In response to the ongoing shortage of resin and increase in cost of raw materials, several coatings manufacturers have recently announced that they are expanding their resin production capacity. The COVID-19 pandemic, extreme weather events in the United States last year, taxes on imports and continuing supply chain issues have all contributed to the resin shortage.
PlasticsExchange reports that polyethylene and polypropylene resins have reached their highest levels of 2022 in March, fueled by the ongoing shortage of materials due to the Russian invasion of Ukraine, and are expected to continue to rise.
Sherwin-Williams Efforts
In mid-February, global coatings firm The Sherwin-Williams Company announced that it would be expanding its manufacturing and distribution capabilities in Statesville, North Carolina.
According to the release, the agreement signed with the state of North Carolina, Iredell County and the city of Statesville plans to significantly expand Sherwin-Williams’ architectural paint and coatings manufacturing capacity and establish a larger distribution facility.
As part of the deal, Sherwin-Williams reports that it will be investing a minimum of $300 million into the project with plans to add more than 180 full-time jobs at the site over the next three years, essentially doubling the facility’s existing workforce.
“Sherwin-Williams continues to invest in initiatives that support our growth for years to come. The planned expansion of our Statesville facility demonstrates a deep commitment to both our customers and the region,” said John G. Morikis, Sherwin-Williams Chairman, President and Chief Executive Officer. “This investment will not only allow us to meet the growing customer demand in the region, but it will also add a number of good-paying jobs to our already vibrant employee base in the community.”
While Sherwin-Williams was reported to have considered several locations for expansion in a competitive vetting process, it reportedly landed on the Statesville facility for its transportation infrastructure, ability to handle expanded capacity and its location that provides for the centralization of existing distribution opportunities for the company's regional operations.
The company also noted in its release that it was extremely pleased with the high quality of its current workforce at the North Carolina facilities and is confident in having continued access. Furthermore, Sherwin-Williams will receive incentives and benefits valued at approximately $30 million from the state, county and local government as part of the agreement.
For the project, Sherwin-Williams is planning to expand its existing 200,000-square-foot manufacturing facility by 36,000 square feet. The company also plans to add four new rail spurs and construct a new 800,000-square-foot distribution and fleet transportation center.
The new center is reported to have an additional 200,000 square feet available for future expansion. With the expansion, Sherwin-Williams intends to add millions of gallons of annual manufacturing capacity and sizable pallet storage capacity to support the increasing demand for architectural paint and coatings products.
Construction is expected to start by the third quarter of this year, with all work slated to be completed by the end of 2024. The manufacturing facility will continue to operate for the duration of the project.
Prior to that, in the company’s 2021 third quarter financial release in September, Sherwin-Williams also announced an agreement to acquire Specialty Polymers, Inc.
"Specialty Polymers will add to our existing internal resin manufacturing capability," said Morikis at the time. "In addition to Specialty Polymers' significant current capacity, we see the opportunity to add millions of pounds of additional capacity to its footprint in the near term with relatively minimal investment. This additional capacity will allow us to better serve the strong demand of Sherwin-Williams customers while also expanding the ability of Specialty Polymers to serve its external customers.”
Arkema Efforts
At the beginning of this year, specialty chemicals company Arkema announced its plans to double its UV-curable resins production capacity at its Nansha plant in China. The expansion project is expected to grow the company's Sartomer business line of high-performance, solvent-free UV-curing solutions portfolio.
Arkema stated that the investment is aligned with the group’s strategy to develop its Coating Solutions segment with high value-added solutions and reinforce its downstream acrylics activities in Asia.
“We are committed to continuously develop innovative materials and sustainable technologies to meet the robust demand driven by megatrends such as new technologies, clean mobility and urbanization,” said Laurent Peyronneau, Vice President of Arkema’s Coating Solutions group. “This new capacity will enable us to provide our latest innovative photocure resin solutions and tailored services to our customers and partners in Asia.”
The expansion project is expected to be fully operational in the second half of 2023 to supply the company’s Asia market, according to Arkema.
AkzoNobel Efforts
Global coatings manufacturer AkzoNobel announced in February that it also plans to invest in the expansion of in-house resin manufacturing. According to the emailed release, the expansion is expected to help build resilience against supply disruptions and act as part of the company’s Grow and Deliver strategy.
“All of our businesses use resins, and while we produce a good proportion of what we need ourselves, commodity and other specialty resins need to be sourced from third parties,” explained Michael Friede, AkzoNobel’s Chief Commercial Officer for Performance Coatings.
“Further investing in our own resin capabilities will help us to secure sustainable business growth, as well as supporting our innovation pipeline and sustainability targets.”
AkzoNobel reports that the plan, which was developed after an internal resins team investigated opportunities to add value and make the company more self-sufficient, includes investing in sites, equipment and people to optimally run them. The company expects to contribute around 15-20 million euros (about $17-22.6 million) in EBITDA by 2023.
“It quickly became apparent that investing in our own resin capability was the way to go,” continued Friede. “It will enable us to secure raw material supply to optimally support our Grow & Deliver ambitions and, at the same time, we’ll look to generate extra value by leveraging and optimizing the volumes we don’t bring in-house with our network of external partners.
“We’re well aware that demand for resins is only expected to increase. Meanwhile, our resin manufacturing sites have extra production capacity available. So the decision to increase our investment in the production of resins at favorable economics is intended to add important value to our customers and our company.”
RPM International Efforts
In September last year, global coatings company RPM International Inc. announced the purchase of a 178,000-square-foot chemical manufacturing facility in Corsicana, Texas, to strengthen its supply chain and increase resin production amid global shortages.
“The addition of the Corsicana plant allows us to expand production of several of our high-growth product lines while also streamlining our manufacturing processes and creating efficiencies,” stated Sullivan at the time.
The company reported in its press release that the facility would be repurposed to act as a manufacturing campus for a number of RPM’s operating companies and would also provide opportunities for expansion to meet its customer demand and strengthen its supply chain.
“The Corsicana plant was appealing to us for a number of reasons. By purchasing a fully operational facility, we can hit the ground running almost immediately, avoiding much of the cost, time and environmental impact associated with building a new plant,” Sullivan added.
“However, the greatest asset we will acquire is the plant’s existing employees and management operating team, who bring with them decades of experience and a high level of competency that will enable them to quickly and effectively convert the plant to meet our manufacturing needs. We look forward to this expansion into Corsicana and believe it will be beneficial both to RPM and the local community.”
PHOTOS (FROM TOP): COURTESY OF SHERWIN-WILLIAMS, ARKEMA AND AKZONOBEL; DORALIN TUNAS / GETTY IMAGES
