia. We are re­pro­duc­ing a ma­jor­ity of our coat­ings here. We al­ready have the global specs, and this puts us in a good po­si­tion for ex­ports.” The OEM lab will also mark an ex­pan­sion of the ap­pli­ca­tion cen­ter, which has been sup­port­ing the af­ter­mar­ket refin­ish seg­ments.

Spend­ing USD 200 mil­lion for R&D and tech sup­port, Ax­alta’s stress on ded­i­cated coat­ings for each ve­hi­cle types as the specs dif­fer from re­gion to re­gion. Though coat­ings for a truck or a bus may mean us­age un­der sim­i­lar op­er­at­ing con­di­tions, their for- mu­la­tion may dif­fer in terms of their UV prop­er­ties, clear coat prop­er­ties, scratch re­sis­tance and im­pact re­sis­tance. Coat­ings may look the same but dif­fer in prop­er­ties where one would be the high bake type and the other would be the low bake type. Stress­ing upon the fact that coat­ings chem­istry can dif­fer from one prod­uct to an­other, Shaver ex­plained, “The change in tech­nol­ogy to wa­ter borne coat­ings is not just about tak­ing the sol­vent out, but also about im­prov­ing pro­duc­tiv­ity. It is pos­si­ble to speed up the process, go wet-on-wet, and use less quan­tity. Even a lot of refin­ish mar­kets world over are shift­ing to wa­ter­borne tech­nolo­gies as they can paint more cars, have quicker color match, and use less oven. So, its not just to do with the reg­u­la­tor y need,” he added.

Shaver also pointed at the rais­ing use of com­pos­ite parts in au­tos with expectations for deeper and clearer coats. He ex­pressed, “In the case of OEMs, the de­mand for longevity, hard­ness, UV re­sis­tance is ris­ing. In the af­ter­mar­ket, the re­quire­ment is to be able to match the color, to match the clar­ity, and with­stand the com­pe­ti­tion. We are thus way ahead of the reg­u­la­tor y needs.”

Af­ter sep­a­ra­tion from Du Pont, Ax­alta ac­cord­ing to Shaver has moved up a good deal on the in­no­va­tion front; the coat­ings ma­jor grew 6% in vol­ume terms glob­ally. Prof­itabil­ity grew by 20% al­most. Good growth be­gin­ning 2013 has been purely or­ganic in na­ture. The big changes the com­pany ef­fected over the last 3 years in­clude prod­uct ex­pan­sion with a strong fo­cus to in­vade the main stream. Cre­ation of new tech­nol­ogy medi­ums like wa­ter borne coat­ings, lay stress upon new prod­ucts at the right price point. Ax­alta has also de­vel­oped a whole new range of prod­ucts that are truly re­designed. In In­dia, the Amer­i­can coat­ings spe­cial­ist hopes to grow faster than the mar­ket is ex­pected to grow.

Ac­cord­ing to Shaver, the com­pany has been quite suc­cess­ful in re­for­mu­la­tions in the bus seg­ment in the form of low bake coat­ings that it of­fers to Volvo, Tata Mar­copolo, etc. Trucks are more high-bake, and in­cludes a ris­ing use of plas­tic com­po­nents. Claim­ing to be the sec­ond largest pow­der coat­ings com­pany in the world, Ax­alta sur­pris­ingly does not have a pres­ence in this re­spec­tive seg­ment in In­dia. Re­new­ing fo­cus on In­dia af­ter China, Brazil, Mex­ico and Ger­many, Ax­alta is keenly look­ing at In­dia as an ex­port base.

A 100% sup­plier to Tata Group’s Jaguar Land Rover ac­cord­ing to Shaver, Ax­alta’s refin­ish busi­ness amount s more than the OEM busi­ness. The refin­ish busi­ness amounts to over USD 2.2 bil­lion, the OEM busi­ness amounts to USD 1.4 bil­lion. With the in­clu­sion of com­mer­cial ve­hi­cles, it amounts to USD 1.7 mil­lion. Apart from pas­sen­ger ve­hi­cles, trucks and buses, Ax­alta eyes on twowheel­ers, off-high­way equip­ments and looks for a growth of 5 to 7% at the top and 10% at the bot­tom. In In­dia, Ax­alta wanted to grow in dou­ble digit. Ax­alta core mar­kets, said Shaver, could grow any­where be­tween 9-10%. While in­put costs, cur­rency sta­bil­ity and in­fla­tion will mat­ter in terms of ex­ports. Ax­alta is hop­ing that the countr y would make a sig­nif­i­cant ex­port base go­ing for ward, both in terms of coat­ings as well as ve­hi­cles painted with their coat­ings. De­spite in­vest­ing in China, Shaver opined, that they feel the countr y will lose its ex­port po­ten­tial over time. He drew at­ten­tion to the fact that raw ma­te­rial costs, la­bor costs and gov­ern­ment costs in China are go­ing up. “They are be­gin­ning to look a lot like US, and they are not low cost any­more,” con­cluded Shaver.

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