Episode 9: Weathering the Supply Chain Storm, Part 1 - Powder Coating

In the wake of COVID, manufacturers in all sectors are working to navigate challenges that are unlike anything experienced before. The pandemic has brought with it a host of problems that have contributed to material shortages and price increases. From workforce challenges to shipping disruptions, the past year and a half has wreaked havoc with the flow of materials — and like everyone, finishers are feeling the pinch. In this latest episode of On the Line, Products Finishing digs deeper into the supply chain woes that coaters are experiencing, specifically within the powder coating world — while also attempting to put things into context with what’s happening in the manufacturing world at large.

Quint Towle, director of sales and marketing, Powder Technology Inc.

Guests include Quint Towle, director of sales and marketing for powder coating supplier Powder Technology Inc. (Schofield, Wisc.), who offers a perspective on what suppliers are experiencing as they are caught in between raw material providers and finishing operations and OEMS.

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“This is by far the largest supply crisis that we’ve ever dealt with. Our initial concern was ensuring we had access to enough raw materials — not everyone does ­— and we feel like we have solved for that. Our secondary concern is price containment and forecasting: the prices on some epoxy products have now increased roughly 100% from November of last year — and are predicted to go even higher before they stabilize.” — Quint Towle, Powder Technology Inc. (An excerpt from Products Finishing, May 2021)

We’ll also hear from Michael Guckes, chief economist with Gardner Intelligence, the data and research arm of Gardner Business Media (Cincinnati, Ohio). Guckes offers helpful market insights gleaned from survey data collected from the finishing industry.

Michael Guckes, chief economist, Gardner Intelligence

 “[An] unusual combination of slowing production growth coupled with strongly expanding backlog activity may signal that supply chain constraints are preventing production from pacing with even the slowing growth of new orders,” he explains in his most recent column for Products Finishing Magazine. 

Guckes also provided the following graphics help illustrate some of the challenges that coaters are currently facing in the midst of rising prices and uncertainty in terms of what materials are readily available.

The above graph shows how hard it is to make a profit if you aren’t protecting yourself with good contracts and supply chain agreements. (Graphics courtesy of Gardner Intelligence)

Smaller powder coating firms seem to be lagging behind their bigger peers in strategizing their pricing which is hurting their revenue and especially profits.

Despite the challenges in the industry, powder coaters appear to have been ramping up their expected cap spending since the start of the pandemic.