Cost increases in the paint industry – Protecting our customers despite recent challenges in the market
Over the past year the paint industry has faced many challenges. Both COVID-19 and Brexit have had huge impacts on the cost of raw materials and packaging.
To combat this, Andura is continuing to innovate and find more efficiencies in the manufacturing process.
This is allowing us to absorb much of the price increases seen in raw materials and packaging.
As a result, we have been able to place a price freeze on our Titanium range of paints.
And we are only passing on small increases on our exterior masonry range. Details of which have been sent directly to all customers affected.
So, how have raw material and packaging costs been affected recently? And what is predicted to happen going forward?
Even though many paints (including Andura) are manufactured in Britain, most raw materials and packaging products are either imported directly from mainland Europe or are manufactured in the UK using feedstocks imported from Europe.
Over the past year, these raw material and packaging costs have continued to rise, across the board.
In addition to rising raw material costs, we have also seen a significant increase in the cost of distribution/shipping from outside the UK.
This is mainly due to high demand for certain raw material products which has led, in some cases, to shortages in some key raw materials.
A prime example is Titanium Dioxide (TiO2) which is a key ingredient for ALL paints and in the past few months has increased in price by 13%+.
Numerous other increases have also affected the industry too.
On 11th January, the British Coatings Federation (BCF) reported that sharp price increases for epoxy resins and supply bottlenecks are creating significant challenges for paint manufacturers in the UK and across Europe.
This comes at a time when the industry is experiencing disruptions caused by the Covid-19 pandemic and added friction being caused by the new trading conditions the UK has with the EU, where 60% of the UK industry’s raw materials are sourced.
The BCF goes on to say: “Strong demand from some markets is driving up prices while an unexpectedly rapid V shaped recovery in China is also fuelling demand for these essential raw materials. In addition, the situation is being compounded by a current global shortage of containers which has led to a sharp rise in transport costs from Asia to Europe, thus further restricting supplies to Europe.”
“This complex mix of higher demand, capacity and supply problems together with restricted availability of transport resources is increasing uncertainty in the market and driving up raw material prices sharply. On top of this, the coatings industry in the UK is faced with additional non-tariff costs related to the new UK customs arrangements with the EU for raw material imports.”
But the raw materials that go in to making the paint are not the only thing that has been affected.
The cost of packaging has also seen increases of 8% - 20% in recent times.
Again, this is caused by several factors, from iron ore trade issues between China and Australia to increased freight container costs and charges for delays at UK ports.
So, what can we expect going forward?
It is predicted that the issues outlined above will continue for a while yet.
However, as COVID-19 ceases to cause such global problems, and the UK adapts to new trading agreements, it is possible that some of root causes of these price increases will be removed.
The future is always uncertain, so the best thing you can do as a decorator is to stay as informed as possible and to keep clear and regular communication with your clients, so they understand the situation.