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Page 1: Us Elastomeric Coatings

www.frost.com

U.S. Elastomeric Coatings Markets

F397-39

Page 2: Us Elastomeric Coatings

#F397-39 © 2005 Frost & Sullivan www.frost.com

Frost & Sullivan takes no responsibility for any incorrect

information supplied to us by manufacturers or users.

Quantitative market information is based primarily on

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Table of Contents

C h a p t e r 1

Executive Summary

Market Overview 1-1

Introduction 1-1

Competitive Analysis 1-2

Market and Product Trends 1-3

Market Trends 1-3

Product Trends 1-3

Major Research Findings 1-3

Opportunities and Forecasts 1-3

Market Drivers 1-4

Market Restraints 1-4

Market Segment Analysis 1-5

Elastomeric Wall Coatings Market 1-5

Market Drivers 1-5Market Restraints 1-5

Elastomeric Floor Coatings Market 1-5

Market Drivers 1-5Market Restraints 1-5

Elastomeric Roof Coatings Market 1-5

Market Drivers 1-5Market Restraints 1-6

Strategic Conclusions 1-6

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C h a p t e r 2

Market Dynamics

Market Definitions 2-1

Glossary of Terms 2-1

List of Abbreviations 2-3

Industry Challenges 2-3

Introduction 2-3

Industry Challenges 2-3

Meeting Environmental Regulations 2-4

Increasing Raw Material and Fuel Prices Affect Profitability 2-4

Creating Bright and Darker Colors 2-4

C h a p t e r 3

Overall U.S. Elastomeric Coatings Market

Introduction 3-1

Market Overview 3-1

Market Overview and Scope of the Study 3-3

Market Engineering Measurements 3-4

Market Size 3-4

Market Age 3-5

Distribution 3-5

Direct Sale to Contractors 3-6Sales through Distributors 3-6Sales through Distributors as well as Direct Sale to Contractors 3-6

Competition 3-6

Product Analysis 3-7

Construction Market Update 3-8

Forecasts and Trends 3-9

Market Drivers 3-9

Growth in Construction Fuels Elastomeric Coatings’ Demand 3-9

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Need for High-performance Coatings Boosts Demand For Elastomerics 3-10

Elastomeric Coatings Experience Growth at the Expense of Other Coatings 3-10

Market Restraints 3-11

Higher Cost of Elastomeric Coatings Restrain Growth 3-11

Competition from Other Coatings Affect Elastomeric Coatings Market 3-11

General Complexity in Application Constrains Growth 3-12

Revenue Forecasts 3-12

Market and Product Trends 3-13

Market Trends 3-13

Revenue Share Trends by Application Market 3-13VOC Regulations Play a Role in Widening the Gap Between Small and Large Manufacturers 3-15

Product Trends 3-15

Creating Coatings with Improved Properties 3-15Trend toward Zero VOC Coatings 3-16Growth in Use of Acrylic-based Elastomeric Coatings 3-16Incorporation of Ceramic Microspheres in Acrylic Elastomeric Coatings 3-16

Pricing Trends 3-16

Price Determinants 3-16

Chemistry of the Coating 3-16Region in which it is Sold 3-17Size of the Project 3-17Performance Requirements 3-17

Pricing 3-17

Pricing Trends 3-17

Competitive Analysis 3-18

Competitive Structure 3-18

The Size and Operation of the Company 3-19

The Type of Company 3-20

Distribution Structure 3-20

Competitive Factors 3-21

Market Participants 3-22

Degussa Construction Systems Americas 3-22

The Sherwin- Williams Company 3-22

Dow Corning Corporation 3-22

3M 3-22

ICI Paints 3-22

Neogard, a division of Jones-Blair Company 3-23

Elastomeric Roofing Systems, Inc. (ERSystems) 3-23

National Coatings Corporation 3-23

Tamms Industries, Incorporated 3-23

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Nationwide Chemical Coatings Manufacturers, Incorporated 3-23

Henry Company 3-24

Market Share Analysis 3-24

Market Engineering Strategies 3-25

Introduction 3-25

What is a Market Engineering Strategy? 3-25

Strategic Recommendations 3-25

Strategic Recommendations 3-25

Meeting Environmental Regulations 3-25

Increased Raw Material and Fuel Prices 3-26

Creating Brighter and Darker Coatings 3-26

Frost & Sullivan Awards 3-26

Market Leadership Award 3-26

Research Methodology 3-26

Measurement Criteria 3-27

Award Recipient: The Sherwin-Williams Company 3-27

Strong Research and Development Focus 3-28

Close Contact with Key Users 3-28

Expansion Plans 3-29

Strategic Acquisition 3-29

Growth Strategy Leadership Award 3-29

Research Methodology: 3-29

Measurement Criteria: 3-30

Award Recipient: Neogard 3-30

Customized Product Line 3-31

Creating Brand Value 3-32

Strategic Partnership 3-32

Efficient Distribution Channels 3-33

Product Line Strategy Leadership Award 3-33

Research Methodology 3-33

Measurement Criteria 3-34

Award Recipient: Degussa Construction Systems Americas 3-34

Ability to Address Customer Requirements 3-36

Major Presence in Two of the Three Market Segments 3-36

Research and Development Focus 3-36

Strong Brand Image 3-37

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Concluding Comments 3-37

Product Quality Leadership Award 3-37

Research Methodology 3-37

Measurement Criteria 3-38

Award Recipient: United Coatings 3-38

Superior Research and Development Capapbilities 3-39

Manufacture of Low Volatile Organic Compound (VOC) Products 3-39

Contacts with End Users 3-40

Strategic Partnership 3-40

Conclusion 3-40

C h a p t e r 4

U.S. Elastomeric Wall Coatings Market

Introduction 4-1

Market Overview 4-1

Market Engineering Measurements 4-2

Market Size 4-3

Market Age 4-3

Competition 4-4

Distribution Structure 4-4

Forecasts and Trends 4-5

Market Drivers 4-5

Popularity of Tilt-up Concrete in Building Construction Fuels Demand for Elastomeric Coatings 4-5

Product Functionality Increases Sales 4-5

Market Restraints 4-6

Increasing Interest Rates for New Home Starts Check Growth 4-6

Tendency of Acrylic Elastomeric Coatings to Blister Impedes Growth 4-6

Lack of Darker and Brighter Shades Affect Wall Coatings Market 4-7

Revenue Forecasts 4-7

Market and Product Trends 4-8

Market Trends 4-8

Large Companies are Growing Faster Than Smaller Companies 4-8Demand for the Application of a Single Thick Coat 4-9Product Trends 4-9

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Pricing Trends 4-9

Prices of Elastomeric Wall Coatings 4-9

Pricing Trends 4-9

Competitive Analysis 4-10

Competitive Structure 4-10

Paint Companies 4-11

Chemical Companies 4-11

Specialty Companies 4-11

Competitive Factors 4-11

Brand Image 4-11Price 4-12Technical Assistance 4-12

Market Participants 4-12

The Sherwin-Williams Company 4-12

Degussa Construction Systems Americas 4-12

ICI Paints 4-13

Dow Corning Corporation 4-13

Sto Corporation 4-13

Dryvit Systems, Inc. 4-13

Benjamin Moore & Co. 4-13

IPA Systems, Inc 4-13

Market Share Analysis 4-14

Tier 1 Companies 4-14

Tier 2 Companies 4-14

Tier 3 Companies 4-14

Strategic Analysis by Products 4-15

Acrylic Elastomeric Coatings 4-15

Market Overview 4-15

Competitive Analysis 4-15

Silicone Elastomeric Coatings 4-16

Overview 4-16

Competitive Analysis 4-16

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C h a p t e r 5

U.S. Elastomeric Floor Coatings Market

Introduction 5-1

Market Overview 5-1

Market Engineering Measurements 5-2

Market Size 5-3

Market Age 5-3

Competition 5-3

Distribution 5-3

Forecasts and Trends 5-5

Market Drivers 5-5

High Performance Requirements Create Demand for Elastomeric Coatings 5-5

Fast Setting Time of Polyurethanes and Polyureas Spurs Growth 5-5

Market Restraints 5-6

Higher Cost of Polyurethane and Polyurea-based Elastomeric Floor Coatings Affect Growth 5-6

Use of Special Skills and Equipment to Apply Restrains Growth 5-6

Competition from Epoxies, Cementitious Products Check Growth 5-7

Revenue Forecasts 5-7

Market and Product Trends 5-8

Market Trends 5-8

Small Manufacturers are Gaining Market Share 5-8Move toward Distribution of Coatings through Independent Distributors 5-8

Product Trends 5-9

High Demand for Polyurea-based Elastomeric Coatings 5-9Hybrid Products Emerging in the Coatings Market 5-9Increase in Acrylic Reinforced Products 5-9

Pricing Trends 5-10

Pricing 5-10

Pricing Trends 5-10

Competitive Analysis 5-10

Competitive Structure 5-10

Competitive Factors 5-12

Market Participants 5-12

Neogard, a division of Jones- Blair Company 5-12

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3M 5-13

Degussa Building Systems 5-13

LymTal International Inc. 5-13

Allied Waterproofing Inc. 5-13

Market Share Analysis 5-14

Strategic Analysis by Products 5-15

Polyurethane Elastomeric Coatings 5-15

Competitive Analysis 5-15

Polyurea Elastomeric Coatings 5-16

Competitive Analysis 5-16

Acrylic Elastomeric Coatings 5-16

Competitive Analysis 5-16

C h a p t e r 6

U.S. Elastomeric Roof Coatings Market

Introduction 6-1

Market Overview 6-1

Market Engineering Measurements 6-2

Market Size 6-3

Market Age 6-4

Competition 6-4

Distribution 6-4

Forecasts and Trends 6-5

Market Drivers 6-5

Lesser Life-cycle Cost of Elastomeric Coatings Drives Demand 6-5

Increasing Demand for Environmentally-Friendly Coatings Favors Elastomeric Coatings 6-6

Government Encouragement to Use White Solar Reflective Coatings Drives Growth 6-6

Trend in Roofing Material Favors Elastomeric Coatings 6-6

Market Restraints 6-7

Application Limitations of Elastomeric Coatings Restricts Growth 6-7

Competition From Other Roof Coatings Limits Growth 6-7

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Revenue Forecasts 6-8

Market and Product Trends 6-9

Market Trends 6-9

Roofing Companies Entering the Coatings Market 6-9Product Trends 6-9

Companies Concentrate on Manufacturing Fast Cure Coatings 6-9Acrylic and Polyurea-based Elastomeric Roof Coatings Grow Faster 6-10Breakthrough Product 6-10

Pricing Trends 6-10

Pricing 6-10

Pricing Trends 6-10

Competitive Analysis 6-11

Competitive Structure 6-11

Roofing Companies 6-11

Specialty Companies 6-12

Chemical Companies 6-12

Paint Companies 6-12

Competitive Factors 6-12

Company Credentials 6-12Energy Star’s Approval 6-13Warranty 6-13Price 6-13

Market Participants 6-13

Henry Company 6-13

United Coatings 6-13

National Coatings Corporation 6-14

Elastomeric Roofing Systems, Inc (ERSystems) 6-14

Structural Elastomeric Products, Inc 6-14

Aldo Products Company, Inc 6-14

Market Share Analysis 6-15

Strategic Analysis by Products 6-16

Acrylic Elastomeric Coatings 6-16

Competitive Analysis 6-16

Polyurethane Elastomeric Coatings 6-16

Competitive Analysis 6-17

Silicone Elastomeric Coatings 6-17

Competitive Analysis 6-17

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C h a p t e r 7

Appendix

Decision Support Database Tables 7-1

Historical U.S. New Construction by Type 7-1

U.S. New Onsite(Put in Place) Construction Forecast 7-2

U.S. Residential Remodelling and Repair Forecasts 7-3

U.S. Nonresidential Remodelling and Repair Forecasts 7-4

U.S. Roof Renovation Spending Forecasts 7-5

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List of Figures

C h a p t e r 1

Executive Summary

1-1 Elastomeric Coatings Market:

Revenue Forecasts (U.S.), 2001-2011 1-4

C h a p t e r 2

Market Dynamics

2-1 Elastomeric Coatings Market:

Impact of Top Three Industry Challenges (U.S.), 2005-2011 2-3

C h a p t e r 3

Overall U.S. Elastomeric Coatings Market

3-1 Elastomeric Coatings Market:

Distribution Channel Followed by Key Suppliers (U.S.), 2004 3-5

3-2 Elastomeric Coatings Market:

Market Drivers Ranked in Order of Impact (U.S.), 2005-2011 3-9

3-3 Elastomeric Coatings Market:

Market Restraints Ranked in Order of Impact (U.S.), 2005-2011 3-11

3-4 Elastomeric Coatings Market:

Revenue Forecasts (U.S.), 2001-2011 3-12

3-5 Elastomeric Coatings Market:

Percent of Revenues by Product Type (U.S.), 2001-2011 3-14

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3-6 Elastomeric Coatings Market:

Competitive Structure (U.S.), 2004 3-18

3-7 Elastomeric Coatings Market:

Database of Key Industry Participants by End-User Market Participation (U.S.), 2004 3-19

3-8 Elastomeric Coatings Market:

Elastomeric Coatings Manufactured by Degussa Construction Systems Americas 3-35

C h a p t e r 4

U.S. Elastomeric Wall Coatings Market

4-1 Elastomeric Wall Coatings Market:

Distribution Channel Followed by Key Suppliers (U.S.), 2004 4-4

4-2 Elastomeric Wall Coatings Market:

Market Drivers Ranked in Order of Impact (U.S.), 2005-2011 4-5

4-3 Elastomeric Wall Coatings Market:

Market Restraints Ranked in Order of Impact (U.S.), 2005-2011 4-6

4-4 Elastomeric Wall Coatings Market:

Revenue Forecasts (U.S.), 2001-2011 4-7

4-5 Elastomeric Wall Coatings Market:

Competitive Structure (U.S.), 2004 4-10

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C h a p t e r 5

U.S. Elastomeric Floor Coatings Market

5-1 Elastomeric Floor Coatings Market:

Distribution Channel Followed by a Few Key Suppliers (U.S.), 2004 5-4

5-2 Elastomeric Floor Coatings Market:

Market Drivers Ranked in Order of Impact (U.S.), 2005-2011 5-5

5-3 Elastomeric Floor Coatings Market:

Market Restraints Ranked in Order of Impact (U.S.), 2005-2011 5-6

5-4 Elastomeric Floor Coatings Market:

Revenue Forecasts (U.S.), 2001-2011 5-7

5-5 Elastomeric Floor Coatings Market:

Competitive Structure (U.S.), 2004 5-11

5-6 Elastomeric Floor Coatings Market:

Company Market Share by Revenue (U.S.), 2004 5-14

C h a p t e r 6

U.S. Elastomeric Roof Coatings Market

6-1 Elastomeric Roof Coatings Market:

Distribution Channel Followed by a Few Key Suppliers (U.S.), 2004 6-4

6-2 Elastomeric Roof Coatings Market:

Market Drivers Ranked in Order of Impact (U.S.), 2005-2011 6-5

6-3 Elastomeric Roof Coatings Market:

Market Restraints Ranked in Order of Impact (U.S.), 2005-2011 6-7

6-4 Elastomeric Roof Coatings Market:

Revenue Forecasts (U.S.), 2001-2011 6-8

6-5 Elastomeric Roof Coatings Market:

Competitive Structure (U.S.), 2004 6-11

6-6 Elastomeric Roof Coatings Market:

Company Market Share by Revenue (U.S.), 2004 6-15

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C h a p t e r 7

Appendix

7-1 Decision Support Database:

Value of New Construction by type—USA (Million USD) 7-1

7-2 Decision Support Database:

US—Value of New Construction Put in Place (USD Million), 2001—2011 7-2

7-3 Decision Support Database:

Spending on Remodeling and Repairs of all Residential Properties—US, 2001—2011 7-3

7-4 Decision Support Database:

Nonresidential Remodeling and Repairs—US, 2000—2011 7-4

7-5 Decision Support Database:

Money Spent on Renovating Roofs —US, 2001—2011 7-5

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List of Charts

C h a p t e r 3

Overall U.S. Elastomeric Coatings Market

3.1 Overall Elastomeric Coatings Market:

Market Engineering Measurements (U.S.), 2004 3-4

3.2 Overall Elastomeric Coatings Market:

Revenue Forecasts (U.S.), 2001-2011 3-13

3.3 Percent of Revenues by product type (U.S.), 2001-2011 3-14

3.4 Elastomeric Coatings Market:

Strengths of Sherwin-Williams as a Market Leader (U.S.), 2004 3-27

3.5 Elastomeric Coatings Market:

Key Strategies adopted by Neogard (U.S.), 2004 3-31

3.6 Elastomeric Coatings Market:

Strengths of United Coatings (U.S.), 2004 3-39

C h a p t e r 4

U.S. Elastomeric Wall Coatings Market

4.1 Elastomeric Wall Coatings Market:

Market Engineering Measurements (U.S.), 2004 4-3

4.2 Elastomeric Wall Coatings Market:

Revenue Forecasts (U.S.), 2001-2011 4-8

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C h a p t e r 5

U.S. Elastomeric Floor Coatings Market

5.1 Elastomeric Floor Coatings Market:

Market Engineering Measurements (U.S.), 2004 5-2

5.2 Elastomeric Floor Coatings Market:

Revenue Forecasts (U.S.), 2001-2011 5-8

5.3 Elastomeric Floor Coatings Market:

Company Market Share by Revenues (U.S.), 2004 5-14

C h a p t e r 6

U.S. Elastomeric Roof Coatings Market

6.1 Elastomeric Roof Coatings Market:

Market Engineering Measurements (U.S.), 2004 6-3

6.2 Elastomeric Roof Coatings Market:

Revenue Forecasts (U.S.), 2001-2011 6-8

6.3 Elastomeric Roof Coatings Market:

Company Market Share by Revenues (U.S.), 2004 6-15

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1Executive Summary

M a r k e t O v e r v i e w

Introduction

This study discusses the elastomeric coatings market in the United States. Elastomeric

coatings have the ability to waterproof substrates and the ability to bridge cracks smaller

than 1/16th of an inch. These coatings extend by about 200 to 400 percent, permitting them

to expand and contract along with their substrates during summertime. They are made five to

ten times thicker than conventional paints, which helps them to cover surface irregularities.

The study identifies and discusses the trends in the U.S. elastomeric coatings market for the

period 2001 to 2011, with 2004 as the base year. The forecast period is from 2005 to 2011.

The study also discusses the key market drivers and restraints, provides in-depth market and

competitive analysis, and offers strategic recommendations to succeed in this highly

competitive market. In this study, the U.S. elastomeric coatings market has been divided into

the following three broad application segments:

■ Elastomeric wall coatings market

■ Elastomeric floor coatings market

■ Elastomeric roof coatings market

The growth prospects of elastomeric coatings is heavily dependent on the construction

industry, for the purpose of which decision support database (DSD) tables have been

provided in the appendix. These tables highlight the historical and forecast construction data

that provide a better understanding of the elastomeric coatings market in the United States.

This study focuses on the building construction applications of elastomeric coatings and

excludes industrial and automotive applications. Elastomeric sealants, adhesives, grouts, and

so on are also excluded from consideration in the study.

The estimated market sizes are based on the total sales of elastomeric coatings in the United

States. They do not represent the amount of material produced in the country.

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Competitive Analysis

The elastomeric coatings market in the United States is very fragmented with about

200 suppliers. Most of these companies participate in one, or a maximum of two end-user

segments. The larger companies usually supply coatings to meet a variety of applications

within a particular segment, while many of the smaller companies focus on very niche

markets. Most companies also favor a particular chemistry for the manufacture of their

elastomeric coatings, which could be due to their area of expertise.

In this study, the participating companies have been classified in two ways depending on:

The size and operation of the company:

■ Large national suppliers

■ Small regional suppliers

The type of company:

■ Chemical companies

■ Paint companies

■ Construction companies

■ Specialty companies

The following are the value chain members in a typical elastomeric coatings buying process:

■ Manufacturers or suppliers of elastomeric coatings

■ Distributors that stock and sell elastomeric coatings to contractors

■ Contractors or applicators that buy elastomeric coatings from distributors or source itdirectly from manufacturers

■ Architects and engineers that play a vital role in selecting the elastomeric coatings

■ Commercial or residential complex owners also play a role in the selection of theelastomeric coatings

The following competitive factors were identified as being key to succeeding in this market:

■ Price

■ Quality of products

■ Reputation of the company

■ Warranty

■ Environmental compliance

■ Ease of application

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Market and Product Trends

The following are the major market trends and product trends which the elastomeric coatings

market is witnessing in the United States.

M a r k e t T r e n d s

■ Elastomeric roof coating revenues are expected to overtake elastomeric wall coating

revenues by 2011

■ Volatile Organic Compounds regulations are likely to play a role in widening the gap

between small and large manufacturers

P r o d u c t T r e n d s

■ Manufacture of coatings with improved properties

■ Trend toward zero VOC elastomeric coatings

■ Growth in the use of acrylic-based elastomeric coatings

■ Incorporation of ceramic microspheres in acrylic elastomeric coatings

M a j o r R e s e a r c h F i n d i n g s

Opportunities and Forecasts

Figure 1-1 represents the revenue forecasts of the U.S. elastomeric coatings market for the

period 2001-2011.

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Note: All figures are rounded; the base year is 2004. Source: Frost & Sullivan

Total revenues from this market for 2004 were $620.0 million and are projected to increase

to $1,216.7 million in 2011, with a compound annual growth rate (CAGR) of 10.1 percent

for the period 2004-2011.

M a r k e t D r i v e r s

The key drivers for the U.S. elastomeric coatings market are:

■ Growth in construction fuels market demand

■ Need for high-performance elastomeric coatings boosts market demand

■ Elastomeric coatings experience growth at the expense of other coatings

M a r k e t R e s t r a i n t s

The key restraints for the U.S. elastomeric coatings market are:

■ Higher cost of elastomeric coatings restrains growth

■ Competition from other coatings affects elastomeric coatings market

■ General complexity in application constrains growth

F i g u r e 1 - 1

Elastomeric Coatings Market: Revenue Forecasts (U.S.), 2001-2011

Revenue

Revenues Growth Rate

Year ($ Million) (%)

2001 483.0 ---

2002 519.4 7.5

2003 563.8 8.5

2004 620.0 10.0

2005 685.8 10.6

2006 758.6 10.6

2007 837.0 10.3

2008 918.2 9.7

2009 1,009.3 9.9

2010 1,108.0 9.8

2011 1,216.7 9.8

Compound Annual Growth Rate (2004-2011): 10.1%

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Market Segment Analysis

E l a s t o m e r i c W a l l C o a t i n g s M a r k e t

Market Drivers

■ Popularity of tilt-up concrete in building construction fuels demand for elastomeric

coatings

■ Product functionality increases sales

Market Restraints

■ Increasing interest rates for new home starts check growth

■ Tendency of acrylic elastomeric coatings to blister impedes growth

■ Lack of darker and brighter shades affects wall coatings market

E l a s t o m e r i c F l o o r C o a t i n g s M a r k e t

Market Drivers

■ High performance requirements create demand for elastomeric coatings

■ Fast setting time of polyurethane and polyurea spurs growth

Market Restraints

■ Higher cost of polyurethane and polyurea-based elastomeric floor coatings affects

growth

■ Use of special skills and equipments to apply restrains growth

■ Competition from epoxies and cementitious products check growth

E l a s t o m e r i c R o o f C o a t i n g s M a r k e t

Market Drivers

■ Lesser life cycle cost of elastomeric coatings drives demand

■ Increasing demand for environment-friendly coatings favors elastomeric coatings

■ Government encouragement to use white solar-reflective coatings drives growth

■ Trends in roofing material favor elastomeric coatings

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Market Restraints

■ Application limitations of elastomeric coatings restrict growth

■ Competition from other roof coatings limits growth

Strategic Conclusions

The U.S. elastomeric coatings industry is faced with the following challenges:

■ Meeting environmental regulations

■ Increasing raw material and fuel prices affects profitability

■ Creating bright and darker colors

Some of the key strategies to counter these challenges could be:

■ Continuous investment into research and development

■ Development of cost-efficient coatings

■ Internal cost reduction

■ Working together with facility owners, applicators, or painting contractors

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2Market Dynamics

M a r k e t D e f i n i t i o n s

Glossary of Terms

Abrasion Resistance: It is the ability of a coating to resist degradation due to mechanical

wear.

Acrylic: Any plastic polymer that contains at least one version of methacrylate monomer,

including but not limited to methylmethacrylate or butylmethacrylate

Adhesion: The degree of attachment or bonding of one substance to another.

Asphalt: A dark brown to black bituminous sticky substance, solid or semisolid in

consistency, found in natural beds and also obtained as a residue in petroleum refining. It

consists chiefly of hydrocarbons. The principal ingredient in asphalt is mastics.

Breathable Coating: A coating with a perm rating above 0.5. It is the opposite of a vapor

retarder. The higher the perm rating, the more breathable the coating.

Coat: The paint applied to a surface in one application that forms a film when dry.

Coating: A finish used to create a protective and/or decorative layer on a surface.

Synonymous with the term ’paint.’

Coverage Rate: Quoted either as square feet covered by a gallon (50 ft2/gal ) or as gallons

used per square (2 gal/square). A square is 100 square feet.

Cure: The process by which a coating becomes a hard film.

Dirt Pickup: The accumulation of dirt on the sealant surface during or after sealant cure.

Elastomer: A material capable of elongating at least 100 percent and recovering its original

dimensions.

Elongation: Lengthening or stretching ability to accommodate movement.

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Epoxy: An adhesive containing epoxide groups, which may be cross-linked through a

chemical reaction. Usually, these are two-part systems that need to be added together before

the reaction will proceed.

Film Thickness: The thickness of a membrane, normally measured in mils.

Gloss: The luster or shininess in paints and coatings.

Grout: Cement or mortar used to seal between precast concrete planks in a roof deck.

Lining: A material used to provide corrosion protection to a container, and/or protect the

contents of the container from contamination by the material of the container.

Mil: A unit in measuring thickness, being 0.001 inch.

Permeability: The degree to which liquid or gas can penetrate and pass through a coating

layer.

Polymer: A chemical compound or mixture of compounds formed essentially of repeating

structural units.

Polyurethane: Urethane is an organic compound formed by the reaction between an

isocyanate and a polyol. Polyurethane coatings provide high levels of gloss retention,

weatherability, flexibility, resistance to chemicals and solvents, and abrasion.

Primer: A chemical material that improves the bond of the sealant or the coating of the

substrate.

Solids Content: The percentage of nonvolatile matter that may be measured in volume or

weight.

Solvent: Any substance, usually a liquid, that dissolves other substances. In coatings,

normally a liquid organic compound used to make a fluid coating be applied more freely.

Substrate: The surface to be painted.

Tensile Strength: The force per unit area that is applied at the time of rupture of the

specimen. It is calculated by dividing the breaking force in pounds by the cross-section of the

unstretched specimen in square inches.

UL Rating: A flammability rating system for materials tested by Underwriters Laboratories.

UL classifies or lists material that pass specific tests.

UV: Ultraviolet radiation or sunlight.

Volatile Organic Compound (VOC): Solvent portion of a paint that evaporates while forming

a dry film of paint.

Volume Solids: The percentage of nonvolatile substance present in a coating material.

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List of Abbreviations

CMU: Concrete Masonry Unit

EIFS: Exterior insulation and finish systems

EPA: Environmental Protection Agency

MDI: Diphenyl Methane diisocynate

R&D: Research and Development

SPF: Spray polyurethane foam

UV. Ultraviolet radiation

VOC: Volatile organic compound

I n d u s t r y C h a l l e n g e s

Introduction

A challenge is any issue that affects the industry’s overall performance or influences

competition and includes consumer issues, regulatory programs, economic trends, market

measurement trends, competitive strategies, new technologies, sales and marketing strategies,

new market opportunities, and market threats. It is a predicament which companies find

difficult to face.

Industry Challenges

Figure 2-1 lists the impact of the top three challenges facing the U.S. elastomeric coatings

industry during the period 2005 to 2011.

Source: Frost & Sullivan

These challenges have been identified and ranked in the order of their impact.

F i g u r e 2 - 1

Elastomeric Coatings Market: Impact of Top Three Industry Challenges (U.S.), 2005-2011

Challenge 1-2 Years 3-4 Years 5-7 Years

Meeting environmental regulations High High High

Increasing raw material and fuel prices affect profitability High High/ Medium High/ Medium

Creating brighter and darker colors Low Low Low

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M e e t i n g E n v i r o n m e n t a l R e g u l a t i o n s

Different state governments have different volatile organic compound (VOC) regulations.

Hence, coating manufacturers are under pressure to manufacture environment-friendly prod-

ucts that are compliant with the regulations prevalent in respective areas. This serves as a

challenge to companies participating in this market as the state governments continuously

introduce newer and more stringent regulations periodically, forcing coatings manufacturers

to be alert and ready to modify their product lines.

Since the larger companies already have the research and development (R&D) set up in place,

the VOC regulatory compliance does not to affect them to a large extent. The smaller partic-

ipants and the midsize companies are particularly affected because they lack the resources

and infrastructure. Most of the large companies provide effective solutions in advance to

meet a particular regulation. Nevertheless, this issue continues to be a major challenge, with

the impact being high, as the entire United States is moving towards zero VOC in coatings.

I n c r e a s i n g R a w M a t e r i a l a n d F u e l P r i c e s A f f e c t

P r o f i t a b i l i t y

All elastomeric coatings are dependant on crude oil and its derivatives for their manufacture.

Since crude oil prices have been un-predictably exploding, manufacturers of elastomeric

resins such as butyl acrylate and polymeric diphenyl methane di isocynate (MDI) have been

unable to absorb these costs and have increased their prices by 10 to 30 percent accordingly.

This in turn has led elastomeric coatings manufacturers to pass on a part of the costs to the

end users, increasing prices by 5 to 10 percent on the entire range

This challenge has a major impact on small- and medium-size companies. Larger organiza-

tions are able to better utilize their resources and avail raw materials at cheaper prices due to

their superior bargaining power, making them better positioned to contain the hike in prices.

Nevertheless the unpredictable nature of raw materials and fuel supply, combined with

ever-increasing prices, presents a major challenge to all the manufacturers participating in

this market.

C r e a t i n g B r i g h t a n d D a r k e r C o l o r s

Despite progressing enormously on the technology front, elastomeric coatings still come infew light shades when compared to ordinary latex/acrylic paints, which are available innumerous colors. This is because brighter and darker elastomeric coatings contain pigmentsthat are UV-sensitive, leading the coatings to degrade and loose color when continuouslyexposed to sunlight. Elastomeric coatings mostly are applied over exterior walls, roofs, andfloors, among which the walls and the roofs are most exposed to sunlight. This presents aserious challenge, more so, to elastomeric wall coatings manufacturers as they are underpressure to serve end users better, who sometimes demand unusually bright and dark shades,besides other superior properties.

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3Overall U.S. Elastomeric Coatings Market

I n t r o d u c t i o n

Market Overview

Elastomeric coatings are a class of high performance, heavy-duty, and internally plasticized

flexible coatings that have the unique ability to bridge cracks smaller than one-sixteenth of

an inch. These coatings also provide a durable waterproof surface. The aforementioned

qualities stem from the fact that these coatings are made up of a rubbery base, which permits

them to extend by 200 percent and above and then recover. Different chemistries of

elastomeric coatings are used in varying quantities in different end-user markets. Acrylic-

based elastomeric coatings, for instance, are more widely used in wall and roof coating

applications, while polyurethanes are more commonly used in flooring applications. These

coatings usually find applications in both new construction and the renovation of high-rise

commercial complexes, residential apartments and houses, sports complexes, and so on.

A lot of confusion exists in the elastomeric coatings marketplace with regard to the definition

of elastomeric coatings. A coating that possesses the crack-bridging capability, the

waterproofing ability, and a stretchability ranging from 100 to 800 percent is referred to as

an elastomeric coating. However, many of the products manufactured by the leading

companies expand by about 200 to 400 percent.

Elastomeric coatings entered the U.S. market in the late 1950s while they have been used in

Europe post world war II. The need to seal cracks and waterproof old buildings in Europe led

to the demand for a coating that would cater to these requirements. Earlier, manufacturers

tried to incorporate plasticizers into their formulation to address this issue but the migration

of plasticizers off the coating; besides loss of properties of the system a couple of years after

application inhibited the market’s growth. In the United States, Rohm and Haas Company

and Union Carbide Corporation first began working on the creation of a 100 percent

internally plasticized system.

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Elastomeric coatings are applied in thick films that are five to ten times thicker than normal

acrylic paints, thereby they help cover surface irregularities. They are weatherproof and

protect their substrate from wind-driven rain. They help rejuvenate weathered or cracked

surfaces and last much longer than traditional paints. However, for best results, the surface

on which the coating is to be applied should be well prepared and cleaned prior to the

application.

Elastomeric coatings are particularly useful in coastal areas as they already have high levels

of moisture in the air. In addition, substrates such as concrete, masonry, and wood are

porous and the absorption of moisture by these surfaces can significantly shorten their life.

The ability of elastomeric coatings to bridge cracks that are formed by thermal expansion

and their waterproofing qualities significantly contribute in extending the substrate’s life.

Elastomeric coatings have many applications. In the building construction industry, being

used to cover vertical walls, terraces, balconies, garages, parapets, roofs, sports stadiums,

decks, bowling alleys, and so on. Industrial uses include reactor lining, equipment coating

and piping and other cryogenic storage devices. Other uses include applications in swimming

pools, flexible bumpers in automobiles, coolers and freezers.

Elastomeric coatings can be classified into the following types based on chemistry:

■ Acrylics: Acrylics are single-component water-based elastomeric coatings and are the

most widely used. Siliconized acrylics also fall under this category.

■ Urethanes: These elastomeric coatings are available in one or two component products.

Urethane coatings generally find use in high traffic areas such as walkways and garages.

■ Silicones: Silicones also come in one or two component products. They are also very

specialized and are being used in specific wall coating applications.

■ Polyureas: Polyureas are two component specialized products and find use in floor

coatings. They are a relatively new class of product.

■ Neoprene: Neoprene coatings are composed of synthetic rubber polymers, which offer

excellent elongation and recovery properties and find specialized used in some roof

coatings.

■ Hypalons: Hypalons (a registered trademark of E.I. DuPont de Nemours Company) are

chlorosulfonated polyethylene rubbers and specialize in roofing applications. Often, a

neoprene-hypalon hybrid is used.

■ Butyl Rubber: Butyl rubber coatings have extremely low water vapor permeability.

Hence, these coatings find use in freezers, coolers, and other cryogenic storage equipment

and also in places subjected to ponding water.

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M a r k e t O v e r v i e w a n d S c o p e o f t h e S t u d y

The elastomeric coatings market in the United States was worth $620 million in 2004. The

market is expected to grow at a compound annual growth rate (CAGR) of 10.1 percent to

reach $1,216 million in 2011. The main driver for this market is the growth in commercial

construction. The durability, elongation, waterproofing ability, and other features of

elastomeric coatings are also contributing to the growth of this market.

Elastomeric coatings are concentrated in the southern coastal areas of California and Florida

rather than the interior and northern parts of the United States. This is due to the greater

need to waterproof in these regions because of the high moisture content in the atmosphere.

Since the building construction industry accounts for maximum usage of elastomeric

coatings, the study is restricted to this industry only. Three main end uses of elastomeric

coatings will be dealt with in detail in this study, which are as follows:

■ Wall coatings—As the name suggests, these are coatings that cover vertical walls of any

type of building

■ Floor coatings—These coatings cover all kinds of horizontal surfaces such as garages,

terraces, and decks

■ Roof coatings—These coatings cover the roofs of residential, commercial, and industrial

buildings

This study also includes the application of elastomeric coatings by Do It Yourselfers (DIYs)

though their usage of these coatings is very limited.

This research service is limited to acrylics, urethanes, silicones, and polyurea-based

elastomeric coatings because these constitute the bulk of the market. Though neoprene,

hypalons, and butyl urea coatings were greatly used in the 1980s, today, there are very few

companies involved in these types of coatings and the market for these coatings has

diminished. Coatings based on asphalt or bitumen, that are rubberized, are excluded from

this study.

Elastomeric membranes or elastomeric liquid membranes are terms commonly confused with

elastomeric coatings. Sometimes, these terms are used interchangeably while at other times

sheets that serve as coatings are called the membranes. At other times, the primer, the sub

coat, and the topcoat are collectively referred to as elastomeric membranes. In this research

service, only elastomeric membranes will be referred to, whose coatings or layers are liquid

applied and are elastomeric in nature. Primers, surface conditioners, adhesives, and sealants

that may or may not be elastomeric in nature are excluded from this study.

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Market Engineering Measurements

Chart 3.1 represents the Market Engineering measurements for the U.S. elastomeric coatings

markets in 2004.

C h a r t 3 . 1

Overall Elastomeric Coatings Market: Market Engineering Measurements (U.S.), 2004

Market Engineering Drives Market

Strategy and Planning

MarketEngineer

ChallengeIdentification

MarketResearch

MarketEngineering

System

Implementation

MarketPlanning

MarketStrategy

Note: All figures are rounded. Source: Frost & Sullivan

M a r k e t S i z e

The elastomeric coatings market in the United States in 2004 was worth $620 million This is

expected to grow at a compound annual growth rate (CAGR) of 10.1 percent to reach

$1,216.7 million by the year 2011.

Measurement Name Measurement Trend

Market age Growth ---

Revenues $620 million Increasing

Potential revenues (maximum future market size) $1,216.7 million Increasing

Base year market growth rate 10% Increasing

Forecast period market growth rate 10.1% Decreasing

Average price $19 per gallon Increasing

Price range $10 to $50 per gallon Stable

Price sensitivity High Increasing

Competitors (active market competitors in base year) Around 200 Increasing

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M a r k e t A g e

The overall elastomeric coatings market in the United States is at a growth stage with a few

national suppliers and a number of regional suppliers. The national suppliers cater to most

parts of United States while the regional participants focus only on a particular region and

manufacture coating customized to the region’s requirements. The growth potential of these

coatings are dependent on their end use and on the region of application in the United States.

Forexample, in the state of California, the government is promoting the use of reflective roof

coatings because of their high moisture levels. White elastomeric coatings, which can reflect

the sunlight and can also waterproof, are an obvious choice for consumers.

D i s t r i b u t i o n

Figure 3-1 presents the modes of distribution followed by key suppliers in the U.S.

elastomeric coatings market:

Source: Frost & Sullivan

F i g u r e 3 - 1

Elastomeric Coatings Market: Distribution Channel Followed by Key Suppliers (U.S.), 2004

Direct Sale to Sale through

Company Contractors Distributors Mix of Both

Benjamin Moore & Co. ■

Degussa Constructions Systems Americas ■

Dryvit Systems, Inc. ■

Elastomeric Roofing Systems, Inc. (ERSystems) ■

Henry Corporation ■

ICI Paints ■

M.A.B. Paints ■

National Coatings Corporation ■

Neogard, a division of Jones- Blair Company ■

Pacific Polymers International, Inc. ■

Sika Corporation ■

Sto Corporation ■

Textured Coatings of America, Inc. ■

The Sherwin- Williams Company ■

Tremco Sealants/ Waterproofing Division ■

United Coatings ■

3M ■

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Direct Sale to Contractors

This is a more common mode of distribution followed in the elastomeric floor and roof

coatings industry. This is as many projects in this industry require several gallons of coatings

and also a good job specially in this market is very dependent on the skills of the applicator

and so the manufacturers generally sell to authorized applicators. Comparatively smaller

companies follow this mode of distribution as they have good local contacts. For example,

Resin Technology Company, a division of Henry Company, manufactures elastomeric

polyurea coatings and sells it only to approved applicators or contractors.

Sales through Distributors

This is a more common mode of distribution followed by the wall coatings industry where

companies even sell its products through Home Depot and Lowe’s. Selling through

distributors gives the manufacturer the advantage of greater geographical coverage and

selling it to newer contractors. For example, The Sherwin-Williams Company sells its coating

through its 2800+ company owned stores throughout the United States while United

Coatings and Sto Corporation sells their products through independent distributors.

Sales through Distributors as well as Direct Sale to Contractors

Many companies are following this mode of distribution and there is a trend favoring this

move. This is because this mode of distribution gives manufacturers the unique advantage of

selling a few of their coatings through approved applicators as well as widening their reach

through independent distributors. Forexample, Neogard and 3M sell their elastomeric

coatings line though a mixture of both the modes of distribution.

C o m p e t i t i o n

Many companies sell elastomeric coatings in the United States. Most of the companies are

regional and sell only to a particular area while there are comparatively fewer companies

selling nationally. The regional companies compete on their ability to manufacture products

that are customized for use in a particular area while the national participants dominate

when it comes to the variety of products manufactured and the availability of technical help.

The U.S. elastomeric coatings market is very fragmented with different market leaders in

different segments. Most companies in this market focus on one or two end use markets,

while there are very few suppliers who cater to all the three end use markets.The

Sherwin-Williams Company dominates the elastomeric wall coatings market while Neogard,

a division of Jones-Blair Company is the market leader in the floor coatings market.

Innovative technology, market know-how and a good distribution network is what

differentiates these companies from the rest.

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P r o d u c t A n a l y s i s

Elastomeric coatings can be classified based on their base resin. They are as follows:

■ Acrylics

Acrylics are single component water based elastomeric coatings. They adhere excellently to

their substrates; have good flexibility, good weather resistance, and high moisture-vapor

transmission rates and are also easy to apply. Acrylics are the most widely used elastomeric

coatings and are also the least priced.

■ Urethanes

These elastomeric coatings are available in one or two component products. Urethane

coatings find specialized use in high traffic areas such as walkways and garages. They offer

excellent weather resistance and are highly resistant to chemicals and UV light. They are the

most expensive coatings in this category.

■ Silicones

Silicones also come in one or two component products. They too are very specialized and

have limited but specialty use.

■ Polyureas

Polyureas are two component products that are also very specialized. They usually find

applications in floor coatings, which are subjected to high traffic. They are difficult to apply

and hence quite expensive.

Different applications have different requirements with respect to environmental conditions,

abrasion resistance, chemical resistance amongst others. Any coating can be used regardless

of the end use but in most cases specific end use markets have a particular type of coating

dominating. For example, acrylic-based elastomeric coatings have a market share of

90 percent in the wall coatings market and polyurethane-based coatings have a market share

of 90 percent in floor coatings market. This is because their chemical composition makes

them specifically suited for a particular end use. Sometimes the elastomeric coatings based on

the same chemistry are used for different end use. For example, acrylic coatings are used for

wall coatings, roof coatings, and also floor coatings. In such circumstances, the coatings are

engineered and slightly modified to match the end use requirement it is not best suited for.

The substrate plays one of the important roles in determining whether a particular coating is

suitable for the particular end use or not. This is because of adhesion compatibility between

the substrate and the coating. For example, acrylics will adhere better to concrete/masonry

surfaces while silicones will go over exterior insulation and finish systems (EIFS) surface

better, both as a roof coating.

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Construction Market Update

The elastomeric coatings market is heavily dependent on the construction industry. Hence,

elastomeric coatings market grows when construction industry flourishes. Exterior walls,

floors and roofs come directly under the residential and nonresidential construction.

The construction industry is seeing high growth. The key factor responsible for this growth is

nonresidential construction. Nonresidential construction is expected to grow at the rate of

five to six percent throughout United States in the next few years. This is because of increase

in corporate profits which has resulted in increase in office construction and employment.

Higher employment has resulted in increased wages and higher consumer spending on leisure

activities and recreation. health care construction has also been growing steadily due to the

increasing demand to serve the elderly. Hotel construction is increasing in tourist areas. All

of this is leading and resulting from an overall improvement in the economy.

The residential construction market is seeing growth, but with a different driver. The years

2001 to 2004, almost until the third quarter, were very good for the residential construction

market. Since the interest rates were down to historic levels, there was a flurry in new

housing starts but toward the end of 2004 and early 2005 the interest and mortgage rates

started climbing and hence the new housing starts began to decline. However, with the

decline in new starts, there started a flurry of renovation and home improvements began to

increase. Total spending on home improvement, renovation, and repair is witnessing growth

and is expected to grow by 5.5 percent in the next couple of years. Construction of

condominiums and conversion of apartments into condos is expected to maintain its

momentum at least in a few places in the United States. This multi-family housing segment

witnessed a boom during 2003 as young professionals were buying new properties. The low

interest rates permitted them to buy a property rather than rent one, hence there was a flurry

in this market. However, with the increase in interest rates, though the condominium

construction is expected to dip, states in the South East, for instance, Florida, Georgia, North

Carolina and South Carolina are still experiencing growth. This may probably be due to the

fact that an independent house is more expensive than a condominium.

The elastomeric wall coatings market is expected to get a surge with the greater usage of tilt-

up and precast concrete in construction. According to the Tilt-Up Concrete Association, the

use of tilt-up concrete in the year 2004 has risen by 23 percent as compared to the previous

year. Since concrete structures are prone to cracking, the increase in use of concrete for

building construction promotes the usage of elastomeric wall coatings. Also, the increase in

the construction of condominiums is responsible for elastomeric wall coatings’ growth. The

construction of conominiums provides the opportunity to construct greater high-rise

buildings. Thus, higher the number of high-rise buildings, the greater is the surface area of

the exterior walls and hence this provides an opportunity for greater use of elastomeric

exterior wall coatings in a single project. Also, the growth in the number of new office

buildings, recreation centers, and industrial workshops and buildings are all and will be

responsible for the elastomeric wall, floor, and roof coatings market to increase. Home

improvements, such as renovation of the parking garage, building walls, terrace, roof, and so

on are facilitating the elastomeric floor and roof coatings market to grow.

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F o r e c a s t s a n d T r e n d s

Market Drivers

Figure 3-2 shows the drivers of the U.S. elastomeric coatings market ranked in the order of

impact for the period 2005-2011.

Source: Frost & Sullivan

G r o w t h i n C o n s t r u c t i o n F u e l s E l a s t o m e r i c C o a t i n g s ’

D e m a n d

The growth in construction is the biggest driver for growth of the elastomeric coatings

market. The nonresidential building construction industry that includes construction of

office buildings, healthcare buildings, educational complexes, and so on is expected to grow

by five to six percent and also the home repair and renovation industry is expected to grow

by 5.5 to 6.5 percent in the coming years.

2004 was the juncture at which growth in residential construction began to fall and growth

in nonresidential construction began to pick up. New housing starts after a decade long of

growth began to slow down. This decline in growth of new housing starts was due to the

rising interest rates. However, the home repair and renovation industry has picked up and is

expected to grow by 5.8 percent in the next couple of years.

The nonresidential new building construction segment has already gained momentum andhas grown by 4.7 percent in 2004. This segment is further expected to grow by 1 to 2 percentin the next few year due to several reasons. Higher corporate profits have increased spendingon office buildings and recruitment. Higher recruitment has led to higher wages and henceincreased spending power on leisure activities. This is resulting in newer recreation and retailcenters being opened. Hotel construction in tourist areas is also seeing growth. All this is dueto and is resulting in the overall growth in economy.

Hence, the elastomeric coatings industry is being fueled by the high growth in construction.This driver is expected to have a high impact in the near and mid-term future.

F i g u r e 3 - 2

Elastomeric Coatings Market: Market Drivers Ranked in Order of Impact (U.S.), 2005-2011

Rank Driver 1-2 Years 3-4 Years 5-7 Years

1 Growth in construction fuels elastomeric coatings’ market demand High High Medium

2 Need for high-performance coatings boosts market demand High Medium Medium

3 Elastomeric coatings experience growth at the expense of other

coatings

Medium Medium Low

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N e e d f o r H i g h - p e r f o r m a n c e C o a t i n g s B o o s t s D e m a n d

F o r E l a s t o m e r i c s

Many people in different regions of the United States are experiencing a need for

high-performance coatings. This is especially true of coastal areas that experiences strong

winds and carry moisture with them. These areas require a coating that will protect their

walls, roofs, and floors and will prevent moisture from penetrating into them. Elastomeric

coatings are hence favored. Their ability to stretch by about 300 percent and their

waterproofing characteristics are unmatched. These coatings are durable and long lasting and

can withstand heavy rainfall and snowfall. They are also dirt, mildew, and chemical resistant.

All these factors, along with end users realizing that applying an elastomeric coating is much

more cost-effective than carrying out renovation or replacement work, make these coatings

increasingly sought after. This factor is expected to drive the market throughout the forecast

period.

E l a s t o m e r i c C o a t i n g s E x p e r i e n c e G r o w t h a t t h e E x p e n s e

o f O t h e r C o a t i n g s

Elastomeric coatings are generally over five times thicker than conventional latex/acrylic

paints when dry. This gives these coatings the ability to hide surface imperfections and bridge

hairline cracks while traditional paints and coatings are not as effective in concealing surface

imperfections. Another factor is that new buildings are warranted for one year in the United

States. Hence, the building contractors tends to use traditional paints. Once these paints peel,

many building owners are swayed toward elastomeric coatings as they provide superior

protection. Also the fact that elastomeric coatings are warranted for a longer period, for

instance, many elastomeric roof coatings manufacturers give ten years warranties, and light

or white coatings help conserve energy in summer, consumers are convinced that they are

best choice.

This driver is expected to have medium impact throughout the coming years, since many end

users see only the initial costs.

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Market Restraints

Figure 3-3 shows the market restraints of the U.S. elastomeric coatings market ranked in

their order of impact for the forecast period 2005-2011.

Source: Frost & Sullivan

H i g h e r C o s t o f E l a s t o m e r i c C o a t i n g s R e s t r a i n G r o w t h

Elastomeric coatings cost about 350 percent more than that of conventional latex/acrylic

paints. On an average, a gallon of acrylic elastomeric coating for wall coating applications

costs $21, while an ordinary acrylic paint costs about $6/gallon. The coverage area per

gallon of elastomeric coatings are much lower than ordinary coatings. Generally, on a porous

surface, elastomeric coatings cover 50 to 60sqft/gallon while conventional paints and

coatings spread at the rate of 200 to 250sqft/gallon.

However, elastomeric coatings have many benefits like being able to effectively waterproof

and bridge cracks smaller than 1/16th of an inch. These coatings also have good chemical,

abrasion, and UV resistance and are long lasting. Despite all these benefits, contractors are

deterred by the pricing, thus, making it the single most important restraint, which has and

will continue to impact the market in a major way.

C o m p e t i t i o n f r o m O t h e r C o a t i n g s A f f e c t E l a s t o m e r i c

C o a t i n g s M a r k e t

Though elastomeric coatings are a unique product with excellent features, conventional

coatings gain an upper hand in a few circumstances. States like Idaho in the United States

have low moisture in the air and also experience lower temperature variations. In these areas

ordinary paints and coatings offer stiff competition to their elastomeric counterpart. This is

because these traditional paints are cheaper and the elastomeric coating’s functionality is not

entirely utilized in such areas. Hence, homeowners and building contractors are often swayed

to go in for the traditional paints.

F i g u r e 3 - 3

Elastomeric Coatings Market: Market Restraints Ranked in Order of Impact (U.S.),

2005-2011

Rank Restraint 1-2 Years 3-4 Years 5-7 Years

1 Higher cost of elastomeric coatings restrain growth High High High

2 Competition from other coatings affects elastomeric coatings market Medium Medium Low

3 General complexity in application constrains growth Medium Low Low

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G e n e r a l C o m p l e x i t y i n A p p l i c a t i o n C o n s t r a i n s G r o w t h

Many of the elastomeric coatings such as polyurethanes, polyureas, and silicones often come

in two component coatings that require effective mixing of the two components before their

application. This necessitates expensive and cumbersome equipment for their effective

mixing and complicates their application. However, coatings which are polyurethane and

polyurea-based offer exceptional durability and a shorter cure time. Hence, this factor is a

medium restraint to this market.

Since the elastomeric coatings market is getting more competitive, many companies are

increasing their R&D expenditure to come up with better technology so as to reduce the

impact of this restraint.

Revenue Forecasts

Figure 3-4 and Chart 3.2 show the revenue forecasts for the total elastomeric coatings market

in the United States for the period 2001 to 2011.

Note: All figures are rounded; the base year is 2004. Source: Frost & Sullivan

F i g u r e 3 - 4

Elastomeric Coatings Market: Revenue Forecasts (U.S.), 2001-2011

Revenue

Revenues Growth Rate

Year ($ Million) (%)

2001 483.0 ---

2002 519.4 7.5

2003 563.8 8.5

2004 620.0 10.0

2005 685.8 10.6

2006 758.6 10.6

2007 837.0 10.3

2008 918.2 9.7

2009 1,009.3 9.9

2010 1,108.0 9.8

2011 1,216.7 9.8

Compound Annual Growth Rate (2004-2011): 10.1%

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C h a r t 3 . 2

Overall Elastomeric Coatings Market: Revenue Forecasts (U.S.), 2001-2011

Note: All figures are rounded. Source: Frost & Sullivan

In 2004, the revenues from the total elastomeric coatings market were $620 million. The

market is forecast to grow to $1,216.7 million by 2011 at a CAGR of 10.1 percent. The

growth in the total market is likely to be driven by the high growth in non- residential

construction. Also, the coating’s unique features favor its growth.

The factors that are likely to support the revenue growth of the total elastomeric coatings

market over the forecast period include:

■ Strict environmental regulations

■ Demand for greater performance and durability

■ New technology development

Market and Product Trends

M a r k e t T r e n d s

Revenue Share Trends by Application Market

Figure 3-5 and Chart 3.3 present the percent of revenues by application markets in the total

U.S. elastomeric coatings market for the period 2001-2011.

0

200

400

600

800

1,000

1,200

1,400

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Rev

enue

s ($

Mill

ion)

0%

2%

4%

6%

8%

10%

12%

Gro

wth

Rat

e

Revenues ($ Million) Growth Rate (%)

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Key: EWC = Elastomeric Wall CoatingsEFC = Elastomeric Floor CoatingsERC = Elastomeric Roof Coatings

Note: All figures are rounded; the base year is 2004. Source: Frost & Sullivan

C h a r t 3 . 3

Percent of Revenues by product type (U.S.), 2001-2011

Note: All figures are rounded. Source: Frost & Sullivan

F i g u r e 3 - 5

Elastomeric Coatings Market: Percent of Revenues by Product Type (U.S.), 2001-2011

EWC EFC ERC

Year (%) (%) (%)

2001 52.2 22.2 25.7

2002 51.2 21.4 27.4

2003 50.0 20.5 29.6

2004 48.4 19.4 32.3

2005 46.7 18.3 35.0

2006 45.1 17.3 37.6

2007 43.8 16.4 39.8

2008 42.9 15.8 41.3

2009 42.2 15.1 42.7

2010 41.6 14.6 43.9

2011 41.1 14.1 44.8

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Perc

ent

of R

even

ues

EWC EFC ERC

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In 2004, the elastomeric wall coatings dominated the elastomeric coatings marketplace by

contributing 48.4 percent to the total market. The elastomeric floor and roof coatings market

contributed 19.4 percent and 32.3 percent respectively. This segmentation is expected to

change with the elastomeric roof coatings slowly moving to the top spot. This is because end

users are paying more attention to their roofs than the floors and the walls. They are

realizing the importance of a leakproof and a damage free roof. Consumers are

understanding that a surface which has to withstand nature’s fury, deserves a better and a

high performance coating. Hence, they generally do not want to compromise on the roof.

Also, government encouragement to use white reflective coatings is greatly favoring the

elastomeric roof coatings than anything else. Hence, it is expected that the elastomeric roof

coatings are eventually going to lead the elastomeric coatings market.

VOC Regulations Play a Role in Widening the Gap Between Small and Large Manufacturers

The U.S. environmental protection agency (EPA) and the different regional boards/

organizations responsible for prevention of environmental pollution, continuously introduce

more stringent VOC regulations with time. So coating suppliers have to manufacture

coatings that adhere to the VOC regulations as prevalent in the region in which they plan to

sell. The larger companies have excellent R&D capabilities and are able to supply different

products to suit different needs and markets much more easily than the small manufacturers.

Also these large companies have a good distribution network, thereby, making it easier to

reach out different markets. Hence, they are able to market their products aggressively when

a new regulation has come in place because most of the times they are already prepared.

While many times the smaller companies find this task of modifying their formulation

slightly difficult because they lack the resources and the expertise. This widens the gap.

Larger companies are easily able to expand into newer regions, while the smaller companies

find it difficult to align their products in order to suit the new region’s requirements. This

factor serves as a competitive advantage for the large organizations while being a roadblock

for their smaller counterparts.

P r o d u c t T r e n d s

Creating Coatings with Improved Properties

Coating manufacturers are continuously working toward creating products with improved

UV resistance, enhanced durability, better chemical resistance, and so on. This is because of

the heated competition prevalent in the entire market. Hence manufacturers are forced to

find newer and better ways to improve their products with an aim to differentiate their

products from their competitors.

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Trend toward Zero VOC Coatings

While the federal government is constantly lowering the VOC limits in coatings, state

governments are one step ahead, for instance, in California and the Eastern Block states, the

governments are heading in the direction of enforcing a zero VOC finally. Hence,

manufacturers are constantly working on their technology to move completely from solvent-

based coatings to waterborne elastomeric coatings that have low VOCs.

Growth in Use of Acrylic-based Elastomeric Coatings

Since the coatings market is moving toward zero VOC and cost being a major factor in this

market, many companies are concentrating on their acrylic waterborne line of elastomeric

coatings. Also, a lot of new companies are emerging in this line of business. Acrylic coatings

are the most versatile of all coatings. They can be used in all the end use markets.

Manufactures only need to modify their formulation slightly in order to accommodate the

requirements of different end use markets. These coatings offer the advantage of being

waterborne, having low VOC content and being cheaper than the other elastomeric coatings.

All this is favoring the growth in acrylic-based elastomerics.

Incorporation of Ceramic Microspheres in Acrylic Elastomeric Coatings

The introduction of white acrylic coatings impregnated with ceramic microspheres is a new

trend which has emerged in this market. These coatings are used over roofs and also on

exterior walls. The ceramic microspheres help in insulating the roof against heat and sound

besides assisting in waterproofing. These ceramic particles reflect, refract, and dissipate a

great amount of heat flow to the interior of the structure, thereby helping the roof or wall

stay cooler, which ultimately helps the building/ home owner reduce his cooling bills. A few

innovative companies which are differentiating themselves from the rest by this technology

are Nationwide Chemical Coating Manufacturers, Inc. Acry-Tech Coatings, Inc. and

Advanced Coatings Systems, Inc.

Pricing Trends

P r i c e D e t e r m i n a n t s

The prices of elastomeric coatings depend on the following factors:

Chemistry of the Coating

The price of elastomeric coatings are heavily dependant on the base resins used. Some base

resins such as acrylics are cheaper while others such as polyurethanes and polyureas are

expensive. This variation comes about from the method of synthesis of the base resins as the

primary source is the same for all which is crude oil.

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Region in which it is Sold

The elastomeric coatings market is very fragmented with numerous manufacturers in every

region or state. Also, the government regulations vary from region to region. So if a regional

manufacturer wants to sell his product in another state, he has to customize his product to

meet the regulations of the other region besides finding a suitable source to distribute. One

must note that in the new region there might be another local manufacturer manufacturing a

similar product at a lower price. The larger manufacturers have a better control over their

prices as they have many manufacturing centers, dedicated R&D labs, and an exhaustive

distribution network. Demand also drives manufacturers to produce coatings at a lower

price. All these factors play an important role in determining the cost of the product.

Size of the Project

Contractors for larger projects can avail elastomeric coatings at a much lower price than that

for smaller products. Manufacturers are always looking for wholesale customers and so give

a discount. Discounts up to 20 percent are offered on huge projects.

Performance Requirements

Elastomeric coatings are priced depending on the performance requirements of the end use

and thus, price differs even in the same application market. They have different warranties as

well. Coatings have to be engineered to meet these requirements, which comes at a cost.

P r i c i n g

Prices vary by base resin and also by the end user segment. The average price of a gallon of

elastomeric coating in the United States costs $19. Acrylic elastomeric coatings cost

anywhere between $10 a gallon to $30 a gallon depending on the end user segment. The

silicone variety comes next with the prices ranging from $25 to $30 per gallon. Both

urethanes and polyureas are very expensive elastomeric coatings which could cost anywhere

between $20 per gallon to $50 per gallon.

P r i c i n g T r e n d s

The prices of elastomeric coatings, in general, have been increasing in the past three to four

years. Most of the companies have increased their prices for the elastomeric coatings line by

5 to 15 percent as compared to the previous year. This is because of the ever increasing prices

of raw materials and fuel supply, which are all derived from crude oil. The instability in

supply is adversely affecting the manufacturing costs, due to which manufacturers’ profits

are being squeezed Hence, these coatings manufacturers are not left with much choice than to

pass on their increased costs to their customers.

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C o m p e t i t i v e A n a l y s i s

Competitive Structure

Figure 3-6 presents the competitive structure of the total U.S. elastomeric coatings market for

2004.

Source: Frost & Sullivan

Around 200 companies participate in the elastomeric coatings market in the United States.

Most suppliers have products based on two or more base resins, which is dependent on the

end use market. Also, many of these suppliers serve only one or two of the three main

application areas in this market. For instance, Pacific Polymers Company manufactures

elastomeric coatings based on acrylics and urethanes and serve only the floor coating market.

Figure 3-7 shows the major participants by end-user markets in the U.S. elastomeric coatings

market in 2004.

F i g u r e 3 - 6

Elastomeric Coatings Market: Competitive Structure (U.S.), 2004

Number of Companies in the Market 200

Types of Competitors Large national suppliers

Small regional suppliers

Distribution Structure Sale through contractors

Sale through distributors

A mixture of both

Key End User Groups Exterior walls, floors, and roofs

Competitive Factors Price, quality of the product, reputation of the company, warranty,

environmental compliance, ease of application

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Source: Frost & Sullivan

The companies participating in this market can be classified in the following two ways

depending on:

T h e S i z e a n d O p e r a t i o n o f t h e C o m p a n y

Elastomeric coating manufacturers are either large national participants or are small and

regional participants who cater only to a particular area. The larger participants are

characterized by their good product line, liberal R&D expenditure, and an extensive

distribution network while the smaller and regional participants do business based on their

knowledge of the local area, thereby, having products that are customized to the regions’

needs. These companies also have good contacts with the contractors in their region who

enable their business to grow.

F i g u r e 3 - 7

Elastomeric Coatings Market: Database of Key Industry Participants by End-User Market

Participation (U.S.), 2004

Company Exterior Walls Floors Roofs

Benjamin Moore & Co. ■

Degussa ■ ■

Dryvit Systems, Inc. ■

Elastomeric Roofing Systems, Inc. (ERSystems) ■

Henry Corporation ■

ICI Paints ■ ■

M.A.B. Paints ■ ■

National Coatings Corporation ■ ■

Neogard, a division of Jones- Blair Company ■ ■ ■

Pacific Polymers International Inc. ■

Sika Corporation ■

Sto Corporation ■

Textured Coatings of America, Inc. ■ ■

The Sherwin- Williams Company ■ ■ ■

Tremco Sealants/ Waterproofing Division ■

United Coatings ■ ■ ■

3M ■

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T h e Ty p e o f C o m p a n y

The classifications based on the type of companies participating in this market are chemical

companies, paint companies, construction companies, and specialized companies. Large

chemical companies such as Degussa and Dow Corning, who have varied and multiple

products catering to many different markets, participate in this market. Paint Companies

such as Sherwin-Williams and Benjamin Moore also have a major presence in this market but

is mostly restricted to the exterior wall coatings applications. These companies manufacture

several types of paints and coatings besides elastomeric varieties. Many companies such as

Sto Corporation and ERSystems have a major presence in this market. These companies also

sell elastomeric coatings as a part of the final product. A lot of small construction companies,

who already do panelling, cladding, and so on, find it easy to incorporate elastomeric

coatings in their product line. Lastly, there are a few specialized companies that manufacture

a few coatings and adhesives for only a specialized end use. A very limited elastomeric

coatings line characterizes them. They are very regional and they cater to niche and highly

specialized markets.

Many companies private label i.e. they buy their elastomeric coatings from other

manufacturers and sell it under their brand name as elastomeric coatings can easily form a

part of their existing product portfolio.

D i s t r i b u t i o n S t r u c t u r e

Elastomeric coatings are distributed in mainly three ways. They are either sold through

distributors, who may be independent or may be company owned, or directly to contractors

or a mix of both. Large companies have several products and so may have distribution

centers in various parts of the country where contractors can go and purchase their products.

These companies have the advantage of getting closer to the contractor’s region of operation

besides providing technical guidance. For instance, The Sherwin Williams Company has over

2600 company owned stores all over the United States. The mid-sized companies either sell

directly to contractors or have a mix of both as their distribution channel. Advanced

Coatings Systems, Inc. sells its products through both independent distributors as well as

direct to the contractors. Only large contractors who buy several thousands of gallons are

generally attended to directly. Small companies are mostly regional and hence supply directly

to contractors.

The advantages of having an extensive network of distributors is that companies are able to

reach out to all parts of the country while on the other hand the products that are sold via

distributors are slightly more expensive. Smaller companies are always keen to cut out on all

overheads; hence they prefer to approach the contractors directly through a dedicated team

of sales representatives.

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Following are the value chain members in a typical elastomeric coatings buying process:

■ Manufacturers of coatings that are the suppliers

■ Distributors that stock and sell these coatings to the contractors

■ Contractors or applicators that buy these coatings from distributors. Sometimes, they

obtain it directly from the manufacturer.

■ Architects and engineers that play a vital role in selecting the coatings.

■ Commercial or residential complex owners that also play a role in the coating’s selection.

C o m p e t i t i v e F a c t o r s

Price: Price is the most competitive factor based on which a coating manufacturer is finally

selected. The elastomeric coatings market is a very fragmented and a competitive market. It is

given utmost importance during the bidding process.

Quality of the Product: The durability, the solids content, water penetration resistance,

weather resistance, and so on play a crucial role in the products selection. The same products

having been used elsewhere in the same locality serves as a testimony to the products quality

and these factors influence final selection.

Reputation of the Company: The name of the company significantly influences sales in this

market. Companies such as 3M, The Sherwin-Williams Company, and Degussa have the

reputation for supplying quality products and have a good brand image. Big contractors

prefer products manufactured by these companies with whom they have associated for

several years This is because they are sure about the timely delivery of the product besides

other technical support. Hence, reputed companies have an edge over their competitors.

Warranty: Long warranties are typical of elastomeric coatings’ suppliers. This industry

standard is five years but there are some roofing companies, which give warranties for as

long as 20 years. Consumers and architects/engineers prefer using products that have long

warranties.

Environmental Compliance: As environmental regulations are becoming increasingly strict, a

key success factor for coating manufacturers is to develop products that comply with the

regulations where the product is to be sold. Manufacturers who anticipate regulations and

develop elastomeric coatings have a competitive edge while bidding for large projects.

Ease of Application: The ease of application has an influence on the final selection of the

elastomeric coating. Acrylic products are easy to apply than the polyurea-based elastomeric

coatings that are two-component products. This is because a two-component product will

require expensive equipment to mix the two components in the correct ratio.

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Market Participants

The following are a few company profiles who participate in this market

D e g u s s a C o n s t r u c t i o n S y s t e m s A m e r i c a s

Degussa is one of the leading participants in the elastomeric coatings market, besides being

one of the largest chemical companies in the world. They participate primarily in the floor

coatings market with their urethane and polyurea-based coatings. They are also a major

participants in the wall coatings market with their acrylic, silicone and siliconized acrylic

products. Degussa takes pride in being technical innovators and have several products which

are patent protected. Degussa also has an extensive distribution network.

T h e S h e r w i n - W i l l i a m s C o m p a n y

Sherwin-Williams is one of the largest paint companies and is also a leader in the elastomeric

coatings market. It makes acrylic and a few polyurea-based elastomeric coatings for exterior

wall coating applications. The company also has a minor presence in the floor and roof

coatings market. Sherwin-Williams’ R&D focus and its impressive nationwide distribution

network is responsible for making it such a major participant in this market.

D o w C o r n i n g C o r p o r a t i o n

Dow Corning is a joint venture between Corning, Inc. and The Dow Chemical Company

pioneering in silicon-based technology and products. The company sells the largest amount

of silicone-based elastomeric coatings for wall coating application. The company serves

several industries including automobile, construction, health care, and so on.

3 M

3M is a major participant in the elastomeric coatings market participating primarily in the

floor coatings market. 3M sells its Scotch-Clad range of products both direct to contractors

and through its extensive distribution network. The company makes high quality products

and has a very good line of solvent-free, waterborne elastomeric coatings.

I C I P a i n t s

ICI is a major participant in the wall coating market and one of the leading paint companies

in the world. The company also makes roof coatings. The company’s brand name coupled

with their research focus and extensive distribution network helps them market their

products successfully.

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N e o g a r d , a d i v i s i o n o f J o n e s - B l a i r C o m p a n y

Neogard is one of the leading suppliers of elastomeric coatings. The company’s primary focus

is urethanes for floor coating applications. The company also has a major presence in roof

coatings with its acrylic, polyurethane, and silicone coatings. Many products are certified by

international organizations such as Underwriters Laboratories and Factory Mutual. The

company differentiates itself by its job and performance history.

E l a s t o m e r i c R o o f i n g S y s t e m s , I n c . ( E R S y s t e m s )

ERSystems takes pride in being a leader in cool roofing technology. The company

manufactures a complete line of high quality reflective coatings, membranes, sealants, and

adhesives specifically designed for single ply membrane, spray polyurethane foam (SPF),

asphalt, and metal roofing. The company has acrylic, silicone, and polyurethane-based

coatings in its elastomeric line. ERSystems is a charter member of the energy star roof

products program and was instrumental in developing the cool roof coating council.

N a t i o n a l C o a t i n g s C o r p o r a t i o n

National Coatings is an innovative participants of elastomeric coatings market in the

Californian region. The company participates both in the roof coatings and wall coatings

market with its waterborne acrylic product. The company has a strong R&D focus and has

been in this line of business for about 25 years. These two factors make National Coatings a

leader in this market.

T a m m s I n d u s t r i e s , I n c o r p o r a t e d

Tamms Industries offer a broad scope of concrete repair, waterproofing, and protectionproducts to the concrete industry. It is a leading manufacturer of curing, coating, grouting,traffic deck systems, waterproofing products etc., and can serve as a single source supplier ofconcrete restoration and protective products for any type of construction project. Thecompany offers acrylic-based elastomeric decorative and protective coatings under the brandTammolastic for exterior wall surfaces.

N a t i o n w i d e C h e m i c a l C o a t i n g s M a n u f a c t u r e r s , I n c o r p o r a t e d

Nationwide Chemical Coatings is a small but innovative company operating in Florida. Theymake paints, coatings, adhesives, primers, and so on. Within their elastomeric range, theyhave acrylic-based and acrylic with urethane-based coatings for both exterior wall and roofapplications. The company has ceramics incorporated in most of their coatings, which lendshigher insulation (both heat and sound). Most of these coating also have fire retardingproperties and come in variety of finishes. Nationwide Chemical Coatings is approved by theEnergy Star, Cool Roof Rating Council.

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H e n r y C o m p a n y

Henry is one of the largest roofing companies in the United States. They primarily make

acrylic coatings.They also manufacture silicones, polyurethane and polyureas-based coatings.

The company’s continued focus on R&D combined with its strong distribution network

makes it a leading participant in the elastomeric coatings market.

Market Share Analysis

The elastomeric coatings market is very fragmented with most of the companies having a

major presence only in one or a maximum of two end-user segments considered in the study,

which made the market share analysis for the total market far more complicated than the

same at the segment level. Also, a lot of companies are regional and do not operate at the

national level, though they have a sizeable market share. Hence, market share analysis for the

leading manufacturers for the total U.S. elastomeric coatings market is not undertaken in this

study as it will be misleading and will dilute the impact of the market leaders at the segment

level.

However, in 2004, some of the leading manufacturers of elastomeric coatings in the United

States were Neogard, Degussa, Henry Company, The Sherwin- Williams Company, 3M,

United Coatings, National Coatings Corporation, Sto Corporation, and ERSystems. All these

companies do business worth more than $8 million in the elastomeric coatings segment

alone. Amongst these, only Neogard and The Sherwin-Williams Company have at least an

elastomeric coating for the three end-user segments considered in this study. Companies such

as Degussa and United Coatings participate in more than one segment while companies such

as Henry Company, National Coatings Corporation, Sto Corporation, 3M and ERSystems

are leaders in their respective segments.

The key manufacturers in the wall coatings segment are Sherwin Williams, Degussa, and Sto

Corporation. The major participants in the floor coatings market are Neogard, 3M, and

Degussa and the same for elastomeric roof coatings market are Henry Company, United

Coatings, and National Coatings Corporation.

The elastomeric coatings market has many companies which operate only in specific regions

of United States. These companies manufacture products which are customized to the local

area. There are many small companies which operate in niche applications with just a few

products. This gives an opportunity for mergers and acquisitions to take place so that the

companies can pool in their resources, manufacture better products, and extend beyond their

traditional boundaries. Since a lot of construction companies also participate in this market,

there exists ample opportunity for a coatings manufacturer to merge with a construction

company so that the company together can manufacture complete systems for any particular

application.

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M a r k e t E n g i n e e r i n g S t r a t e g i e s

Introduction

W h a t i s a M a r k e t E n g i n e e r i n g S t r a t e g y ?

The key advantages of Market Engineering strategy development over theoretical, university,

or expert-developed strategies are that:

■ It is based on measurements, therefore, can be easily communicated within the company.

■ It provides a measurement system in which the effectiveness of the chosen strategy can be

evaluated.

■ The strategy drives action that provides return on investment from the market research

process.

S t r a t e g i c R e c o m m e n d a t i o n s

Researchers at Frost & Sullivan have developed strategic recommendations based on their

analysis of this market. The strategic recommendations are designed to address the challenges

that exist throughout the U.S. elastomeric coatings industry.

Strategic Recommendations

The following strategic recommendations are made to address each of the industry

challenges:

M e e t i n g E n v i r o n m e n t a l R e g u l a t i o n s

Since the government is moving towards a zero VOC policy, coating manufacturers should

invest and work toward creating elastomeric coatings that are waterborne and contain the

minimum VOCs. Companies should invest in their R&D so that they not only anticipate and

create coatings in advance of the new regulations, but also to come up with newer and better

products that will give them an edge in this highly competitive market.

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I n c r e a s e d R a w M a t e r i a l a n d F u e l P r i c e s

The only way to counter this challenge is to use one’s bargaining power, eliminate overhead

costs, operate at maximum efficiency and find the best possible way to distribute the

products and thereby increase sales. Mergers and acquisitions could be considered to pool in

resources, reduce overheads, and to capture newer markets. Backward integration of coating

companies with resin manufacturers could also help. This would eliminate one step in the

product chain and hence would result in higher profits.

C r e a t i n g B r i g h t e r a n d D a r k e r C o a t i n g s

Elastomeric coating manufacturers should invest in R&D so as to synthesize UV stable

pigments, which do not degrade under continuous exposure to sunlight. Since other ordinary

coatings are available in several shades and colors, creating elastomeric coatings in many

colors need to be addressed.

F r o s t & S u l l i v a n A w a r d s

Market Leadership Award

The Frost & Sullivan Market Leadership Award is presented to the company that has

exhibited market share leadership through the implementation of market strategy. The

recipient has displayed excellence in all areas of the market leadership process, including the

identification of market challenges, drivers and restraints, as well as strategy development

and methods of addressing these market dynamics. Furthermore, the Award recipient has

continually demonstrated solutions for monitoring market changes and for implementing

superior market strategies. By utilizing these strategies for success, the company has

established itself as the market share leader in its respective industry.

R e s e a r c h M e t h o d o l o g y

To choose the recipient of this Award, the analysts track competitor revenue and market

share within the industry. This is achieved through interviews with all market participants

and extensive secondary research of proprietary data sources. Finally, the competitors are

compared and ranked for relative position. Frost & Sullivan then presents the Award to the

company that received the number one industry rank.

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M e a s u r e m e n t C r i t e r i a

In addition to the methodology described above, there are specific criteria used to ascertain

final competitor ranking in this industry. The recipient has excelled by substantially

increasing one or more of the following criteria:

■ Market share

■ Revenue growth rates

■ Profitability

■ Market and technology innovation

A w a r d R e c i p i e n t : T h e S h e r w i n - W i l l i a m s C o m p a n y

The Frost & Sullivan Award for Market Leadership is presented to The Sherwin-Williams

Company. The company is the largest supplier of elastomeric wall coatings in the United

States. The company’s ability to better meet customer requirements and its ability to better

extend support to the contractors by educating them on new products and technologies are

factors that clearly differentiate The Sherwin-Williams Company from the other companies

participating in this market. Chart 3.4 clearly shows the strengths of The Sherwin-Williams

Company as a market leader.

C h a r t 3 . 4

Elastomeric Coatings Market: Strengths of Sherwin-Williams as a Market Leader (U.S.),

2004

Note: The Sherwin-Williams Company is the recipient of 2005 Frost & Sullivan Market Leadership Award.

Source: Frost & Sullivan

Strategic Acquisition

The Sherwin- WilliamsCompany

Strong Distribution

Network

More than 2,800 company

owned stores

More than 1,200 Sales

Representatives

Ability to Better Support

Contractors

Strong R&D Focus

Ability to Address of Market Drivers, Restraints and

Industry Challenges

Product Innovation

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The Sherwin Williams Company was founded in the year 1866 and since then it is known for

the high quality paints and coatings it supplies.

The company manufactures a wide variety of coatings including aerospace coatings and

automotive finishings. Within the elastomeric coatings product line, the company offers

acrylic coatings under the brand names of SherLastic, ConFlex XL and EnviroLastic. Sherwin

Williams has a network of over 2,800 company-owned stores and over 1,200 sales

representatives, which help the company to successfully distribute its products throughout

the United States.

S t r o n g R e s e a r c h a n d D e v e l o p m e n t F o c u s

The Sherwin-Williams Company is committed to supplying high-quality products and

investing heavily in research and development (R&D). The company has identified that high

R&D investment is the best solution to flourish in this highly competitive market. This

would enable the company to manufacturer newer and better products that are in accordance

to the Volatile Organic Compound (VOC) regulations prevalent in the intended region of

sale, thereby better meeting customer expectations.

Loxon XP is one such result of the company’s R&D. This coating can be directly applied

over new concrete that is less than 28 days old. This coating can withstand the high

alkalinity of new concrete and thus eliminates the need for a primer. Hence, this product

helps the contractor improve his productivity by cutting down one step in the coating

application process.

C l o s e C o n t a c t w i t h K e y U s e r s

The Sherwin-Williams Company maintains close working relations with contractors. It takes

initiatives to educate contractors and specifiers and on new technologies and application

methods. This end-user link provides a twofold benefit to the company. Firstly, contractors

tend to favor The Sherwin Williams Company’s products for their projects and secondly, it

enables the company to better understand the requirements and concerns of their end users,

thus enabling them to tailor their products accordingly. Therefore there is a mutual benefit

that arises from this relationship.

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E x p a n s i o n P l a n s

The Sherwin-Williams Company has plans to introduce complete concrete restoration

systems, which will help it to serve the building construction industry better. The company

believes that by supplying concrete systems in addition to their coatings, it could better serve

the renovation market where many times customers prefer using elastomeric coatings on

completion of the wall restoration. This would also help customers to buy all their products

from a single company as against buying different products from different manufacturers.

The company would also consider an entry in the roof coatings market, as this market is

experiencing high growth.

S t r a t e g i c A c q u i s i t i o n

The Sherwin-Williams Company acquired Duron Inc. in September 2004. This strategic

acquisition enables The Sherwin-Williams Company to serve coating contractors and the

Do-It-Yourselfers better, especially in the eastern parts of the United States where Duron Inc.

had a strong presence. Duron Inc. manufactures acrylic elastomeric wall coatings under the

brand name Maxflex. This acquisition gives the company an additional manufacturing

capability and helps it reach its customers through an additional 230 stores.

In conclusion, Sherwin Williams continues to build on its core capabilities, which include

strong technical capabilities and excellent customer focus. The company is constantly

analyzing the elastomeric coatings market and is evaluating newer business models to

improve profitability. The company’s brand name, along with the support of contractors,

makes it the coating manufacturer of choice. Hence, The Sherwin-Williams Company is the

deserving recipient of the Frost & Sullivan Market Leadership Award in the year 2005 for the

U.S. Elastomeric Coatings Market.

Growth Strategy Leadership Award

The Frost & Sullivan Award for Growth Strategy Leadership is given each year to the

company that has demonstrated an exceptional growth strategy within their industry.

R e s e a r c h M e t h o d o l o g y :

A recipient is chosen to receive the Frost & Sullivan Award for Growth Strategy Leadership

based on specific criteria. Through primary and secondary research methods, all companies’

market revenues are tracked and those exhibiting significant growth are noted for their

strategy implementation. Revenues are then compared year to year to monitor growth

patterns. When a company continues to show high growth rates, it is a candidate for the

Frost & Sullivan Award Growth Strategy Leadership.

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M e a s u r e m e n t C r i t e r i a :

This Award is given to the company that has bolstered their position in the market during the

base year and whose strategy will have a lasting impact on the market. The Award criteria is

based on the following:

■ Ability to grow in a saturated or maturing market

■ Implementing a unique sales strategy

■ Technological innovation and leadership

■ Discovering new venues for an established product

■ Effective Internet strategy

■ Strategic mergers, acquisitions, or joint ventures to penetrate new markets

■ Reorganization structured around growth strategy

A w a r d R e c i p i e n t : N e o g a r d

The 2005 Frost & Sullivan Growth Strategy Leadership Award is conferred upon Neogard, a

division of Jones-Blair Company. Neogard has displayed exceptional competence by adopting

growth strategies, which has led the company to grow by 30 percent in 2004. Also, Neogard

has consistently churned higher profits in the last few years that are much above the industry

average. This has led the company to become one of the leading suppliers of elastomeric

coatings, especially in the area of elastomeric floor coatings

Neogard participates in the elastomeric roof and wall coatings market, besides the

elastomeric floor coatings market. The company possesses 75 years of experience in the

coatings segment and has earned reputation as a supplier of high quality coatings. Neogard

manufactures an extensive product line under the brand names Auto-Gard, Peda-Gard, Pool-

Gard, Perma-Gard III, Neoflex and Elasta-Gard. The company supplies to new construction

as well as to retrofit projects throughout the country through its extensive distribution

network.

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Chart 3.5 shows the key strategies adopted by Neogard that has helped the company to grow

at the current rate.

C h a r t 3 . 5

Elastomeric Coatings Market: Key Strategies adopted by Neogard (U.S.), 2004

Note: Neogard is the recipient of 2005 Frost & Sullivan Growth Strategy Leadership Award.

Source: Frost & Sullivan

C u s t o m i z e d P r o d u c t L i n e

Neogard manufactures quality coatings that are engineered differently to meet different

requirements within the same end use. For instance, within the elastomeric floor coatings

segment, Neogard manufactures three products, which can withstand pedestrian traffic.

Standard Peda-Gard is the one, which is recommended for most applications. Fast Cure Peda-

Gard Elastomeric coating helps in minimizing shutdown time and enables fast turnaround

times while Decorative Peda-Gard coating is used where aesthetics is a concern. The

company also manufactures roofing systems, which includes elastomeric-coated Spray

Polyurethane Foam (SPF) roofs and other flooring systems, which helps the company to serve

its customers better. These products clearly demonstrate the company’s technological

leadership.

Neogard

Experiencing High Growth

Strategic Partnership

Technological Leadership

Creating Brand Value

Distribution Channel Mix

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C r e a t i n g B r a n d V a l u e

Neogard’s products have been used in many prestigious and demanding projects. For

instance, the parking garage of White Flint Mall in North Bethesda, Maryland and the

Bellagio Resort in Las Vegas, California have been two major challenging projects

undertaken by Neogard. Auto-Gard, the company’s vehicular traffic bearing waterproof

coating, was chosen to cover the area of 600,000 sq. feet of concrete parking structure at

White Flint Mall. Auto-Gard’s customer friendly features include its ability to withstand

heavy vehicular traffic, resist natural forces such as rain and wind and prevent staining due

to chemicals such as brake fluids and battery acids. For the Bellagio resort project, Auto-

Gard, Peda-Gard, and Neoflex coating systems were used to provide protection to the

parking garages, balconies, and domes of the resort against the high-speed abrasive winds in

Mojave dessert.

Having accomplished many such demanding projects, and also having highlighted these

projects as case studies on its web site and other publications, Neogard has successfully

created a brand-value. This helps to foster business relationships with architects/contractors

who work on governmental and other important projects such as religious buildings,

shopping malls, hotels, resorts and so on. This gives rise to many new business opportunities

besides repeat business.

S t r a t e g i c P a r t n e r s h i p

Neogard has partnered with BASF Corporation and many fine contractors such as Wattle &

Daub Contractors, Inc., Dallas Urethanes, Inc. and so on to provide the Alpha roofing

system. The Alpha roof offers a quantifiable and a verifiable roofing solution for building

owners who want to minimize the risks of a roofing job. It combines polyurethane

elastomeric coatings manufactured by Neogard and SPF, manufactured by BASF

Corporation. Also, the most skillful contractors are hired to install the roofing system. Alpha

contractors have a performance history of installing roofs of which at least 98 percent are

leak proof. The manufacturers issue a 15-year joint warranty that covers the performance of

the system without the exclusion of damage caused by severe hail, 90 mph wind forces,

ponding water and so on.

This partnership has aided Neogard to reinforce their position as a leading supplier of

polyurethane elastomeric roof coatings.

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E f f i c i e n t D i s t r i b u t i o n C h a n n e l s

Neogard has correctly identified the distribution channel required to sell successfully into a

particular segment. The company mostly relies on direct sale to approved contractors for the

floor and roof coatings segment. This is because the company has realized that the

application of the coating is as critical as the quality of the product. Neogard has a good

network of approved contractors with several years of experience. Supplying through

independent distributors gives the company the ability to serve customers located in different

geographical regions. Neogard has a regional manager for different regions of United States,

under whom there are several area representatives to coordinate the sales in the particular

region.

In conclusion, Neogard is a company committed to excellence. The company’s manufacturing

capabilities and a dedicated R&D department is responsible for many of their products like

Elasta-Gard Roof Coatings to be Underwriters Laboratories’ and Factory Mutual Approved.

Also the company’s enviable job and performance history provides it a competitive edge.

Neogard is growing significantly in a period where many of its competitors participating in

the floor coatings market are loosing market share. Hence, Neogard is a deserving recipient

of the 2005 Frost & Sullivan Award for Growth Strategy Leadership in the U.S. Elastomeric

Coatings Market.

Product Line Strategy Leadership Award

The Frost & Sullivan Market Award for Product Line Strategy Leadership is presented each

year to a company that has demonstrated the most insight into customer needs and product

demands. The recipient company should have optimized its product line by leveraging

products with the various price, performance, and feature points required by the market.

R e s e a r c h M e t h o d o l o g y

To select the Award recipient, the analyst team tracks all end-user requirements and market

dynamics within the industry. This process includes interviews with suppliers, end-users, and

industry experts. The product lines are compared with customer base demands, and the

top-ranking supplier is then presented the Award.

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M e a s u r e m e n t C r i t e r i a

In addition to the methodology described above, there are additional criteria used to

determine the final competitor rankings in this industry. The recipient of this Award should

have excelled in one or more of the following criteria:

■ Introduction of new products, strategically positioned to balance the product line

■ Ability to accommodate different market segments, or different markets within an

industry by repurposing technology

■ Enhancement of product offerings through optimization of packaging, service, delivery,

financing, and/or other value-added services

■ Strategic technology or marketing acquisitions or alliances

A w a r d R e c i p i e n t : D e g u s s a C o n s t r u c t i o n S y s t e m s

A m e r i c a s

The 2005 Frost & Sullivan Award for Product Line Strategy Leadership is presented to

Degussa Construction Systems Americas for its outstanding contribution to the U.S.

Elastomeric Coatings Market. The company has an exceptional product line to suit different

end-user requirements. For instance- the product IC2480, which is a polyurea based

elastomeric coating, enables a surface to be serviced within one hour and Silflex coating,

which is a silicone modified acrylic coating that can elongate by 700 percent. These products

are a result of the company’s research prowess and technical expertise, which is responsible

for making it one of the leading manufacturers participating in the U.S. elastomeric coatings

market.

Degussa is one of the world’s leading specialty chemical companies with offices/centers at

more than 300 locations and nearly 45,000 employees worldwide. Degussa Construction

Systems Americas, a division of Degussa Construction Chemicals, operates Degussa Building

Systems, and Degussa Wall Systems, Inc. Degussa Building Systems manufactures elastomeric

coatings under the Sonneborn and Thoro brands for the walls and floor coatings market

while Degussa Wall Systems, Inc. manufactures elastomeric wall coatings under the

Senerlastic brand name.

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Figure 3-8 outlines the elastomeric coatings the company manufactures.

Source: Frost & Sullivan

F i g u r e 3 - 8

Elastomeric Coatings Market: Elastomeric Coatings Manufactured by Degussa Construction

Systems Americas

Product Name Base Resin Substrate of Application Characteristics

Colorflex® Acrylic Stucco, Brick, Concrete, Concrete

Block Masonry (CMU), Exterior

Insulation and Finish Systems (EIFS)

One finish coat application on most

installations, available in 463 colors

Flexcoat® Acrylic Stucco, Brick, Concrete, CMU, EIFS Suitable for high humidity climates

Flextex® Acrylic Stucco, Brick, Concrete, CMU, EIFS Suitable for cool climates

IC2480 Polyurea Concrete, Metal Serviceable within one hour

Silflex® Silicone-

modified acrylic

Stucco, Brick, Concrete, CMU, EIFS Superior ability to bridge cracks with

total elongation of 700 percent

IC-5000 Polyurea Concrete, Steel Withstands vehicular traffic within

two hours

Thorogard™ Acrylic Previously coated surfaces, aged

stucco concrete and Portland cement

plaster, EIFS

Designed for recoat applications

Thorolastic® Acrylic Stucco, Concrete, Portland cement

plaster, Brick, CMU, EIFS

Bridges crack movement up to 27mils

Thorolastic

A+

Acrylic Stucco, Concrete, Portland cement

plaster, Brick, CMU, EIFS

Engineered for use in humid

conditions

Senerlastic Acrylic Concrete, Stucco, Masonry, EIFS Low temperature flexibility

Senerlastic

Plus

Silicone-

enhanced

Acrylic

Concrete, Stucco, Masonry, EIFS Excellent weather ability, protects

against wind-driven rain

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A b i l i t y t o A d d r e s s C u s t o m e r R e q u i r e m e n t s

Degussa Construction Systems Americas has identified that fast cure products are in great

demand, as polyurethane/ epoxy coatings require a turnaround time of 24-48 hours. To

address this need, the company manufactures two products, which are IC2480 and IC-5000.

Both these products are 100 percent solids, zero Volatile Organic Compounds (VOCs),

aromatic polyurea based elastomeric coatings, which necessitate a shutdown time of less than

two hours. The company also manufactures Flexcoat and Flextex acrylic coatings. These

coatings are both resistant to wind-driven rain and cover with one coat application on most

substrates. These coatings are also available in 470 colors. Degussa Construction Systems

Americas keeps the cost-conscious consumer in mind while manufacturing acrylic elastomeric

coatings, which are comparatively lower priced coatings.

M a j o r P r e s e n c e i n Tw o o f t h e T h r e e M a r k e t S e g m e n t s

Degussa Construction Systems Americas has a strong presence in both the elastomeric floor

coatings market as well as the elastomeric wall coatings market. The company ranks number

two in terms of sales in the elastomeric wall coatings segment and number three in the

elastomeric floor coatings segment. The company’s strong product line and its ability to

manufacture unique products are factors, which differentiates Degussa Construction Systems

Americas from the other companies participating in this market. For instance, Senerlastic

elastomeric wall coating is a unique product that shows remarkable flexibility, even at very

low temperatures and IC2480 is a sprayable polyurea-based elastomeric floor coating,

specifically engineered to withstand thermal movements besides being serviceable in one hour

and containing Zero VOCs.

R e s e a r c h a n d D e v e l o p m e n t F o c u s

Degussa Construction Systems Americas invests highly in research and development

activities, which enables new product development. The strong link with end users provides

it with information regarding the requirements of contractors and architects. Also, the

company’s technical capabilities ensure that its end users receive support at all times.

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S t r o n g B r a n d I m a g e

Degussa is a global company known for its quality products. The company’s brand image as

a technical innovator helps the company gain favor from architects and engineers when

exclusive and highly important projects are being considered. Also, the company’s extensive

distribution network, combined with its strong network of contractors, helps the company

increase its brand-value, enabling better business opportunities.

C o n c l u d i n g C o m m e n t s

In conclusion, Degussa Construction Systems Americas has well identified end user needs

such as low price, fast cure products, enhanced product functionality and so on, and has

products to meet these requirements. The company’s enormous research and development

capabilities make them one of the leading participants in the elastomeric wall and floor

coatings market. The company continues to concentrate on its core capabilities that enable it

to manufacture quality coatings, which adhere to the VOC regulations. Degussa

Construction Systems Americas is a deserving candidate of the 2005 Frost & Sullivan

Product Line Strategy Leadership Award for its outstanding contribution to the Elastomeric

Coatings Market.

Product Quality Leadership Award

The Frost & Sullivan Award for Product Quality Leadership is bestowed upon the company

that has demonstrated superior quality control—over their existing competitors—in product

manufacturing. Quality control is an essential element of satisfying customers, increasing

repeat buying behavior, and assuring long-term market survival.

R e s e a r c h M e t h o d o l o g y

To choose the Award recipient, the analyst team tracks all products and research and

development projects within the industry. This is accomplished through interviews with all

market participants, end-users, distributors, and extensive secondary and technology

research.

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M e a s u r e m e n t C r i t e r i a

In addition to the methodology described above, there are specific criteria used to determine

final competitor rankings in this industry. The Award recipient has excelled based on one or

more of the following criteria:

■ Lowest defect percentage per batch of units produced by suppliers in current base year

■ Product ability to fulfill customer needs, in terms of functionality and user friendliness

■ Number of breakdowns or services required per year

■ Degree of connectivity

■ Level of product support end-users receive from their vendors or suppliers

A w a r d R e c i p i e n t : U n i t e d C o a t i n g s

The 2005 Frost & Sullivan Product Quality Leadership Award for the U.S. Elastomeric

Coatings Market is presented to United Coatings. The award recognizes the company’s

pursuit for excellence and its ability to consistently manufacture high quality products, for

instance—Diathon and Elastuff 101/102. The company's research efforts, its commitment to

the environment and the technical support it extends to its customers are factors that clearly

differentiate United Coatings form the rest of the companies participating in this market.

United Coatings was founded in 1919 as a paint and hardware store. Today, it is a trusted

source of high-quality and high-performance coatings for contractors, architects, and

engineers worldwide. The company serves the architectural, roofing, industrial, and the

Do-It-Yourselfers (DIYs) segment. The company has a wide range of products to meet

different end-user requirements.

United Coatings manufactures acrylic elastomeric coatings such as Diathon, Acron 60 and

Acrycryl to primarily serve the roofing segment. The company serves both the renovation and

the new construction market. It also sells to substrate manufacturing companies, which sell

the coatings combined with their substrates as complete roofing systems. The company

retains a presence in the wall coatings market as well. It manufactures products such as

Aquathon and Marathon CWS coating systems. Marathon CWS is a unique acrylic coating

system that incorporates ceramic microspheres to the acrylic topcoat for enhanced

reflectivity. Chart 3.6 clearly shows United Coatings' strengths as a quality manufacturer of

elastomeric coatings.

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C h a r t 3 . 6

Elastomeric Coatings Market: Strengths of United Coatings (U.S.), 2004

Note: United Coatings is the recipient of 2005 Frost & Sullivan Product Quality Leadership Award.

Source: Frost & Sullivan

S u p e r i o r R e s e a r c h a n d D e v e l o p m e n t C a p a p b i l i t i e s

United Coatings possesses tremendous research acumen with leading industry experts and

chemists heading the R&D division of the company. The company has state-of-the-art

production facilities and quality control laboratories, which are among the finest in the

world. It also has certified quality control (QC) professionals and a highly experienced

technical support team to answer querries about their products.

The in-depth, and comprehensive research approach adopted by the R& D division of the

company ensures that every product adheres to the highest quality standards.

M a n u f a c t u r e o f L o w V o l a t i l e O r g a n i c C o m p o u n d ( V O C )

P r o d u c t s

United Coatings only manufactures 100 percent polyurethane products or water based

acrylic coatings which are both low on VOC content and hence very safe. This demonstrates

the company’s ability to manufacture quality products which are compliant with government

regulations. This ability has won the company many laurels including the environmental

protection agency’s Evergreen Award, which recognizes the company’s continued

environmental protection efforts. Also, United Coatings is the only company to win this

award twice.

Manufacture of Low VOC products

Strategic Partnership

Superior Research &

Development Capabilities

United Coatings

Contacts withEnd Users

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C o n t a c t s w i t h E n d U s e r s

United Coating believes that it is not only essential to manufacture and apply quality

coatings, but to also improve its formulation and functionalilty. As a result, the company

interviews its customers, on a regular basis by sending across questionnaires and thus

assessing the performance of its coatings and customer requirements. This aids in the

company obtaining a better understanding and insight as to how it can serve its customers

better.

United Coating’s technical support team, which has over 90 years of combined experience, is

ever receptive to questions about its products. Also, the company’s field officers,

warehousing representatives, and distributors ensure that assistance is available when

required.

S t r a t e g i c P a r t n e r s h i p

United Coatings has entered into a strategic partnership with Rohm and Haas Company to

provide the Duraplus Roofing System. The Duraplus roofing system comprises of a Spray

Polyurethane Foam substrate, topcoated with Diathon DP, a 100 percent acrylic elastomeric

coating supplied by United Coatings. The roofing system is available with a ten year

warranty from the Rohm and Haas Company, the world’s largest specialty chemicals

company. This partnership is a clear indication of the high quality coatings that United

Coatings manufactures.

C o n c l u s i o n

United Coatings is committed to the development and manufacture of high-quality products

that not only serves its purpose but also exceeds customer expectations. Its research focus

and excellent technical support ensure complete support throughout the life cycle of a

product. The company also ascertains that its products as well as the development process is

environment friendly. Also, its partnership with Rohm and Haas Company is a clear

testimony for the high performance of its products. Hence, these cumulative factors make

United Coatings a deserving candidate for the 2005 Frost & Sullivan Product Quality

Leadership Award in the U.S.Elastomeric Coatings Market.

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4U.S. Elastomeric Wall Coatings Market

I n t r o d u c t i o n

Market Overview

Elastomeric wall coatings represents the largest segment of all elastomeric coatings market in

the United States. They account for nearly 49 percent of the total market. These coatings are

generally acrylic or silicone-based and they mostly go over concrete or masonry surfaces in

commercial and industrial building walls. They also go over hard coat stucco which primarily

serve as substrates of exterior walls in residential homes. They are used on both new and

renovation projects. Elastomeric coatings are generally modified to go over different surfaces

depending upon the material and adhesion characteristics. The same coatings are also used

over different surfaces, but using an appropriate primer.

The performance requirements of wall coatings are that they should:

■ Maintain their aesthetic features, that is, color, finish and gloss

■ Be resistant to dirt and other particles

■ Be durable and long lasting

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Elastomeric wall coatings are very well suited for exterior walls. Besides meeting the above

aesthetic requirements, they also provide a uniform coating without cracking or peeling when

exposed to climatic variations. Cracks smaller than 1/16th of an inch need not be filled and

elastomeric coatings can directly be applied. Cracks larger than 1/16th of an inch need to be

caulked either with an acrylic or a silicone caulk as appropriate before applying the coating.

Elastomeric coating allows the substrate to "breathe", thereby permitting the moisture to

escape. These coatings are also resistant to mold and mildew formation. Elastomeric wall

coatings generally come in both smooth and textured finishes. The smooth coating can be

spray or roller applied while the textured coating will generally require a trowel.

Exterior walls are generally made up of masonry, concrete or stucco. Since these surfaces are

porous, and prone to hairline cracks, applying an elastomeric coating would be a good

choice. These elastomeric coatings when applied, would expand and contract along with the

wall surface thereby, preventing water seepage. While all exterior building materials are

susceptible to this expansion and contraction due to climatic changes, concrete and stucco

are particularly vulnerable as they are made up dissimilar materials. Once the water migrates

out during curing, the hard material left behind shrinks and cracks, leaving the surface

exposed to moisture. Thus, elastomeric coatings are ideal for this kind of application.

As with traditional paints, the ability of elastomeric coatings to perform to its optimum

depends on proper surface preparation. Most exterior coatings i.e. elastomeric and normal

paints, fail due to the presence of contaminants on weathered surfaces. Dirt, dust, grease, oil,

rust, and chalk should be removed through pressurized water cleaning. Efflorescence may

require the use of chemical cleaners and pressure washing. If the surface is new, an

appropriate sealer must be used to seal out the alkalinity. Lastly, in renovation projects, old

paint films that are not bonded properly to the substrate must be removed otherwise the

curing stress of a newly applied elastomeric coating can cause the old coatings to come off.

This will result in elastomeric coatings not fulfilling its intended purpose.

Market Engineering Measurements

Chart 4.1 represents the Market Engineering measurements for the U.S. elastomeric wall

coatings markets in 2004.

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C h a r t 4 . 1

Elastomeric Wall Coatings Market: Market Engineering Measurements (U.S.), 2004

Market Engineering Drives Market

Strategy and Planning

MarketEngineer

ChallengeIdentification

MarketResearch

MarketEngineering

System

Implementation

MarketPlanning

MarketStrategy

Note: All figures are rounded. Source: Frost & Sullivan

M a r k e t S i z e

The elastomeric wall coatings market in the United States in 2004 was worth $300 million.

This is expected to grow at a compound annual growth rate (CAGR) of 7.6 percent to reach

$500.4 million by the year 2011.

M a r k e t A g e

The elastomeric wall coatings market is at a growth stage and has been growing at the rate of

5.5 to 6 percent for the last three years. The growth in this market is dictated by the high

performance requirements of end users and the growth in the usage of tilt-up concrete for

building construction.

Measurement Name Measurement Trend

Market age Growth ---

Revenues $300 million Increasing

Potential revenues (maximum future market size) $500.4 Increasing

Base year market growth rate 6.5% Increasing

Forecast period market growth rate 7.6% Decreasing

Average price $20 per gallon Increasing

Price range $12 to $30 per gallon Stable

Price sensitivity High Increasing

Competitors (active market competitors in base year) 100 Increasing

Degree of competition High Increasing

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C o m p e t i t i o n

The elastomeric wall coatings market in the United States is fragmented and is at a mature

stage with a few national suppliers and a number of regional suppliers. There are about a

100 suppliers. The top three manufacturers of elastomeric wall coatings are The Sherwin-

Williams Company, Degussa, and ICI Paints. Generally companies concentrate on

elastomeric wall coatings as applied to either new or renovation building construction

projects.

D i s t r i b u t i o n S t r u c t u r e

Many companies in the elastomeric wall coatings market sell their products through

distributors. There are also a few products that are available in Home depot, Lowe’s and

similar other places which are targeted at the Do-Iy-Yourself market.

Figure 4-1 shows the distribution channel adopted by the top companies participating in this

market.

Source: Frost & Sullivan

F i g u r e 4 - 1

Elastomeric Wall Coatings Market: Distribution Channel Followed by Key Suppliers (U.S.),

2004

Direct Sale to Sale through

Company Contractors Distributors Mix of Both

Benjamin Moore & Co. ■

Degussa Construction Systems Americas ■

Dryvit Systems, Inc. ■

ICI Paints ■

M.A.B. Paints ■

Neogard, a division of Jones- Blair Company ■

Sika Corporation ■

Sto Corporation ■

Textured Coatings of America, Inc. ■

The Sherwin- Williams Company ■

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F o r e c a s t s a n d T r e n d s

Market Drivers

Figure 4-2 shows the drivers, ranked in order of impact, for the U.S. elastomeric wall

coatings market for the period 2005-2011.

Source: Frost & Sullivan

P o p u l a r i t y o f T i l t - u p C o n c r e t e i n B u i l d i n g

C o n s t r u c t i o n F u e l s D e m a n d f o r E l a s t o m e r i c C o a t i n g s

Tilt- up concrete is increasingly being used in building construction. This construction is

gaining market share because of its speed of construction, low cost, and the architectural

treatments that they can be given. As per Tilt-up Concrete Association, the usage of tilt-up

concrete in 2004 has soared by 23 percent as compared to the previous year. With concrete/

masonry structures prone to cracking and elastomeric coatings known for its crack-bridging

and waterproofing abilities, the usage of elastomeric coatings is on the increase. This driver

is expected to highly impact the market in the near future.

P r o d u c t F u n c t i o n a l i t y I n c r e a s e s S a l e s

Elastomeric coatings are a unique product. Besides crack-bridging and waterproofing, they

are also weatherproof and dirt and mildew resistant. These coatings, especially the acrylic

and silicone coatings, are mostly used for wall coating applications and are easy to apply and

are low on VOC content. Building owners and contractors, particularly in the coastal areas,

use these coatings as they have the ability to protect the substrate against wind-driven rain

and the moisture in the air. However, due to their high costs, this driver is expected to have

only a medium impact throughout the forecast period.

F i g u r e 4 - 2

Elastomeric Wall Coatings Market: Market Drivers Ranked in Order of Impact (U.S.),

2005-2011

Rank Driver 1-2 Years 3-4 Years 5-7 Years

1 Popularity of tilt-up concrete in building

construction fuels demand for elastomeric coatings

Medium/ High High High

2 Product functionality increases sales Medium/ High Medium/ High Medium/ High

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Market Restraints

Figure 4-3 shows the restraints, ranked in order of impact, for the U.S. elastomeric coatings

market for the period 2005-2011.

Source: Frost & Sullivan

I n c r e a s i n g I n t e r e s t R a t e s f o r N e w H o m e S t a r t s C h e c k

G r o w t h

After witnessing historically low interest rates in 2004, lending rates for new housing starts

has begun to increase. But an overall improving economy, combined with an increase in

employment, is responsible for the high interest rates. This will result in fewer houses being

constructed which will check the growth of elastomeric wall coatings as well. This restraint is

expected to have a medium impact in the short term future and a lower impact in long term

as housing starts are expected to pick up.

T e n d e n c y o f A c r y l i c E l a s t o m e r i c C o a t i n g s t o B l i s t e r

I m p e d e s G r o w t h

Acrylic elastomeric wall coatings could sometimes blister if applied on moist masonry/

concrete substrate or if water has seeped through the coating and the coating has low water

vapor permeability. This moisture brings alkalinity along with it, which may blister or

separate the acrylic coating from the surface it is intended to adhere. Sometimes alkalinity, as

high as pH 10-11, is seen at the interfaces which affects the acrylic coating. The impact of

this restraint is low as most licensed contractors apply these coatings after the application of

a suitable primer or apply as per manufacturers instructions.

F i g u r e 4 - 3

Elastomeric Wall Coatings Market: Market Restraints Ranked in Order of Impact (U.S.),

2005-2011

Rank Restraint 1-2 Years 3-4 Years 5-7 Years

1 Increasing interest rates for new home starts check growth Medium Medium/ Low Medium/ Low

2 Tendency of acrylic elastomeric coatings to blister impedes

growth

Low Low Low

3 Lack of darker and brighter shades affect wall coatings

market

Low Low Low

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L a c k o f D a r k e r a n d B r i g h t e r S h a d e s A f f e c t W a l l

C o a t i n g s M a r k e t

Though resin technologies have advanced and a wide range of colors are available today,

darker and brighter colors can still be a problem. Creating these colors would need high

pigment loading which are UV sensitive and but these may decompose when exposed to

sunlight. Also, these colors are susceptible to moisture, which slows down curing time. End

users rarely wants dark or bright colors for their walls and hence this restraint is expected to

have a minor impact on this market for the next few years.

Revenue Forecasts

Figure 4-4 and Chart 4.2 show the revenue forecasts for the U.S. elastomeric wall coatings

market for the period 2001 to 2011.

Note: All figures are rounded; the base year is 2004. Source: Frost & Sullivan

F i g u r e 4 - 4

Elastomeric Wall Coatings Market: Revenue Forecasts (U.S.), 2001-2011

Revenue

Revenues Growth Rate

Year ($ Million) (%)

2001 251.9 ---

2002 265.7 5.5

2003 281.7 6.0

2004 300.0 6.5

2005 320.4 6.8

2006 342.3 6.9

2007 366.5 7.1

2008 393.9 7.5

2009 425.9 8.1

2010 460.5 8.1

2011 500.4 8.7

Compound Annual Growth Rate (2001-2011): 7.6%

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C h a r t 4 . 2

Elastomeric Wall Coatings Market: Revenue Forecasts (U.S.), 2001-2011

Note: All figures are rounded. Source: Frost & Sullivan

In 2004, the revenues from the U.S. elastomeric wall coatings market were $300 million. The

market is forecast to grow to $500.4 million by 2011 at a CAGR of 7.6 percent. The key

driver for this is the increasing use of tilt-up concrete for residential and nonresidential

construction. Acrylic coatings, which constitute 90 percent of the elastomeric wall coatings

market, are the environment friendly and therefore, is also responsible for this high growth.

Market and Product Trends

The following are the market and product trends seen in the elastomeric wall coatings market

M a r k e t T r e n d s

Large Companies are Growing Faster Than Smaller Companies

The U.S. elastomeric wall coatings market has a few large national participants and several

small regional participants who serve the local market. Though the smaller companies

capitalize on local knowledge of what works and what doesn’t, its the large companies that

are seeing high growth in this market. The larger companies are gaining mainly because of

their wide distribution network coupled with the technical support they are able to provide

their contractors/customers. Contractors prefer using reputed brands as they are confident

that it will bring them repeat business. Also, large companies are in touch with their

contractors or end users all the time, and therefore, get a better understanding of their needs.

They invest heavily in R&D and have a broad product line. All these factors make companies

such as Sherwin-Williams, Dow Corning, Degussa and others perform better than their

smaller counterparts in the market.

0

100

200

300

400

500

600

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Rev

enue

s ($

Mill

ion)

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

Gro

wth

Rat

e

Revenues ($ Million) Growth Rate (%)

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Demand for the Application of a Single Thick Coat

Contractors are demanding the formulation of an elastomeric coating which can be applied

in just one coat. Most of the current elastomeric coatings available in the market are to be

applied in two coats, which would ultimately dry down to a 15-25 mils. The application of a

single coat that would dry down to about 10 mils but will still retain all the properties of an

elastomeric coating.Contractors favor this as it would save them a lot in terms of time and

cost.

Product Trends

Every product in the elastomeric coatings market is moving toward lower VOCs so as to

meet government regulations in different regions of the United States. Hence companies are

moving toward creating more waterborne products. Besides these, there have been some

interesting product launches which suggest that a new product trend could emerge. One of

them is Loxon XP, launched by Sherwin-Williams in 2004 and it aims to cut down a step

during the application of an elastomeric coating. Loxon XP is an acrylic elastomeric coating

which can directly go over a concrete/masonry surface, thus eliminating the need for a

primer. This probably heralds a new trend in the elastomeric wall coatings market where new

products are created to counter the alkalinity of the concrete/masonry substrate directly

reducing the number of steps in the process and helping to increase the contractors’

productivity.

Pricing Trends

The following are the prices and the pricing trends in elastomeric wall coatings market.

P r i c e s o f E l a s t o m e r i c W a l l C o a t i n g s

The average price for a gallon of elastomeric wall coating in the United States is $20. Acrylic

wall coatings are cheaper and are priced between $12 to $30, while the silicone elastomeric

coatings are priced between $25 and $30.

P r i c i n g T r e n d s

The prices of elastomeric wall coatings have been on the rise as a result of uncertainty and

shortage in crude oil supplies and elastomeric resins. The monomer, butyl acrylate, which is

used in the manufacture of the acrylic elastomeric coatings, has been in shortage and so resin

manufacturers are faced with the dilemma of finding newer ways to meet this demand.

Hence, resin manufacturers have increased their prices which in turn has lead to elastomeric

wall coatings manufacturers to increase their prices by 5-10 percent in 2004. Though the

prices are unlikely to increase at the current rate in future, they are completely governed by

the crude oil supplies.

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C o m p e t i t i v e A n a l y s i s

Competitive Structure

Figure 4-5 presents the competitive structure of the total U.S. elastomeric wall coatings

market for 2004.

Source: Frost & Sullivan

In 2004, there were about a 100 elastomeric wall coatings suppliers. The top suppliers were

The Sherwin-Williams Company, Degussa, and ICI Paints. These three companies accounted

for more than 15 percent of the elastomeric wall coatings market. Besides these companies,

there are a few of other large companies such as Sto Corporation and Dow Corning

Corporation who have a major presence in this market. Several medium and small sized

regional suppliers also participate in this market who cater only to a particular region based

on their local knowledge.

The companies participating in this market could be classified based on their type as paint,

chemical, and specialty companies. A brief description of each type of suppliers in this

market is provided below.

F i g u r e 4 - 5

Elastomeric Wall Coatings Market: Competitive Structure (U.S.), 2004

Number of Companies in the Market Around 100

Types of Competitors Paint companies

Chemical companies

Specialty companies

Distribution Structure Direct sale to contractors

Sale through distributors

A mixture of both

Key End Users Nonresidential buildings, industrial buildings, residential homes and

buildings

Competitive Factors Price, quality of the product, reputation of the company, warranty,

environmental compliance, ease of application

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P a i n t C o m p a n i e s

Paint companies such as Sherwin-Williams, ICI Paints, Benjamin Moore, and M.A.B. Paints

constitute a big segment in this market. Also, there are a lot of traditional paint companies

trying to cash in the elastomeric coatings market. These companies are typically small and

have a few products in their product line. With elastomeric coatings gaining importance,

especially in coastal areas, many companies are buying these products from other companies,

rebranding it, and selling it as theirs. By this, the company can have a wider product offering

and can also meet the requirements of the contractors. The company also might want to try

selling these products before deciding to set up a manufacturing facility as being a paint

manufacturer, its easy to incorporate these elastomeric coatings into their product offering.

Hence, a large number of traditional paint manufacturers are playing an active role in this

market.

C h e m i c a l C o m p a n i e s

The other type of companies participating in this market are the chemical companies such as

Degussa, Dow Corning Corporation, and Sika Corporation that have an arm in the

elastomeric coatings market. Besides elastomeric wall coatings, these companies manufacture

adhesives, sealants, membranes, reinforcements, and the like. Hence, these companies are

characterized by their ability to cater better to a building construction.

S p e c i a l t y C o m p a n i e s

The specialty companies include companies such as Neogard, specializing in elastomeric

waterproofing products and companies such as Edison Coatings Inc. and IPA Systems Inc, in

elastomeric wall coatings besides a few other restoration products, sealants, and adhesives.

These companies are characterized by the fewer number of markets they participate in. Most

of these companies are small because of the nature of their business as they participate in

niche markets.

C o m p e t i t i v e F a c t o r s

The following are a few competitive factors based on which companies compete amongst

each other in the elastomeric wall coatings market:

Brand Image

Companies participating in this market make use of their already existing brand name and

image to penetrate this market. End users rely on the brand name for quality products,which

also provides them with some proof of work in the local region. This serves as a testimony to

the customer for purchasing a particular brand.

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Price

The elastomeric wall coatings market is very closely fought on price. Large commercial

projects require many hundreds of gallons of the coating and therefore, favor companies with

a good brand name selling at a competitive price. Hence companies are always on the

lookout to keep their prices as low as possible to lure these projects.

Technical Assistance

Technical assistance is also an important aspect to the contractor, especially the smaller ones.

Manufacturers who give good information about the product, their method of application,

etc. are always favored. Good technical assistance helps a contractor grow and gain

reputation making it an important factor while choosing a manufacturer for the elastomeric

coatings.

Market Participants

The following are a few companies that participate in this market:

T h e S h e r w i n - W i l l i a m s C o m p a n y

Sherwin-Williams is the market leader in the elastomeric wall coatings market. The company

manufactures acrylic elastomeric coatings and markets their products under the brand

names- Loxon XP, SherLastic, Conflex XL, and VIP. The company’s high investment in R&D

coupled with its extensive distribution network and technical support has enabled it to gain

the largest market share.

D e g u s s a C o n s t r u c t i o n S y s t e m s A m e r i c a s

Degussa is another major participant in the elastomeric wall coatings market. The company

participates in this market through its Construction System Americas business unit. The

elastomeric wall coatings are marketed under the brand names—Colorflex, Flexcoat, Silflex,

Thorogard, Thorolastic, Sonneborn®, and Senerlastic. Degussa supplies both acrylic-based

and silicone enhanced or siliconized acrylic coatings for exterior wall applications. The

company's products are sold mostly through independent distributors across the country.

Degussa is one of the leading chemical companies in the world with their extensive product

line and their image as technological innovators helps them market their products

successfully.

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I C I P a i n t s

ICI paints is another important participant in this market. The company sells its Decra-Flex

elastomeric coatings line in three textures that are smooth, coarse, and fine. The company

being a major paints manufacturer worldwide, has a good reputation and an established

distribution channel which enables them to sell their products in large volumes.

D o w C o r n i n g C o r p o r a t i o n

Dow Corning Corporation is a pioneer in the development and manufacture of silicone-based

high performance products. This company plays a very specific and an important role in the

elastomeric wall coatings market. The company manufactures the one component,

100 percent AllGuard elastomeric silicone coating for use over exterior walls. The AllGuard

coating has been used in many prestigious retrofit projects and can also be used in new

construction projects. Besides elastomeric coatings, the company manufactures over

7000 products for use in several industries.

S t o C o r p o r a t i o n

Sto Corporation is another major participant in the elastomeric wall coatings market. The

company manufactures both acrylic and silicone elastomeric wall coatings through their

brand names StoLastic and Sto Silco® Lastic. Besides these coatings, the company also makes

exterior wall claddings, concrete repair products, and air and moisture barrier products. Sto

invented the Exterior Insulation & Finish System (EIFS) and is a global participant.

D r y v i t S y s t e m s , I n c .

Dryvit Systems Inc., a subsidiary of RPM International Inc., is another major supplier of

elastomeric coatings that find applications over stucco, masonry, concrete, CMU, and EIFS

substrates. The company promotes its elastomeric coatings under Whetherlastic brand.

B e n j a m i n M o o r e & C o .

Benjamin Moore sells acrylic elastomeric wall coatings under Moorlastic brand. These

products are sold through independent paint dealers throughout the United States. The

company banks on its technical capabilities and its reputation to sell into this adjoining

market.

I P A S y s t e m s , I n c

IPA is a niche company which is involved in repair and restoration of masonry/concrete

structures, besides manufacturing a few specialty products for new construction. The

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company manufactures IPALastic which is a 100% acrylic elastomeric coating. The company

takes pride in being able to provide quality products and meeting its customer’s needs.

Market Share Analysis

The elastomeric wall coatings market in the United States was very fragmented and

comprised around 100 suppliers in 2004. The market was characterized by a handful of big

suppliers and a number of regional or niche coating manufactures. For the purpose of market

share analysis the competitors in this market are classified in the following three tiers.

T i e r 1 C o m p a n i e s

Companies with market shares in the range of five to ten percent of the total segment revenue

fall under this category. The Sherwin-Williams Company, Degussa, and ICI Paints were

identified as Tier 1 suppliers of elastomeric wall coatings in the United States. Sherwin-

Williams was the leading supplier, followed by Degussa in the second position, and ICI Paints

in the third position.

T i e r 2 C o m p a n i e s

Companies with market shares in the range of two to five percent of the total segment

revenue fall under this category. Sto Corporation, Dryvit Systems, Inc., Benjamin Moore &

Co., Dow Corning Corporation, Sika Corporation, and Textured Coatings of America, Inc.,

were identified as Tier 2 companies in this market.

T i e r 3 C o m p a n i e s

Tier 3 companies have market shares less than two percent of the total segment revenue. A

large number of paint manufacturers with a few elastomeric products in their portfolio

participated in this market. Some notable suppliers in this category include Neogard, United

Coatings, Tremco Inc., National Coatings Corporation, DeHaven Construction, Edison

Coatings, Inc., Everest Coatings, Inc., Metacrylics, Nationwide Chemical Coatings

Manufacturers, Inc., Rainguard Products Company, and Tamms Industries, Inc. among

others.

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S t r a t e g i c A n a l y s i s b y P r o d u c t s

Acrylic Elastomeric Coatings

M a r k e t O v e r v i e w

Acrylic-based elastomeric coatings are the most popular coatings used in exterior wall

applications. They constitute 90 percent of the elastomeric wall coatings market as

elastomeric acrylic resins offer good adhesion characteristics, high degree of flexibility and

elasticity, high tensile strength, and superior alkali and dirt resistance. Acrylic coatings are

generally water-based and have low VOC content, thus in line with the government

regulations. Also these coatings being one component coatings, can be easily applied with a

roller brush or can be spray applied, thus saving trouble for the applicators.

Acrylic elastomerics can also be applied by do-it-yourselfers, but to obtain better results,

manufacturers recommend the coatings to be applied by the authorized contractors. Most

companies also give a 5 year warranty period.

Another class of products which are sold in the market are the siliconized acrylics. These

Siliconized acrylics, comparatively a newer product, which combine the benefits of both-

acrylics and silicone elastomerics. These products have better adhesion and are easily

cleanable as the acrylics while at the same time have better UV resistance as that of the

silicones.

C o m p e t i t i v e A n a l y s i s

Most of the elastomeric wall coatings suppliers compete in this arena and they offer a

100 percent acrylic elastomeric coating. This is because of the growing popularity of acrylic

coatings which comes across as a good and clean waterproof coating to most end users.

Almost all of these coatings are compatible with concrete stucco, masonry, and EIFS. Though

the market is dominated by the same major manufacturers- The Sherwin-Williams Company,

Degussa, ICI Paints, and Sto Corporation, there are more than 75 medium and small coatings

manufacturers. Companies such as M.A.B. Paints and Textured Coatings of America Inc. or

Texcote are major participants in their local region. These companies compete on their

knowledge of the local market and weather conditions and their ability to manufacture such

suitable coatings. These companies mainly sell their products to contractors who then use it.

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Silicone Elastomeric Coatings

O v e r v i e w

Silicone elastomeric coatings were introduced in the early 1990s and since then Dow Corning

Company has been a pioneer in this field. Silicone coatings have exceptional water vapor

permeability and alkaline resistance. They have the ability to withstand high pH without the

need of a primer. These coatings could hence be used after a two day cure period over

concrete stucco or masonry surfaces. Elastomeric silicones also have high UV resistance and

have the inherent ability to withstand light, heat, and most chemicals. Many of these coatings

are one component coatings and hence are easy to apply. They have the ability to function at

extreme temperatures.

One of the concerns which most building owners have is that once silicone elastomerics are

applied, they generally cannot be recoated with another elastomeric coating. Elastomeric

silicone coatings contribute 10 percent to the elastomeric wall coatings market.

C o m p e t i t i v e A n a l y s i s

The elastomeric silicone coatings market is dominated single-handedly by Dow Corning

Corporation. There are also other companies such as GE Silicones, Everest Coatings, and

Gaco Western Inc. who also participate in this market but Dow Corning is the undisputed

market leader with its AllGuard Silicone Elastomeric Coating. Dow Corning has successfully

waterproofed many buildings throughout the United States with its AllGuard Elastomeric

Coatings, for instance- the Barton Oaks Plaza at Austin, Texas. This has saved many

buildings from water leakage and expensive re-cladding without disturbing work within and

all this within a reasonable period of time.

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5U.S. Elastomeric Floor Coatings Market

I n t r o d u c t i o n

Market Overview

The elastomeric floor coatings contribute over 19 percent to the total elastomeric coatingsmarket. These coatings are used on decks, parking garages, terraces, parapets, walkways,stadium surfaces and other similar surfaces.The bulk of these floor coatings arepolyurethane-based. Polyureas and acrylics also have a small share in this market.

The performance requirements of floor coatings are listed as below:

■ The coated floor should be capable of withstanding the traffic over it. This includes bothvehicular and foot. Certain areas have very high traffic such as parking decks anddriveways.

■ Abrasion and chemical resistant

■ Dirt and dust resistant. Areas with high traffic accumulate dirt quickly.

■ Durable and long lasting.

■ The floor must be weatherproof. This mostly applies to exposed surfaces.

■ The coated floor should maintain its color and finish.

Elastomeric floor coatings are well engineered to handle these requirements. Theirweatherproofing and waterproofing qualities contribute to their durability and long lastingproperties. The polyurethane coatings which comprises the majority of the coating sold inthis market come in both one and two components, while the polyureas are two componentsystems.

Coatings are engineered differently to meet each of the different performance requirements.For instance, in case vehicular traffic decks, these coatings are engineered to offer additionalstrength and skid resistance on areas such as ramps and curves and in the case of specialtydecks as in mechanical equipment rooms, suitable coatings provide protection over andaround equipment pads and protrusions. Elastomeric coatings are also widely used forrecreational purposes such as decks surrounding swimming pools, tennis courts where thesecoatings offer an attractive and a skid resistant surface.

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Elastomeric floor coatings are applied both new construction as well as renovation projects.

These coatings are sold accordingly to building contractors or restoration/ waterproofing

contractors and applied at the job site.

Market Engineering Measurements

Chart 5.1 presents the Market Engineering measurements for the U.S. elastomeric floor

coatings markets in 2004.

C h a r t 5 . 1

Elastomeric Floor Coatings Market: Market Engineering Measurements (U.S.), 2004

Market Engineering Drives Market

Strategy and Planning

MarketEngineer

ChallengeIdentification

MarketResearch

MarketEngineering

System

Implementation

MarketPlanning

MarketStrategy

Note: All figures are rounded. Source: Frost & Sullivan

Measurement Name Measurement Trend

Market age Growth ---

Revenues $120 million Increasing

Potential revenues (maximum future market size) $171.1 million Increasing

Base year market growth rate 4.0% Increasing

Forecast period market growth rate 5.2% Decreasing

Average price $30 per gallon Increasing

Price range $15 to $45 Stable

Price sensitivity High Increasing

Competitors (active market competitors in base year) 40 Increasing

Degree of competition Medium Increasing

Market concentration (percent of base year market controlled by top three

competitors)

42% Decreasing

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M a r k e t S i z e

The elastomeric floor coatings market in the United States in 2004 was worth $120 million.

This is expected to grow at a compound annual growth rate (CAGR) of 5.2 percent to reach

$171.1million by 2011.

M a r k e t A g e

The elastomeric floor coatings market is at a growth stage and has been growing steadily at

the rate of 3.5 to 4 percent for the last three years. In the next 5 to 7 years the market is

expected to grow by four to six percent. The growth in this market is dictated by the

different performance requirements of various end uses and the ability of elastomeric

coatings to meet the requirement.

C o m p e t i t i o n

The elastomeric floor coatings market comprises of a few national suppliers and many

regional suppliers. There are about 50 suppliers in all in the United States. The top three

manufacturers of elastomeric floor coatings are Neogard, 3M, and Degussa Building Systems.

These companies alone account for 42 percent of the entire elastomeric floor coatings

market.

D i s t r i b u t i o n

One of the following distribution channels are followed by elastomeric coatings

manufacturers in the United States:

■ Direct sale to contractors

■ Sales through independent distributors

■ Mix of both of the above

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Figure 5-1 shows the distribution channel followed by a few key suppliers in this market.

Source: Frost & Sullivan

Many of the elastomeric coating manufacturers sell their products directly to contractors.

This is because elastomeric floor coatings when applied in certain areas have to meet a few

performance requirements which only when applied by an authorized contractor, can the

manufacturer ensure its longevity and durability. Also for large projects such as parking

decks, it is more economical for the contractor to buy directly from the manufacturers than

through the distributors. Hence, in these cases both manufacturers as well as contractors

prefer dealing directly with each other. A lot of coating manufacturers are also selling

through a mix of both the distribution channels. Selling through distributors enables them to

widen their reach within the country thereby enabling them to make newer contacts and do

greater business.

F i g u r e 5 - 1

Elastomeric Floor Coatings Market: Distribution Channel Followed by a Few Key Suppliers

(U.S.), 2004

Direct Sale to Sale through

Company Contractors Distributors Mix of Both

Degussa Construction Systems Americas ■

Neogard, a division of Jones- Blair Company ■

Pacific Polymers International Inc. ■

Sika Corporation ■

Tremco Sealants/Waterproofing Division ■

3M ■

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F o r e c a s t s a n d T r e n d s

Market Drivers

Figure 5-2 shows the drivers, ranked in the order of impact, for the U.S. elastomeric floor

coatings market for the period 2005-2011.

Source: Frost & Sullivan

H i g h P e r f o r m a n c e R e q u i r e m e n t s C r e a t e D e m a n d f o r

E l a s t o m e r i c C o a t i n g s

Areas such as parking decks and parking garages would require coatings that can withstand

the vehicular or foot traffic while areas such as aircraft hangars or mechanical rooms where

heavy industrial equipment are placed, will need a coating that can withstand the vibration

of equipment without rupturing or delaminating. Elastomeric coatings have high traffic

bearing capacity and excellent impact, chemical, and abrasion resistance. These coatings can

extend by 200 to 400 percent as the situation demands and can waterproof the surface. These

coatings are designed to be turned up at the walls and columns so as to maintain one integral

waterproofing membrane. All this contributes to these elastomeric coatings being widely used

in situations which demand high performance.

F a s t S e t t i n g T i m e o f P o l y u r e t h a n e s a n d P o l y u r e a s S p u r s

G r o w t h

Polyurethanes and polyureas cure rapidly to form a monolithic waterproofing membrane. On

an average, polyurethane-based coatings cure in 48 hours at suitable temperatures and

humidity levels polyurea-based coatings cure in 30 minutes as against other traditional

systems which are both time and labor intensive. This reduces shutdown time and enables

work to commence immediately, which is very critical in industrial work floors. Hence, the

use of elastomeric polyurethanes and polyureas for floor coating applications are increasing.

The impact of this driver is expected to be high for the next two to three years.

F i g u r e 5 - 2

Elastomeric Floor Coatings Market: Market Drivers Ranked in Order of Impact (U.S.),

2005-2011

Rank Driver 1-2 Years 3-4 Years 5-7 Years

1 High Performance Requirements create demand for elastomeric

coatings

High High High

2 Fast setting time of polyurethane and polyurea Medium/ High High High

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Market Restraints

Figure 5-3 shows the restraints, ranked in the order of impact, for the U.S. elastomeric floor

coatings market for the forecast period 2005- 2011.

Source: Frost & Sullivan

H i g h e r C o s t o f P o l y u r e t h a n e a n d P o l y u r e a - b a s e d

E l a s t o m e r i c F l o o r C o a t i n g s A f f e c t G r o w t h

Though the polyurethane and polyurea-based elastomeric coatings offer superior surface

properties, they come at a premium price. Both polyurethane/polyurea-based elastomeric

coatings are priced between $20 and $45.Hence, this factor is always considered before

building contractors make the final choice. This restraint is expected to have a high impact in

the short term future.

U s e o f S p e c i a l S k i l l s a n d E q u i p m e n t t o A p p l y R e s t r a i n s

G r o w t h

Polyurethane coatings are available as both one component as well as two component

systems. The two component systems combined with polyurea-based elastomeric coatings,

which are two component coatings, necessitate the use of pumps and special spray delivery

equipment besides special skills to apply. Although their fast setting properties will favor

their application in large open areas, industrial setups with a lot of machinery will require

pre-installation masking, protection, and detailing which may exceed the time savings. Hence

this factor serves as a roadblock when polyurethanes or polyureas are being considered for

application.

F i g u r e 5 - 3

Elastomeric Floor Coatings Market: Market Restraints Ranked in Order of Impact (U.S.),

2005-2011

Rank Restraint 1-2 Years 3-4 Years 5-7 Years

1 Higher costs of polyurethane and polyurea- based

elastomeric coatings affect growth

High Medium/

High

Medium/ High

2 Use of special skills and equipments to apply restrains

growth

Medium Medium/ Low Low

3 Competition from epoxies and cementitious products

check growth

Very Low Low Low

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C o m p e t i t i o n f r o m E p o x i e s , C e m e n t i t i o u s P r o d u c t s

C h e c k G r o w t h

Epoxies and polymer modified cement coatings compete with elastomeric coatings for use in

decks, industrial floors, and so on. These materials adhere well to common construction

surfaces such as masonry, concrete, metal, and wood, are easy to apply, and have good

chemical resistance. Since, elastomeric coatings possess a few superior properties such as

their ability to waterproof and are more durable and long lasting, the impact of this restraint

is low.

Revenue Forecasts

Figure 5-4 and Chart 5.2 show the revenue forecasts for the U.S. elastomeric floor coatings

market for the period 2001 to 2011.

Note: All figures are rounded; the base year is 2004. Source: Frost & Sullivan

F i g u r e 5 - 4

Elastomeric Floor Coatings Market: Revenue Forecasts (U.S.), 2001-2011

Revenue

Revenues Growth Rate

Year ($ Million) (%)

2001 107.2 ---

2002 111.2 3.7

2003 115.4 3.8

2004 120.0 4.0

2005 125.2 4.3

2006 131.1 4.7

2007 137.6 5.0

2008 144.7 5.2

2009 152.6 5.5

2010 161.4 5.8

2011 171.1 6.0

Compound Annual Growth Rate (2004-2011): 5.2%

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C h a r t 5 . 2

Elastomeric Floor Coatings Market: Revenue Forecasts (U.S.), 2001-2011

Note: All figures are rounded. Source: Frost & Sullivan

In 2004, the revenues from the U.S. elastomeric floor coatings market were $120 million.The market is likely to grow to $171.1 million by 2011 at a CAGR of 5.2 percent. Thisgrowth will be due to the high performance requirement in several areas such as parkinggarages, industrial workshops, hangars and so on. The fast setting time which theseelastomeric coatings offer will further favor its growth.

Market and Product Trends

The following are a few trends in the elastomeric floor coatings market:

M a r k e t T r e n d s

Small Manufacturers are Gaining Market Share

The elastomeric floor coatings market has got is a mix of large national manufacturers suchas Neogard and 3M as well as small regional suppliers such as Metacylics and AlliedWaterproofing, Inc. Since these small regional companies cater mostly to local needs theyhave the competitive advantage of knowing many contractors locally and being located closeto the job site enables instant delivery of products. Their familiarity with the local weatherconditions and ability to sell their products at a much more competitive price than largenational suppliers helps them gain market share quickly.

Move toward Distribution of Coatings through Independent Distributors

Many elastomeric floor coatings manufacturers sell directly to contractors as the general sizeof the project is large.Projects such as parking decks, airplane hangars require several gallonsof coatings and hence the contractor would prefer buying it directly from the manufactureras this would save costs. Many manufacturers have realized selling through distributorsenables them to sell to new areas and to newer people. This enables them to establishcontacts with newer contractors and so a lot of companies are now selling throughdistributors as well.

0

20

40

60

80

100

120

140

160

180

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Rev

enue

s ($

Mill

ion)

0%

1%

2%

3%

4%

5%

6%

7%

Gro

wth

Rat

e

Revenues ($ Million) Growth Rate (%)

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The following are a few product trends in the elastomeric floor coatings market:

P r o d u c t T r e n d s

The following product trends are observed in the elastomeric floor coatings

High Demand for Polyurea-based Elastomeric Coatings

Polyurea-based elastomeric coatings are experiencing high demand because of its fast curing

time. Typically, polyurea-based coatings cure fully in 30 minutes and hence help in

minimizing shutdown time. These coatings can also be applied over a wide temperature

range. They are also abrasion and chemical resistant besides possessing the ability to

waterproof. Hence, in places where there is a high performance waterproofing requirement

with minimum shutdown time, for example, industrial work floors, parking decks and other

similar surfaces, polyureas seem to be in great demand.

Hybrid Products Emerging in the Coatings Market

Since both polyurethanes and polyureas have similar chemistry and comparable physical and

chemical properties, scientists are working toward creating a polyurethane-polyurea hybrid

elastomeric coating. This will combine the benefits of both polyurethanes that are available

at a lower cost and polyureas which have excellent properties such as wider application

temperatures and fast cure.

Increase in Acrylic Reinforced Products

Acrylic coatings have a small share in this market. One of the major reasons for this is that

these coatings have lower tensile strength as compared to the polyurethanes and polyureas.

However, acrylics are the most versatile of all coatings and possess outstanding flexibility

and adhesion characteristics. Also, they come at a lower cost than the polyurethane and

polyurea-based coatings. It is for this reason, a lot of manufacturers are reinforcing acrylic

coatings with some other external material so as to increase its strength. Hence, the

companies market these reinforced-acrylic coatings as coating systems. For instance- Elasto-

Tex Deck Coating manufactured by Pacific Polymers International, Inc. uses fiberglass to

strengthen the acrylic coatings.

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Pricing Trends

The following are the pricing and the trends in pricing seen in the elastomeric floor coatings

market.

P r i c i n g

The average price for a gallon of elastomeric floor coatings is $30. The price of a gallon of

acrylic elastomeric floor coating varies from $15 to $30, the same amount of polyurethane

floor coating will range between $20 to $40 and polyurea-based elastomeric floor coating

will range between $25 and $45.

P r i c i n g T r e n d s

The prices of elastomeric floor coatings have remained almost flat over the past two to three

years with very little variation. Though crude oil prices continued to escalate, the

manufacturers mostly absorbed these costs so as to be more competitive in the market but

now it has reached a situation where manufacturers are no longer able to contain the prices

and are passing on the increasing costs to the end users. The average prices of elastomeric

floor coatings were estimated to have increased by three percent during the year 2004. The

prices of these coatings in future depend entirely on the crude oil supply.

C o m p e t i t i v e A n a l y s i s

Competitive Structure

Figure 5-5 presents the competitive structure of the U.S. elastomeric floor coatings market in

2004.

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Source: Frost & Sullivan

In 2004, there were around 20 suppliers of elastomeric floor coatings in the United States.

The top three suppliers- Neogard, 3M, and Degussa Building Systems accounted for

42 percent of the total sales in the elastomeric floor coatings market, which clearly shows the

high level of concentration in this market.

The companies participating in this market could be classified into three types—chemical,

specialty, and paint companies. Chemical giants such as Degussa, 3M, and Sika Corporation

participate in the coatings market, at the same time specialty companies such as Neogard and

Carlisle Coatings & Waterproofing Inc. also participate. The large chemical companies serve

several markets and have presence in many countries. These companies have high R&D

expenditure and an extensive distribution channel.

The specialty companies, on the other hand, can be further split into two segments which are

large national companies and small niche companies. Large national companies such as

Neogard and Carlisle serve the elastomerics market in many parts of the country. These

companies are specialized and participate in only a few markets where all their efforts are

focussed. These companies have high R&D expenditure, a good brand name, and

manufacture competitive products. The small niche suppliers are very focussed in a particular

area. For instance, Allied Waterproofing Inc participates in the concrete restoration market.

This company also sells elastomeric deck coatings, membranes, and some caulks and

sealants. Their knowledge of local environment conditions, purchasing trends of customers,

and their local contact with contractors enables them to customize their products better to

their region of focus.

F i g u r e 5 - 5

Elastomeric Floor Coatings Market: Competitive Structure (U.S.), 2004

Number of Companies in the Market 40

Types of Competitors Chemical companies

Specialty companies

Paint manufacturers

Distribution Structure Direct sale to contractors

Sale through distributors

Mix of both

Key End-UsesFor application over parking garages, mechanical rooms, stadium

surfaces, walkways, parapets, terraces and so on

Competitive Factors Price, ease of application, company credentials, speed of application

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A few paint companies such as Sherwin-Williams and Life Paint Company also participate in

this market. Sherwin-Williams is one of world’s leading paints and coatings companies while

Life Paint company is a small paints and coatings company operating only within California.

Paint companies have a limited presence in this market.

C o m p e t i t i v e F a c t o r s

The following are a few competitive factors in the elastomeric floor coatings market.

Building Contractors consider each of these factors before finalizing in on the most

appropriate coating.

Price: The elastomeric floor coatings market is a very price competitive market. This factor is

at the top of the list while deciding a coating manufacturer for a particular project.

Ease of Application: This is another major factor while deciding on the coating especially,

when these coatings are to be applied over large areas. Acrylic elastomerics are the easiest to

apply while polyurea-based elastomerics are the most difficult, requiring expensive

equipment.

Company Credentials: The brand name, number of years the company has been in service,

job history, performance history are all important factors while deciding on the coating

manufacturer.

Speed of Application: This is a very important factor that is dependent on the urgency of the

job. Industrial work floors generally need the application of coatings in the shortest possible

time so that shutdown time is minimal and work is resumed immediately after.

There is usually a trade-off while deciding the type of coating. Depending on the priorities,

the contractor makes his final choice.

Market Participants

The following are a few companies that participate in this market

N e o g a r d , a d i v i s i o n o f J o n e s - B l a i r C o m p a n y

Neogard is the largest company operating in the floor coatings market accounting for

20 percent of total sales. The company makes polyurethane-based elastomeric floor coatings

for parking decks, walkways, sports stadiums, pavements etc., through its Auto-Gard,

Peda-Gard, Pool-Gard, and Perma-Gard 3 brands. Neogard also makes seamless

polyurethane and epoxy flooring systems. The company procures its products based on

performance. has a strong brand name and supplies throughout the country.

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3 M

3M is also a major participant in this market accounting for 12 percent of the total market,

though participating only in floor restoration systems. The company makes

polyurethane-based elastomerics and markets its products under the Scotch-Clad name. 3M

has the largest solvent free line of polyurethane elastomeric coatings. 90 percent of the

company’s urethane coatings are used for coating parking garages. 3M is a global chemical

company manufacturing a range of products for many industries. Its brand name coupled

with an excellent supply chain management reinforces its position at number two in the

elastomeric floor coatings market.

D e g u s s a B u i l d i n g S y s t e m s

Degussa Building Systems, another important participant in this market, sells polyurethane,

polyurea, and acrylic-based elastomeric floor coatings and contributes ten percent of the

total sales in this market. The company sells its products under the ThoRoc and Sonneborn

brand. Degussa relies on its technical expertise to manufacture newer and better products.

Their latest offering, IC 2480, is a fast setting polyurea-based elastomeric coating which can

be serviceable within one hour.

L y m T a l I n t e r n a t i o n a l I n c .

LymTal International is mid-sized and an important participant in the elastomeric floor

coatings market. The company manufactures polyurethane floor coatings for decks,

stadiums, plazas etc. Besides elastomeric coatings the company manufactures a range of

epoxy coatings, sealants, grouts and other similar coatings. The company manufactures an

extensive product line of polyurethane coatings, under the IsoFlex brand name, with many of

them being one component and low in VOC content. The company takes pride in providing

high quality products, product development, and the technical support it can offer to its end

users.

A l l i e d W a t e r p r o o f i n g I n c .

Allied Waterproofing is a small company participating in the concrete waterproofing and

repair industry. The company supplies elastomeric deck coatings for parking garages, sun

decks, pool decks, and balconies. The company also supplies some expansion joints, caulks,

and sealants. Allied waterproofing operates from Lyons, Illinois, and caters mostly to the

local region.

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Market Share Analysis

Figure 5-6 and Chart 5.3 represent the market shares by revenues of major participants in the

U.S. elastomeric floor coatings market in 2004.

Note: Others include Carlisle Coatings and Waterproofing Inc., Tremco Sealants/Waterproofing Division, LymTal International Inc., Pacific Polymers International Inc, The Sherwin- Williams Company, United Coatings, Edison Coatings, Inc., DeHaven Construction Company.

Note: All figures are rounded; the base year is 2004. Source: Frost & Sullivan

C h a r t 5 . 3

Elastomeric Floor Coatings Market: Company Market Share by Revenues (U.S.), 2004

Note: All figures are rounded. Source: Frost & Sullivan

The top three suppliers namely Neogard, 3M, and Degussa Building Systems together

accounted for 42 percent of the total market. This shows that unlike the wall coatings

market, the floor coatings market is concentrated and is dominated by a few manufacturing

powerhouses. These companies have excellent R&D centers and the best distribution

networks. Neogard and 3M have a mix of both distribution channels, which gives them the

competitive edge.

F i g u r e 5 - 6

Elastomeric Floor Coatings Market: Company Market Share by Revenue (U.S.), 2004

Company 2004 (%)

Neogard 20

3M 12

Degussa 10

Others 58

TOTAL 100

Neogard20%

3M12%

Degussa10%

Others58%

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Other notable companies which also have a major presence, though locally, in this market

include Carlisle Coatings and Waterproofing Inc., Tremco Sealants/Waterproofing division,

LymTal International Inc., and Pacific Polymers. These companies have an extensive line of

products and they are major suppliers in their respective areas.

S t r a t e g i c A n a l y s i s b y P r o d u c t s

Polyurethane Elastomeric Coatings

Polyurethane-based elastomeric coatings have 90 percent of the floor coatings market share.

This is because these coatings have very high tensile strength and abrasion resistance and

hence can withstand heavy vehicular and pedestrian traffic. These coatings have been there in

the market for the last 20 years and have gained wide acceptability. They have excellent

chemical and sunlight resistance and suit public areas. Polyurethane coatings come in both

single and two-component systems. The two-component systems require the components to

be mixed in the correct ratio for their best performance.

The presence of moisture can cause foaming and can thus hinder curing. Many

polyurethane-based elastomeric coatings are solvent-based and companies are slowly moving

toward water--based urethanes since they are environment friendly and better comply with

the VOC regulations. Polyurethanes are also priced attractively when compared to its closed

competitor polyureas.

C o m p e t i t i v e A n a l y s i s

Almost all the companies participating in the floor coatings market have at least a

polyurethane product suitable for floor coatings. The leading manufacturers are Neogard,

3M, and Degussa. Neogard, and 3M manufacture only polyurethane coatings while Degussa

makes polyurethane, polyurea, and acrylic-based coatings. Neogard and 3M sell most of

their coatings for application on parking decks and since parking decks are huge projects, the

contractors prefer to buy it directly from the manufacturers. Hence, these companies sell a

lot of their coatings directly to manufacturers. While, Degussa sells a lot into other flooring

applications as well and sell their coatings through their distributors. Neogard and 3M sell

through distribution as well. Besides these companies Tremco Sealants/ Waterproofing

division, Pacific Polymers and LymTal International also play a key role in this market.

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Polyurea Elastomeric Coatings

Polyurea-based elastomeric coatings contribute seven percent to the elastomeric floor

coatings market. They are fast setting and are insensitive to moisture. They have excellent

adhesion characteristics, chemical resistance, abrasion resistance, and also have high tensile

strength. They are easy to apply and contain low or zero VOCs. These coatings are the most

expensive of all elastomeric coatings we are considering in this study. For applications such

as industrial work floors where work has to resume as quickly as possible, polyurea-based

coatings are the best alternative.

C o m p e t i t i v e A n a l y s i s

Fewer companies participate in the polyurea-based elastomeric coatings market as comparedto the polyurethane elastomeric coatings market. This is because polyureas are a newerproduct and also they are the most expensive of the elastomeric coatings. Also a lot of hypehas been created about these products which has deterred many companies from enteringinto this line. However, the features polyurea-based coating offer are unmatched, forexample, their fast setting times, their moisture insensitivity, and their ability to perform inextreme conditions.

Degussa is a major participant in this market. Sherwin Williams markets its EnviroLastic,polyurea-based elastomeric coatings for use on decks and floors. There are also a few smallcompanies participating in this market such as Polyurea Coatings Systems Incorporated andVersaFlex Incorporated.

Acrylic Elastomeric Coatings

Acrylic elastomeric coatings constitute three percent of the elastomeric floor coatings market.Though they have excellent adhesion characteristics, high degree of flexibility, and elasticity,these coatings are of lower tensile strength than polyurethanes and polyureas. Since flooringapplications require very high tensile strength to withstand the traffic above it, polyurethanesand polyurea-based coatings are preferred. However, acrylic coatings are generally waterbased and have low VOC content, thus in line with the government regulations. Thesecoatings being one component coatings, can be easily applied with a roller brush or can bespray applied and are the least expensive of all coatings.

C o m p e t i t i v e A n a l y s i s

A few companies manufacturing acrylic elastomeric coatings for floor coating applicationsinclude Degussa, Pacific Polymers International Incorporated and United Coatings. Manycompanies are reinforcing these coatings with other materials or are creating hybrid productsin order to make them stronger while retaining all the other beneficial properties of acrylics.For instance, Pacific Polymers’ Elasto-Tex deck coating is a fiberglass reinforced acrylic decksystem while Degussa manufactures Son-No-Mar under the Sonneborn brand which is apolyurethene-acrylic hybrid coating.

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6U.S. Elastomeric Roof Coatings Market

I n t r o d u c t i o n

Market Overview

Elastomeric roof coatings contribute over 32 percent to the total elastomeric coatings

market. These coatings are made to protect roofs of commercial, residential buildings, and

houses. Roof coatings are a very important system as a damaged or a leaking roof could

completely disrupt the work within.

The different substrates over which elastomeric coatings can be applied include asphalt,

modified bitumen, metal, spray polyurethane foam(SPF), built-up roof (BUR) amongst

others. The elastomeric roof coatings mostly include acrylic, silicone, and polyurethane

besides a few polyurea-based coatings. The selection of a particular type of elastomeric

coating depends primarily on the roofing substrate. For instance- Silicone-based elastomerics

adhere well to SPF roofs. The polyurethane and polyurea-based coatings would be mostly

used in places which would have some pedestrian traffic. Most of these coatings are used in

retrofit or renovation type projects.

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Since roof coatings are a very important system, there are a few performance requirements

these coatings are expected to meet. They are:

■ Roof coatings should have good adhesion characteristics. If these coatings are unable to

adhere to the substrates well, one will have to replace these coating sooner or later. To

ensure good adhesion, the application of a primer is usually recommended.

■ Since roof coatings are exposed to the brunt of nature, these coatings should have the

ability to withstand variations in temperature, that is, should not crack or peel due to

varying temperatures.

■ They should have high water resistance as sometimes these coatings would be expected to

handle waterlogging and in some cases, snow logging and therefore, the roofs are

generally sloped.

■ They should maintain their reflectivity for long.

■ They should be resistant to dirt and other dust particles.

■ They should be durable and long lasting.

■ They should maintain their color/finish.

Elastomeric coatings are very well engineered to meet these requirements. In addition to all

this, these coatings also offer excellent waterproofing, thereby ensuring that the roof lasts

long. A proper white reflective elastomeric coating could offer reduction in temperature and

hence reduction in cooling costs. Temperature reduction up to 50 degree Fahrenheit and

reduction in cooling costs by 20-25 percent is quite common. This would further translate

into reduced fuel usage and lower power-plant emissions. In addition to landfill usage, to

which roofing materials are a major contributor, in urban areas, the cumulative effect of

multiple cool roof systems will also reduce the urban ambient temperature.

Market Engineering Measurements

Chart 6.1 represents the Market Engineering measurements for the U.S. elastomeric roof

coatings markets in 2004.

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C h a r t 6 . 1

Elastomeric Roof Coatings Market: Market Engineering Measurements (U.S.), 2004

Market Engineering Drives Market

Strategy and Planning

MarketEngineer

ChallengeIdentification

MarketResearch

MarketEngineering

System

Implementation

MarketPlanning

MarketStrategy

Note: All figures are rounded. Source: Frost & Sullivan

M a r k e t S i z e

The elastomeric roof coatings market in the United States in 2004 was worth $200 million.

This is expected to grow at a compound annual growth rate (CAGR) of 15.4 percent to reach

$545.1 million by 2011.

Measurement Name Measurement Trend

Market age Growth

Revenues $200 million Increasing

Potential revenues (maximum future market size) $545.1 million Increasing

Base year market growth rate 20.0% Increasing

Forecast period market growth rate 15.4% Decreasing

Average price $17 per gallon Increasing

Price range $10 to $50 per gallon Stable

Price sensitivity High Increasing

Competitors (active market competitors in base year) 75 Increasing

Degree of competition High Increasing

Market concentration (percent of base year market controlled by top

three competitors)

23.3% Decreasing

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M a r k e t A g e

The elastomeric roof coatings market is at a high growth stage where it has been growing at

a CAGR of 17 percent from 2001 to 2004. The growth in this market is dictated mainly by

the lower life cycle costs of the roof experienced by its usage.

C o m p e t i t i o n

The elastomeric floor coatings market in the United States is at a growth stage with nearly

75 companies participating in this market. Among these, there are a few national suppliers

and the others mostly catering to few regions. The top three manufacturers of elastomeric

roof coatings are Henry Company, United Coatings, and National Coatings Corporation

accounting for 23.3 percent of the entire elastomeric coatings market.

D i s t r i b u t i o n

One of the following distribution channels are followed by elastomeric coating

manufacturers in the United States:

■ Direct sale to contractors

■ Sales through independent or company owned distributors

■ Mix of direct sale to contractors and sale through distributors

Figure 6-1 gives the distribution channels followed by a few key companies in this market.

Source: Frost & Sullivan

F i g u r e 6 - 1

Elastomeric Roof Coatings Market: Distribution Channel Followed by a Few Key Suppliers

(U.S.), 2004

Direct Sale to Sale through

Company Contractors Distributors Mix of Both

Elastomeric Roofing Systems, Inc. (ERSystems) ■

Henry Corporation ■

National Coatings Corporation ■

Neogard, a division of Jones- Blair Company ■

United Coatings ■

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Many of the elastomeric roof coating manufacturers sell their products directly tocontractors. This is because these coatings meet the performance requirements only whenapplied by an skilled contractor making it important for many large companies such asNational Coatings Corporation to sell their coating through approved applicators. A lot ofcoating manufacturers also sell these roof coatings through distributors. Selling throughdistributors enables them to widen their reach within the country thereby enabling them tomake newer contacts and do better business. Companies such as United Coatings sell throughboth the channels which gives them the competitive edge.

F o r e c a s t s a n d T r e n d s

Market Drivers

Figure 6-2 shows the drivers, in their order of impact, for the U.S. elastomeric roof coatings

market for the period from 2005 to 2011.

Source: Frost & Sullivan

L e s s e r L i f e - c y c l e C o s t o f E l a s t o m e r i c C o a t i n g s D r i v e s

D e m a n d

The lesser life cycle cost encountered when elastomeric coatings are applied onto the roofs isthe strongest driver for this market. People are realizing the application benefits ofelastomeric coatings such as reduced frequency of a roofing job and high energy savings forseveral years if a light colored roof coating is applied. With ordinary coatings, there is agreater possibility for the water seeping through the substrate and damaging the roof. Anordinary coatings has to be replaced every two to three years. With elastomeric roof coating,manufacturers offering long warranties (10 to 15 years), people are realizing that white orlight colored elastomeric roof coatings are the best alternatives.

F i g u r e 6 - 2

Elastomeric Roof Coatings Market: Market Drivers Ranked in Order of Impact (U.S.),

2005-2011

Rank Driver 1-2 Years 3-4 Years 5-7 Years

1 Lesser life cycle cost of elastomeric coatings drives

demand

Very High Very High Very High

2 Increasing demand for environment-friendly coatings

favors elastomeric coatings

Very High Very High High

3 Government encouragement to use white solar-reflective

coatings drives growth

High Medium/ High Medium/ High

4 Trend in roofing material favor elastomeric coatings

favor elastomeric coatings

Medium Med/High Medium/ High

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I n c r e a s i n g D e m a n d f o r E n v i r o n m e n t a l l y - F r i e n d l y

C o a t i n g s F a v o r s E l a s t o m e r i c C o a t i n g s

The U.S. environmental protection agency (EPA) also has driven change in the coatings

industry by continually tightening the solvent volatile organic compound (VOC) emission

regulations. These regulations require roof coating manufacturers and raw-material suppliers

to produce products that meet the lower VOC regulations. Since asphalt-based coatings

contain solvents and are high VOC coatings, people are favoring solvent free and water

based elastomeric coatings. This drives the growth of these environmentally friendly

elastomeric roof coatings. This driver is expected to highly impact the market in the next few

years.

G o v e r n m e n t E n c o u r a g e m e n t t o U s e W h i t e S o l a r

R e f l e c t i v e C o a t i n g s D r i v e s G r o w t h

Energy-efficient roofing systems are in demand as a result of rising energy costs, evolving

building codes, and greater sensitivity to the effects of urban heat islands. The use of

energy-efficient roofing materials results in cooler roof surfaces thus, less energy is spent on

air conditioning.

As a result of this demand and media focussing on ENERGY STAR® ratings and reflectivity,

acrylic coatings frequently are specified as finish coats for built-up and modified bitumen

roof systems and maintenance coatings for existing roof systems, including built-up,

modified bitumen, metal, spray polyurethane foam, and concrete.

T r e n d i n R o o f i n g M a t e r i a l F a v o r s E l a s t o m e r i c C o a t i n g s

In the 1980s, asphalt, bitumen, and metal roofs constituted most of the roofing substrates

but now the trend is changing. Roofing contractors are installing a lot of ethylene propylene

diene monomer (EPDM), SPF, single ply, and other roofing membranes. This gradual change

taking place in the roofing market is driving the growth for elastomeric roof coatings since

asphalt-based coating mostly go only over asphalt/bitumen roofs, while elastomeric roof

coatings could be applied over a wider range of substrates. This driver is expected to have a

low impact in the short term future though the roofing trends promise a higher impact in the

long term future.

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Market Restraints

Figure 6-3 shows the market restraints in their order of impact for the U.S. elastomeric roof

coatings market for the forecast period 2005 to 2011.

Source: Frost & Sullivan

A p p l i c a t i o n L i m i t a t i o n s o f E l a s t o m e r i c C o a t i n g s

R e s t r i c t s G r o w t h

Elastomeric coatings have a few application requirements which restrict its usage. For

instance, these roof coatings should be applied over 45 degree Fahrenheit and therefore, can

be applied mostly during summer. Acrylic elastomeric coatings require two physical changes

to occur for complete curing:

■ Water must evaporate first for initial drying to occur

■ Acrylic polymers must fuse together.

The first process occurs quickly while the second takes about two to four weeks sometimes.

Climatic conditions such as cold weather, rainstorms, high humidity and/ or fog and reduced

daylight hours during winters can hamper this process. Hence, in regions such as the pacific

northwest, these coating can be mostly applied only from May through October. This factor,

hence, significantly affects the elastomeric coatings’ market.

C o m p e t i t i o n F r o m O t h e r R o o f C o a t i n g s L i m i t s G r o w t h

Ordinary roof coatings are cheaper, have been in the market for a greater period of time and

are generally more acceptable to most people. Also with asphalt/bitumen roofs still

occupying a significantly greater market share in the roofing market, asphalt/ bitumen

coatings represent a cheaper and acceptable option.

F i g u r e 6 - 3

Elastomeric Roof Coatings Market: Market Restraints Ranked in Order of Impact (U.S.),

2005-2011

Rank Restraint 1-2 Years 3-4 Years 5-7 Years

1 Application limitations of elastomeric coatings restrict

growth

High Medium/ High Medium/ High

2 Competition form from other roof coatings limits growth Med/High Med/High Med/High

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Revenue Forecasts

Figure 6-4 and Chart 6.2 show the revenue forecasts for the U.S. elastomeric roof coatings

market for the period 2001 to 2011.

Note: All figures are rounded; the base year is 2004. Source: Frost & Sullivan

C h a r t 6 . 2

Elastomeric Roof Coatings Market: Revenue Forecasts (U.S.), 2001-2011

Note: All figures are rounded. Source: Frost & Sullivan

F i g u r e 6 - 4

Elastomeric Roof Coatings Market: Revenue Forecasts (U.S.), 2001-2011

Revenue

Revenues Growth Rate

Year ($ Million) (%)

2001 123.9 ---

2002 142.5 15.0

2003 166.7 17.0

2004 200.0 20.0

2005 240.3 20.1

2006 285.2 18.7

2007 332.9 16.7

2008 379.5 14.0

2009 430.8 13.5

2010 486.1 12.8

2011 545.1 12.1

Compound Annual Growth Rate (2004-2011): 15.4%

0

100

200

300

400

500

600

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Rev

enue

s ($

Mill

ion)

0%

5%

10%

15%

20%

25%

Gro

wth

Rat

e

Revenues ($ Million) Growth Rate (%)

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In 2004, the revenues from the U.S. elastomeric roof coatings market were $200 million. The

market is forecast to grow to $545.1 million by 2011 at a CAGR of 15.4 percent. The key

driver responsible for this high growth is the lower life cycle costs associated with the usage

of elastomeric coatings. Acrylic coatings, which constitute 80 percent of the roof coatings

market, are the most environment friendly of all the other elastomeric coatings leading to

increase in demand and thereby, a higher growth.

Market and Product Trends

The following are the market and product trends seen in the elastomeric roof coatings

market.

M a r k e t T r e n d s

Roofing Companies Entering the Coatings Market

Many roofing companies are now participating in the coatings market. These companies

typically sell roofing membranes, some sealants, and adhesives. Since elastomeric roof

coatings are witnessing a high growth rate, a lot of roofing companies have entered and are

considering to enter this lucrative market. Many times these companies do not have the

required infrastructure and equipment to manufacture these coatings and hence indulge in

private labelling. These roof restoration companies purchase the elastomerics from another

major manufacturer and sell it along with their roofing products with their label on them.

P r o d u c t T r e n d s

Apart from the elastomeric roof coating, manufacturers moving toward waterborne coatings

which have low or no VOCs within them. The following are a few product trends.

Companies Concentrate on Manufacturing Fast Cure Coatings

Since the application of elastomeric coatings is greatly dependant on weather conditions,

companies are working toward the creation of fast cure products. Typically acrylic coatings

take two to four weeks to cure completely and to acquire their actual tensile strength and

flexibility characteristics. The emergence of fast cure products will greatly help this market

grow as elastomeric products are a superior product and fast curing products will increase its

usage in seasons other than summer. Polyureas are one class of elastomeric coatings which

can cure completely in 30 minutes.

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Acrylic and Polyurea-based Elastomeric Roof Coatings Grow Faster

Acrylic and polyurea-based elastomeric coatings are growing faster than silicone and

polyurethane-based elastomerics as acrylics are cheap, easy to apply, and offer good tensile

strength and durability. Also, with the state governments promoting the cool roofing

technology, white acrylic elastomeric coatings market is growing faster. Polyurea-based

elastomerics are growing fast as these coatings cure fast and offer excellent weatherproofing

and durability characteristics.

Breakthrough Product

National Coatings Corporation has come up with an innovative and a breakthrough product

for the SPF market. The company has manufactured AcryLock Base Coat A140 which is an

acrylic elastomeric coating which can go over silicone coatings. Earlier, only expensive and

solvent borne silicone coatings could be used over worn out silicone coated SPF roofs, but

now homeowners and contractors have the choice of using a high performing, less expensive,

and a waterborne acrylic coating.

Pricing Trends

The following are the pricing and the trends in pricing seen in the elastomeric roof coatings

market.

P r i c i n g

The average price for a gallon of elastomeric roof coating in the United States is $17 and

varies from $10 to $45. The price for a gallon of acrylic elastomeric roof coating falls

between $10 to $20. A gallon of elastomeric silicone coatings cost between $25 to $30. The

price range of the polyurethane and polyurea-based elastomeric roof coatings is $25 to $50.

P r i c i n g T r e n d s

The prices of elastomeric roof coatings have been going up in the last two to three years due

to the overall increase in the fuel and raw material prices. In 2004, the overall prices went up

by 10 to 15 percent though the prices of polyurea-based coatings have mostly remained

steady. This is probably because the manufacturers are realizing that the high costs are

restraining its growth and hence, they want to price it competitively. In future, though it is

unlikely that the prices continue to increase at the current rate, the costs are entirely

dependant on the crude oil supplies.

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C o m p e t i t i v e A n a l y s i s

Competitive Structure

Figure 6-5 presents the competitive structure of the U.S. elastomeric roof coatings market in

2004.

Source: Frost & Sullivan

In 2004, there were around 75 suppliers of elastomeric roof coatings in the United States.

Out of these around 75 percent of the companies concentrate on the roof restoration market.

The top three suppliers- Henry Corporation, United Coatings, and National Coatings

Corporation accounted for 23.3 percent of the total sales in the elastomeric roof coatings

market.

The companies participating in this market could be classified into four types- Roofing,

Specialty, Chemical and Paint companies. A short briefing about each of these are as follows:

R o o f i n g C o m p a n i e s

These companies are basically involved in manufacturing roofing materials, roof restoration,

and roof protection products. They have a good line of products which include elastomeric

coatings, roofing membranes, adhesives, and a few other products. These companies serve

their customers through contractors. Since the application of roof coatings is specialized, the

large companies generally have a few approved contractors, through whom they ensure that a

good job has been done. For instance- Henry Company is a leading roofing company

participating in this segment.

F i g u r e 6 - 5

Elastomeric Roof Coatings Market: Competitive Structure (U.S.), 2004

Number of Companies in the Market 75

Types of Competitors Roofing companies

Specialty companies

Chemical companies

Paint companies

Distribution Structure Direct sale to contractors

Sale through distributors

Mix of both

Competitive Factors Company credentials, Energy Star approval, warranty, price

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S p e c i a l t y C o m p a n i e s

These companies are generally focussed and manufacture a few products to suit a particular

industry. This could include elastomeric coatings, a few reinforcement membranes, adhesives

and so on. There are large companies as well as small companies which would fall into this

segment. Companies such as United Coatings manufacture coatings for architectural,

industrial, roofing, and do-it-yourself applications. These companies are characterized by a

good distribution network and a high R&D investment while smaller companies like Aldo

Products Company, Inc. have a few products for limited end uses. These companies are

regional and they do good business because of their strong business contacts.

C h e m i c a l C o m p a n i e s

These companies make several products, serving many industries and are usually

characterized by a good distribution system. Companies like Tremco participate in this

market but have limited presence in this market.

P a i n t C o m p a n i e s

Paint companies such as Sherwin-Williams and ICI paints have a limited presence in this

market as well. These large companies have a good distribution system in place coupled with

a strong brand name, which helps their products to do well in this market.

A lot of private labelling too takes place in this market. Many roofing companies sell

elastomeric coatings since its in line with their business. However, some of them get these

coatings from another manufacturer, rebrand them and then sell it.

Some companies also have approvals from associations such as Underwriters Laboratories

and Factory Mutual. Underwriters Laboratories is a world leader in testing and safety of

products while Factory Mutual is a leading organization in property loss prevention and risk

management. Companies like United Coatings, Henry Company, Everest Coatings, and

Conklin Company Inc. have got such approvals and are hence expected to gain market share.

C o m p e t i t i v e F a c t o r s

The following are a few competitive factors in the elastomeric roof coatings market. Building

Contractors consider each of these factors before finalizing in on the most appropriate

coating.

Company Credentials

The brand name, job history, performance history, and the number of years the company has

been in service are important factors that influence architects/contractors while deciding on

the coating manufacturer in this industry.

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Energy Star’s Approval

Many contractors these days are looking at coatings that have Energy Star’s approval before

using them. Energy Star is a government backed initiative that recognizes products and

businesses that help conserve energy. Energy Star approved elastomeric coatings can provide

temperature reduction of about 50 Fahrenheit and 10 to 15 percent energy savings. Hence,

building contractors and home owners are more and more conscious about using an Energy

Star approved elastomeric coating.

Warranty

Contractors prefer using coatings, which have long warranties. Companies give warranties

anywhere from 5 years up to 20 years. Long warranties help contractors gain recognition for

their work as much as for the coatings and hence, this factor is another key consideration

before selecting the manufacturer.

Price

Though not the most important factor while choosing a roof coating, the cost of the coating

is also of consideration while deciding on the type of coating and the manufacturer.

Market Participants

The following are a few companies that participate in this market

H e n r y C o m p a n y

Henry Company is the leading manufacturer of elastomeric roof coatings. The company

accounts for 12 percent of the total sales in the elastomeric roof coatings market. The

company manufactures acrylic elastomeric coatings, a silicone-based coating and several

other roof maintenance and restoration products. Henry company is committed to R&D and

is known for the quality of their products. The company’s brand name backed by the

experience of its approved contractors is what makes Henry hugely successful in this market.

U n i t e d C o a t i n g s

United Coatings is another leading participant in this market. The company retains sevenpercent of the market. The company manufactures a range of products for architectural,industrial, roofing, and do-it-yourself applications. United Coatings offer a complete line ofacrylic, silicone, and polyurethane elastomeric coatings for SPF roofs under the Diathon,Acron, Unisil, and Elastuff brands. Another unique product is the Roof Mate, which is anacrylic, high solids elastomeric coatings system which is designed to extend the life of bothnew and existing roof substrates. The company’s technical expertise and their reputation formanufacturing environment friendly coatings sets them apart from their competitors.

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N a t i o n a l C o a t i n g s C o r p o r a t i o n

National Coatings is another major participant in this market. The company has a market

share of 4.3 percent. National Coatings have earned the reputation of being technical

innovators besides manufacturing environment friendly products. The company mostly

manufactures one component waterborne acrylic elastomeric coatings under the brand name

AcryShield besides some reinforcements to extend the lives of the roofs. The company’s

technical knowledge, job history, and performance history gives it the competitive edge in

this market.

E l a s t o m e r i c R o o f i n g S y s t e m s , I n c ( E R S y s t e m s )

ERSystems is a leader in cool roofing technology. The company provides customized high

performing restoration systems to suit different substrates. The company manufactures a

complete line of high quality elastomeric coatings, membranes, sealants, and adhesives. The

elastomeric coatings include acrylic, polyurethane, and silicone-based coatings. The company

leads in restoring single-ply membranes and asphalt-based roofs. ERSystems is a charter

member in the Energy Star roof products program and was instrumental in developing the

Cool Roof Rating Council.

S t r u c t u r a l E l a s t o m e r i c P r o d u c t s , I n c

Structural Elastomeric Products, Inc makes the Elastek line of elastomeric coatings. This

company is comparatively small and regional but has an extensive product line to suit

different roofing substrates. The company’s success is attributed to its knowledgeable and

friendly staff and the ability to customize every project, thereby serving the end user better.

A l d o P r o d u c t s C o m p a n y , I n c

Aldo products is a specialty roof coating company that manufactures energy efficient

elastomeric roof coatings and a few primers and sealers. The company markets acrylic and

polyurethane elastomeric coatings under the brand name Aldocoat. The Aldocoat products

are Underwriters Laboratories and Factory Mutual approved. The company markets its

products through approved contractors as well as distributors.

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Market Share Analysis

Figure 6-6 and Chart 6.3 represent the market shares by revenues of major participants in the

U.S. elastomeric roof coatings market in 2004.

Note: Others include ERSystems, Gaco Western Inc, Everest Coatings Inc., Tremco Sealants/Waterproofing Division, Neogard, The Sherwin- Williams Company and Textured Coatings of America, Inc.

Note: All figures are rounded; the base year is 2004. Source: Frost & Sullivan

C h a r t 6 . 3

Elastomeric Roof Coatings Market: Company Market Share by Revenues (U.S.), 2004

Note: All figures are rounded. Source: Frost & Sullivan

The top three suppliers namely, Henry Company, United Coatings, and National Coatings

Corporation together accounted for 23.3 percent of the total market. Other major

participants in this market include ERSystems, Gaco Western Inc., and Everest Coatings.

These companies besides investing heavily in R&D and manufacturing high quality products,

have the most experienced and skilled contractors which gives them the competitive

advantage.

F i g u r e 6 - 6

Elastomeric Roof Coatings Market: Company Market Share by Revenue (U.S.), 2004

Company 2004 (%)

Henry Corporation 12.0

United Coatings 7.0

National Coatings Corporation 4.3

Others 76.7

TOTAL 100.0

Others76.7%

˝

United Coatings7.0%

Henry Corporation12.0%

National Coatings Corporation 4.3%

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S t r a t e g i c A n a l y s i s b y P r o d u c t s

Acrylic Elastomeric Coatings

Acrylic elastomeric coatings represent the most important class amongst all elastomeric

coatings used for roof coating purposes. Acrylics constitute 80 percent of all elastomeric

coatings used in this market. This is because these coatings are waterborne, one component

coatings that have excellent adhesion characteristics, flexibility, dirt and mildew resistance,

and are easy to apply. These coating also have good tensile strength and durability. White

colored acrylic elastomeric coatings are most widely used although other lighter shades are

available. These coatings gain a competitive edge due to their lower costs, as compared to the

other elastomerics, and their environment friendly characteristics.

C o m p e t i t i v e A n a l y s i s

Almost every company that participates in this segment manufactures acrylic elastomeric

coatings. These coatings have become synonymous with roof coatings as they are used for

most roofing projects. The companies leading in manufacturing acrylic coatings would be the

same companies leading the roof coatings market segment namely—Henry Company, United

Coatings, and National Coatings. These companies gain their competitive edge due to their

high R&D investment, superior products, brand name, and their good network of approved

contractors. Most of the small companies too make many acrylic-based elastomeric coatings

for roofing purposes. This is because these coatings are versatile i.e. they can go over most

substrates and are competitively priced. A good roof coating is quite dependant on good

workmanship and hence most companies have their approved contractors.

Polyurethane Elastomeric Coatings

Polyurethane elastomeric roof coatings represent an important class of roof coatings which

need to withstand some foot traffic. These coating have a market share of 6 percent.They are

usually solvent-based and they come in one component as well as two component mixtures.

These coatings are superior to the acrylics as these coatings have higher tensile strength and a

better UV resistance. These coatings have the ability to withstand water and snow logging for

extended periods of time and are more resistant to weathering. Despite such superior

properties, polyurethanes are witnessing more or less a flat growth owing to their high cost

and their comparatively higher VOC content. Many companies are manufacturing fabric or

mesh reinforced acrylic elastomeric coatings, which are checking its growth.

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C o m p e t i t i v e A n a l y s i s

There are not many companies involved in the manufacture of polyurethane elastomeric roof

coatings. Polyurethanes are a preferred product for floor coating applications and hence,

many companies that manufacture these floor coatings are involved in polyurethane roof

coatings. A few of them are Neogard, Tremco Sealants and Waterproofing division, General

Coatings Corporation, and Gaco Western, Inc.

Silicone Elastomeric Coatings

Silicone elastomeric roof coatings constitute a small but prominent segment in this market.

They have a market share of 14 percent. They are one or two component solvent-based

coatings. They have the inherent ability to withstand harsh environmental conditions and are

capable of handling water and snow logging. They are also strong, flexible, and have good

resistance to mold and mildew. All these factors make them an excellent roofing material

which are highly durable and long lasting. Silicone coatings are more expensive than acrylic

coatings but they have superior properties. Silicone coatings are mostly applied over SPF

substrates.

C o m p e t i t i v e A n a l y s i s

There are fewer companies in the roofing arena which sell silicone-based elastomeric roof

coatings when compared to acrylic elastomeric coating. A few leading companies that sell

silicone coatings are Dow Corning, Henry Company, United Coatings and Gaco Roof, a

division of Gaco Western, Inc.

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7Appendix

D e c i s i o n S u p p o r t D a t a b a s e T a b l e s

Historical U.S. New Construction by Type

Figure 7-1presents the historical value of new construction for the period 1999 to 2004.

Definition: Above figure represents the value of private construction residential and nonresidential buildings only

Note: All figures are in terms of current dollar

Note: All figures are rounded; the base year is 2004. Source: Frost & Sullivan

F i g u r e 7 - 1

Decision Support Database: Value of New Construction by type—USA (Million USD)

Years

Types 1999 2000 2001 2002 2003 2004

Residential 350,562 374,457 388,324 421,912 476,143 544,424

Industrial 32,639 31,801 29,521 16,403 14,231 14,750

Official 47,582 55,605 52,260 37,578 32,579 34,296

Hotels, motels 15,951 16,293 14,490 10,443 9,928 11,744

Other Commercial 54,317 58,067 58,471 53,397 52,396 55,396

Religious 7,371 8,030 8,393 8,335 8,481 8,073

Educational 9,645 11,375 12,591 12,841 13,096 12,549

Hospital and institutional 13,530 14,434 14,910 17,423 17,716 18,796

Miscellaneous 10,301 10,332 9,418 8,269 7,508 7,568

Farm nonresidential 5,059 5,988 5,135 5,786 5,284 5,702

Total 546,957 586,382 593,513 592,387 637,362 713,298

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U.S. New Onsite(Put in Place) Construction Forecast

Figure 7-2 presents the value of New Onsite (Put in place) Construction in the United States

for the period 2001 to 2011.

Definition: Above figure represents the value of construction installed or erected at the site during a given period

Note: 1.All figures are in terms of current dollar.2.Values include installed cost of normal building service equipment & site fabricated industrial production equipment3.Values do not consider cost of land, shipbuilding and machinery & equipment4.Different from building permit and construction contract data in terms of timing & coverage

Note: All figures are rounded; the base year is 2004. Source: Frost & Sullivan

F i g u r e 7 - 2

Decision Support Database: US—Value of New Construction Put in Place (USD Million),

2001—2011

Year Total Growth Rate (%)

2001 858,291 -

2002 871,342 1.52

2003 915,742 5.10

2004 999,601 9.16

2005 1,092,264 9.27

2006 1,195,068 9.41

2007 1,310,201 9.63

2008 1,439,484 9.87

2009 1,585,217 10.12

2010 1,748,727 10.31

2011 1,933,865 10.59

CAGR % (2004—2011) 9.89

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U.S. Residential Remodelling and Repair Forecasts

Figure 7-3 presents the spending on residential remodelling and repair forecasts for the

period of 2001 to 2011.

Definition: Above figures represents total expenditure for maintenance, repairs, improvements, additions & alterations and major replacements of all US residential properties.

Note: All figures are rounded; the base year is 2004. Source: Frost & Sullivan

F i g u r e 7 - 3

Decision Support Database: Spending on Remodeling and Repairs of all Residential

Properties—US, 2001—2011

US

Year Mn USD Growth Rate (%)

2001 627,300 -

2002 689,700 9.95

2003 707,000 2.51

2004 745,885 5.50

2005 788,400 5.70

2006 834,916 5.90

2007 885,011 6.00

2008 939,882 6.20

2009 1,000,974 6.50

2010 1,068,340 6.73

2011 1,141,628 6.86

CAGR % (2004—2011) 6.27

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U.S. Nonresidential Remodelling and Repair Forecasts

Figure 7-4 presents the spending on nonresidential remodelling and repair for the period

2000 to 2011.

Definition: Figures indicate total expenditure for maintenance, repairs, improvements, additions & alterations and major replacements of all US nonresidential properties.

Note: Above figure represent the expenditure incurred for maintenance, repairs and improvements of Commercial buildings only

Note: All figures are rounded; the base year is 2004. Source: Frost & Sullivan

F i g u r e 7 - 4

Decision Support Database: Nonresidential Remodeling and Repairs—US, 2000—2011

Year US

Bn USD Growth Rate

2000 161.5 -

2001 158.8 (1.67)

2002 155.9 (1.83)

2003 159.6 2.37

2004 164.9 3.32

2005 170.8 3.58

2006 177.2 3.75

2007 184.2 3.95

2008 191.8 4.13

2009 200.3 4.43

2010 209.9 4.79

2011 220.2 4.91

CAGR (2004-2011) 4.22

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U.S. Roof Renovation Spending Forecasts

Figure 7-5 presents the roof renovation spending forecasts in the United States for the period

2001 to 2011.

Definition: Above figure represents the money spent on renovating roofs of owner-occupied properties.

Note: 1. Figures for 2004 are Frost & Sullivan estimates2. Figures include expenditure on Total Maintenance & Major Replacement

Note: All figures are rounded; the base year is 2004. Source: Frost & Sullivan

F i g u r e 7 - 5

Decision Support Database: Money Spent on Renovating Roofs —US, 2001—2011

Year US

Mn USD Growth Rate

2001 1,449 -

2002 1,869 28.99

2003 2,662 42.43

2004 2,759 3.64

2005 2,870 4.02

2006 2,997 4.43

2007 3,143 4.87

2008 3,306 5.19

2009 3,489 5.54

2010 3,707 6.25

2011 3,962 6.88

CAGR (2004-2011) 5.31

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