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If sales for your finishing business have been declining, you may need to consider adding a new coating line to bring in new business. An option may be to add an electrocoat system to your current powder line to increase your coating capabilities.
Freedom Finishing did just that after opening in 1989 to powder coat zinc and aluminum die castings. Increased competition—plus the loss of some jobs to overseas shops—reduced sales, and business began to suffer. To counter this, the company decided to add an e-coat line to an existing powder coating line, creating new business and enabling the company to increase the sales of its powder-coated products by 20 percent.
Remember: companies like Freedom Finishing aren’t in the business of coating parts; they’re in the business of making money. Today’s competitive environment has made it very difficult to improve financial results through large increases in business share and nearly impossible to do it through increasing prices. In fact, it’s not unusual for coating companies to reduce prices to keep customers.
Indicators point to change in coating process
There are many indicators that a coating company can watch for to gauge whether it’s time to consider adding a different coating line:
- New coating shops have opened up that compete directly with your company, causing prices to decrease.
- Manufacturers who outsourced large jobs have now installed their own coating lines. Some of these manufacturers have installed larger lines than needed and have solicited outside work, becoming competitors.
- Manufacturers have moved business to other coating companies that can supply one stop for all of their coating needs. Some are sending parts overseas to be coated.
There are other indicators, but they share a similar theme with the ones listed: a loss of business or a reduction in margin. If one or more of these indicators has affected your company to the point of reducing profits, it’s time to consider expanding to a different type of coating line. Although the information in this article is about adding an e-coat line to a powder coating shop, it can hold true for any type of coating business.
But adding an e-coat line to a powder shop isn’t as easy as installing a system, filling it with paint and running parts. Knowledge is key, and there are four types of e-coat technologies used in today’s marketplace on a wide variety of products:
- Anodic epoxy: a low-cure e-coat that provides good weatherability, high gloss and the ability to coat recessed areas. Excellent finishes for castings, engines, and temperature-sensitive substrates and assemblies.
- Anodic acrylic: offers economical, one-coat, interior finishes that exhibit an ultrasmooth appearance with excellent color and gloss control. Heating, ventilation and air-conditioning parts typically are coated with anodic acrylics.
- Cathodic acrylic: combines corrosion resistance with weatherability. Color controllable, have permitted light colors to be used on large truck wheels; also known for their chemical and alkali resistance and are used to provide one-coat finishing for laboratory furniture, and lawn and garden equipment.
- Cathodic epoxy: defines the global benchmark for corrosion resistance, throwpower and operational reliability. Gives user the capability to control film builds over complex part configurations such as automobile bodies, parts and accessories.
Choose e-coats to match customers’ needs
The right e-coat is the one that matches your business wants with your customer needs. Choosing the right e-coat is the key to success in this type of venture. Table 1 shows e-coat applications in the industrial marketplace, and Table 2 matches e-coat technologies to products.
There are several steps to determine the right e-coat for your business:
Step 1: Determine the types of e-coat available in your area. The right e-coat is the one that’s on the products in demand in your area. Starting up an e-coat line filled with the wrong product wouldn’t be good for business. The answers to the questions in Table 3 should provide an overview of the types of e-coat used in your area. Depending on your location, this could be all four types or only one type.
Step 2: Determine the business share for each type of e-coat. The right e-coat for your business is the one that has a big enough market to pay off equipment and put money back into your company. This step will require good information to accurately predict what the market is in your area. You need to find out how many square feet you’ll be coating a year and how much it will cost you per square foot. Manufacturers are your best bet for this type of information.
Step 3: Estimate what portion of business your company can capture for each type of e-coat. This one is up to you, but make it an accurate guess. Start with the current market share your company has in existing coatings versus the number of competitors you have. Adjust the number for e-coat to the number of competitors in your market.
Step 4: Choose a supplier. This step is very important. A supplier can be a big help by giving you guidance in picking a system, helping you define markets and even bringing you customers. Start with your current supplier or suppliers. Do they have the type or types of e-coat that are used in your area? If your current suppliers don’t provide e-coat, which ones do your competitors use? (Editor’s Note: You can always peruse pfonline.com for e-coat suppliers.)
Step 5: Pick an e-coat, pretreatment and waste treatment system for each type of e-coat. The e-coat process is basically the same for the different types of e-coat. The main differences between the types of e-coats are in the pretreatment and the oven used. Three of the most important factors to consider when choosing an e-coat system are space availability, conveyor type and part size:
Space availability. How much floor space is available for your e-coat system? Will a building extension or a new building have to be built to accommodate a system?
Conveyor type. What type of conveyor do you need? Conveyors for e-coat systems fall into two main categories: indexing and straight-through monorail. Indexing moves parts through a system in steps. The parts move from one stage to the next and then stop for a period of time before moving to the next stage. Parts in a straight-through monorail system continuously move through the system. Although an indexing system generally occupies less floor space than a monorail, a monorail can produce more parts than an indexing system.
Part size. The size of the largest part will be used to size the system. The possible system variations are numerous and should be worked through with your supplier.
Step 6: Determine permits required for each type of e-coat. This is an important step that can be overlooked. Permits cost money and, more important, may dedicate equipment that will add cost to the project. It’s sometimes best to hire an environmental consultant familiar with local, state and federal laws to guide you through this step.
Step 7: Estimate the capital required for each type of e-coat. The best way to estimate the cost of a system is to have contractors provide you with quotes to build a system. The information from Step 5 will enable you to put together a list of system requirements. Submit the list of requirements to the contractors for quotes. The quotes you receive back will probably be in a wide range. Work with your supplier to ensure the quotes are for what you need.
Step 8: Determine operating costs for the e-coat system. The operating costs of the system will have an effect on the profit of the e-coat line and need to be considered. The best way to gather this information is to have the contractors include the cost of operating the system in their quotes. The contractor will be able to supply energy costs and maintenance costs, but not manpower costs. You will have to determine labor costs.
Step 9: Determine return on investment (ROI) for each type of e-coat. It’s time to put all the information gathered to work. For each type of e-coat, determine the total cost to install the system, the cost to operate the system and the estimated revenue. Use this information to determine the ROI for each type of e-coat.
Step 10: Choose the e-coat type with the best economic return for your business. Simply, which e-coat offers the best return for the dollar?
Several companies have used this process or a similar one over the past couple of years with positive results. These companies installed e-coat lines that increased new business and powder sales. The process relies on good information. Make sure you use the most accurate information available.
Joseph J. Subda is with DuPont Performance Coatings and can be reached at firstname.lastname@example.org.