Can you guess what color of paint this is about to be?
green? blue?
There's color all around us that we do take for granted.
We look at every single day, don't appreciate.
And that all came from just the correct amount of color pigments into a gallon of paint, basically
chemistry in a gallon.
The color economy touches nearly everything.
And so no matter what you buy, it's got a coating on it.
But right now, paint may be harder to come by.
And so there is a shortage
Or at the very least, more expensive.
It's due to a confluence of factors.
It's kind of a Whack-A-Mole.
If something goes wrong and gets sorted out then something else happened.
It takes specific pigments and access to global trade networks to move color around the world.
Who has the pigments to create that product?
Color pigments is large.
There are hundreds.
Ultimately, there were thousands
That makes paint vulnerable to supply chain issues and climate change.
Two of the largest paint companies, Sherwin-Williams and PPG, have cited worsening supply chain
shortages, impacting their ability to manufacture product.
Meanwhile, home improvement retailers like Lowe's and Home Depot have seen earnings soar as customers
spend money on fixing up their homes.
You know, our sales have actually gone up pretty substantially.
How long the disruptions will last is a matter of debate.
So why can't businesses and consumers find the colors they need to paint the world as we know
it? There's a lot of different kinds of paints and coatings, but no matter
what, it starts with science.
Well, my name is Tony Piloseno.
I am the owner of Tonester Patents here in Orlando, Florida.
He fell in love with mixing paint during his part time job while still in college.
Today, let's make a brand new paint color.
He brought that love of color to TikTok.
It falls into like that oddly satisfying category.
The cool part about paint colors is that it's measured very precisely of how much pigment is
in each gallon to achieve a certain color to make a gallon of paint the exact same as the next one.
You have to have that same amount of color pigment in it.
As the industry began to progress through the age of industrialization, synthetic materials made from
oil and natural gas came into play based on polymer resins.
They outperform the organic materials in terms of durability, adhesion, chemical
resistance, oil resistance, water resistance, and so that took over the market.
The paint shortage is mainly isolated to synthetic paint.
It is quite a fragmented market.
The biggest part of the market is decorative, architectural, residential, and nonresidential
paint. interior, exterior.
Then you've got those coatings that are applied in a controlled environment, factory environment,
automotive assembly plants, coatings that are applied on food containers and beverage containers.
Third, then are field applied coatings.
The main paint ingredients are the pigments, which provide the color and hue resins for binding,
solvent, and additives.
Solvent or water holds The other ingredients like the additives, and the additives vary, but can make
paints, fast drying or scuff resistant.
Things like that.
The largest ingredient is the resin.
The second largest is is the TiO2.
We'll call it the white pigment titanium dioxide.
TiO2 is the most costly pigment, and it represents approximately thirty one percent of all
pigments used as coatings raw materials, then pigments or colorants are added.
As the modern color industry developed, so did the standards for producing colors.
Swatches are used to communicate color accurately, so different companies can achieve the same colors,
At least subconsciously, the color is a language that explains something I think from a brand point of
view.
Every color and color combination expresses something different.
I couldn't see Starbucks moving off of their green or Coca-Cola moving off of their red.
Thus, the standardization of color was born like the color index.
Another example is the Pantone color matching system, a standardized color reproduction system, and
it has thousands of colors.
It's measured visually by expert color technicians, but it's also being measured spectrally.
So scientifically, it has to be a clear standard, not a reference, a standard that's what
people expect from us.
That kind of consistency, whether it's our cotton formats or pigment formats or our print formats.
Raw material shortage is still it's something we have a meeting once a week to discuss, you know, what are
we cut out of this week?
I get orders that sometimes I can't even keep up with.
Demand for paint materials soared over the pandemic as those quarantine took to DIY projects and home
improvement, but supply couldn't keep up with that demand during the setbacks Covid caused
manufacturers. Not to mention shipping,
Dealing with shipping problems and driver shortages, and dealing with containers, not being able to come
onshore and being offloaded.
Dealing with the Suez Canal blockage it's a little different when you compare it to Walmart and
Target because they're bringing in finished products.
They're not bringing in intermediates and raw materials that have to be manufactured and
produced. Here in the U.S.
Pigments are often imported from Asia.
The vast majority of colored pigments are produced in India and China.
They're not produced here.
I do know that companies have been shipping raw materials by airfreight to meet the customer
demand.
We have been flying in things because we've had to.
We're doing everything we can to protect our clients.
Another incident that affected the industry,
Lyondellbasell, which is a major supplier of acetic acid, a precursor to the
vinyl residents that go into interior paint.
They had a major accident, and it took down a major core unit that supplied product globally.
And so the entire global supply chain felt that accident.
Climate change has also impacted production.
In a statement to CNBC, paint manufacturer PPG said a number of global suppliers have been impacted by
disruptions due to weather events in 2021, as well as recent Hurricane Ida impacts, the deep
freeze in the South slowed production of petroleum and plastics in 2021 that impacted a critical
ingredient for all kinds of paints and coatings: resin.
The ice storm hit inventory was extremely low because of COVID.
A lot of times our roadblock will not be the bulk of resin that's going in the pigment.
It'll be the one thickener in there, but you need it to make paint right?
And so that one drum might be the thing that you're waiting on.
That's the difference in making thousands of gallons [that] are not making anything at all.
Whole thing about this raw material shortage is that things come in waves, right?
Sometimes you'll have an abundance of certain materials, products and other times that's not so
much the case.
All of these impacts reach both consumer and business wallets.
We have seen price increases.
We are absorbing pretty much all of that.
We just want to protect our customers.
At the same time, I don't know how you don't in some ways pass it on to the consumer.
Actually got a couple of price increases again today, so those are still kind of rolling in.
We're hearing some stabilization in the second half of 2022, but I don't think that means prices are
going to decline.
Inflation at the consumer level is definitely one way that the consumer is seeing this.
The second is having enough product available.
Sherwin-williams told CNBC in a statement production disruptions, coupled with surging architectural and
industrial demand, have pressured raw material supply and rapidly driven prices upward.
Sherwin-williams is the largest paint manufacturer in the U.S.
with eighteen point four billion dollars in annual revenue.
Meanwhile, PPG told CNBC in a statement that it continues to take an aggressive approach to securing
materials and carriers to minimize the impact to our customers.
Price increases have been coming at them left and right.
Almost every month, every two months, significant price increases across the board in all of the major
chemical categories.
Producer prices for painting and coating manufacturing rose 15.7% percent in December, 2021
from a year ago.
Meanwhile, on a 12 month basis, the producer price index overall was up 9.7% percent
to end 2021, the highest calendar year increase ever in data going back to
2010. At the same time, sales totals have been rising.
Sales at paint and wallpaper stores spiked 7.8% percent annually in June 2021, to $
1.34 billion dollars.
The pace of sale increases has slowed, but is nevertheless robust.
For example, the latest data available in November 2021 shows $1.1 billion in
sales. Paint could continue to be scarce and costly for the foreseeable future.
I do think most companies are very, very thoughtful, and they want to keep their clients.
At the same time, costs do rise, and they also need to be profitable.
If nothing else happens in the chemical supply chain.
Today, we're forecasting fourth quarter of 2022 and and possibly into the first quarter of 2023
before we see some sort of normal.
But, the industry has resilience.
The industry has good people.
We will get through it.
As many negatives, there have been about everything that's gone over the last year with supply chain and
everything, it has opened people's eyes to alternatives.
You know, when these giant corporations don't have product or their shelves are bare or something,
there's other people to shop from out there.
You know, there's smaller family owned businesses like we are.