SIC 2851 Paints, Varnishes, Lacquers, Enamels, and Allied Products
SIC 2851
This industry category includes establishments primarily engaged in manufacturing paints (in paste and ready-mixed form); varnishes; lacquers; enamels; shellac; dry powder coatings; putties, wood fillers, and sealers; paint and varnish removers; paintbrush cleaners; and allied paint products.
Establishments primarily engaged in manufacturing carbon black are classified in SIC 2895: Carbon Black; those manufacturing bone black, lamp black, and inorganic color pigments are classified in SIC 2816: Inorganic Pigments; those manufacturing organic color pigments are classified in SIC 2865: Cyclic Organic Crudes and Intermediates, and Organic Dyes and Pigments; those manufacturing plastics materials are classified in SIC 2821: Plastics Materials and Resins; those manufacturing printing ink are classified in SIC 2893: Printing Ink; those manufacturing caulking compounds and sealants are classified in SIC 2891: Adhesives and Sealants; those manufacturing artists' paints are classified in SIC 3952: Lead Pencils, Crayons, and Artists' Materials; and those manufacturing turpentine are classified in SIC 2861: Gum and Wood Chemicals.
325510
Paint and Coating Manufacturing
According to the U.S. Census Bureau, U.S. manufacturers shipped $22.9 billion worth of paint and coatings in 2005. Architectural coatings had the lion's share of the market, at $9.3 billion, followed by $6.2 billion for OEM (original equipment manufacturers) coatings and $4.3 billion for special-purpose coatings. There were approximately 700 companies in this industry.
Historically, paint is a comparatively small but influential industry. Despite its relatively minor revenues, the industry's products affected virtually every aspect of modern life. From cars and homes to food and beverage containers, appliances, and furniture, paints and coatings protect, personalize, and beautify the surroundings. Some economists consider it a leading economic indicator.
The paint industry has become essential to nine major manufacturing industries, including automobiles, trucks and buses, metal cans, farm machinery and equipment, construction machinery and equipment, metal furniture and fixtures, wood furniture and fixtures, major appliances, and coil coating (high-speed application of industrial coatings to continuous sheets, strips, and coils of aluminum or steel). Additionally, paint manufacturers influence the wider chemicals industry via their purchase of billions of dollars worth of raw materials. Paint and coatings also were an integral contributor to the new and resale housing industry.
The paint industry's first national professional organization, the National Paint, Oil, and Varnish Association, was founded in 1888 in Saratoga, New York. Industry associations proliferated in the early twentieth century until the Great Depression, when government officials and top paint company executives urged the creation of a single national organization. The National Paint, Varnish, and Lacquer Association was formed in 1933, and it was later renamed the National Paint and Coatings Association (NPCA).
The NPCA's membership constituted more than 75 percent of the entire paint industry in the 1990s. The organization existed to represent the industry to government regulators and the general public. Its public relations and educational programs focused primarily on the technical and aesthetic qualities of architectural paint. The group's annual "Clean-Up, Paint-Up, Fix-Up" campaign, which encouraged neighborhood pride through house painting, was first undertaken in 1912 and lasted through the early 1970s. In the 1990s campaigns countered paint's persistently bad image as a noxious, but necessary, maintenance product. Following the lead of such successful "category marketers" as the cotton and milk industries, the NPCA promoted paint as a versatile decorating tool.
Numerous mergers, the high cost of regulation, and increasingly expensive, complex manufacturing processes began to have a cumulative effect on industry composition in the mid-1990s. Mergers and acquisitions reduced the number of companies in the industry from more than 900 to about 700 over the course of the early 1990s. By that time, the top three producers accounted for about 45 percent of U.S. shipments, up from less than 30 percent in 1990. The ten largest manufacturers comprised nearly two-thirds of the market. Industry observers had expected consolidation to eliminate another 300 companies by the year 2000.
The geographic dispersal of paint manufacturers was historically dictated by the high transportation costs associated with paint distribution. The weight of prepared paint encouraged the development of a regionalized structure of small manufacturers by the end of the nineteenth century. Paint companies gravitated toward major population and industrial centers such as Cleveland, New York, St. Louis, and Chicago. This arrangement dominated the industry until the 1940s and 1950s, when the leading paint manufacturers began to consolidate paint plants and develop wider distribution networks.
However, that trend reversed by the early 1960s, and smaller branch plants were built to lower freight costs, avoid some state taxes, and facilitate more personalized service. In 1967 about 66 percent of paint was consumed within 500 miles of its manufacture. Decentralization persisted through the 1990s, represented by the industry segment of tenacious, small to medium-size paint manufacturers who served limited regional markets.
Three basic segments existed within the industry: architectural coatings, original equipment manufacturer (OEM) product coatings, and special-purpose coatings. Architectural coatings, known in the industry as trade sales paint and commonly referred to as house paint, comprised the largest segment, contributing 40 percent of revenues in 2005. In 1995, about 60 percent of the 617.5 million gallons of architectural coatings sold in 1995 were interior paints. Exterior paints contributed 36 percent (225.1 million gallons), and lacquers and all others accounted for the remainder of architectural paint shipped. Water-based, or latex, paints constituted 76 percent of trade sales in 1996, up slightly from 73 percent in 1990.
The bulk of architectural coatings were distributed through wholesale and retail outlets. Marketing these paints encompassed both formulation and aesthetic factors. Safety, durability, consistency, washability, and convenience were some common consumer concerns with regard to formulation. But color and appearance also were important, so paint manufacturers were often obliged to keep up with decorating trends.
Sales in this industry segment were keyed to weather (which could limit the application of exterior paints), new housing starts, sales of existing homes, and, to a lesser degree, commercial and industrial construction. Architectural coatings were subject to competition from vinyl siding, wallpaper, wood paneling, and glass. Major producers for this segment included Sherwin-Williams Co.; PPG Industries Inc.; Grow Group; Valspar Corp.; Glidden Co. (a subsidiary of Great Britain's ICI Paints); and Benjamin Moore and Co.
OEM paints constituted about 27 percent of industry revenues in 2005. These products were often custom formulated in consultation with the end-user and applied during manufacturing. These coatings were used in such durable goods markets as automobiles, aircraft, appliances, furniture, metal containers, sheet and coil metals, and industrial equipment. Dollar shipments for this industry segment in 2005 were $6.2 billion.
One major challenge facing OEMs in the early 1990s was the increased use of plastics in automobiles and appliances, which created the need to match the paint finish of metal panels with plastic panels that were painted separately. The development of new applications technologies was another primary concern. Major companies with interests in OEM markets included E. I. DuPont de Nemours, PPG Industries, Grow Group, and Glidden.
Special-purpose or industrial coatings, which developed largely after World War II, accounted for almost 19 percent of industry revenues in 2005. While similar to architectural coatings in that they could be classified as stock or shelf goods, special-purpose coatings were formulated for specific applications or environmental conditions, and they were often sold directly to the end user. Primary markets for these products included automotive and machinery refinishing, industrial maintenance (including factories, equipment, tanks, utilities, and railroads), bridges, traffic markings, metallic coatings, and marine coatings. Having declined in both volume and revenues in 1991 and 1992, this industry segment rebounded to sales of $3.1 billion and volume of 194 million gallons by 1994, $3.3 billion in 2002, and $4.3 billion in 2005. Important producers of specialty coatings were DuPont; PPG Industries; Sherwin-Williams; RPM Inc.; Courtaulds Coatings Inc.; Glidden; Akzo Coatings Inc.; and Valspar Corp.
The first recorded paint mill in America was established in Boston in 1700 by Thomas Child, who had emigrated from England. His business manufactured the components of paint in a paste form. During most of the nineteenth century...
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