Auto-paint plant lines are too complex and expensive to consider introducing new suppliers, say paint industry leaders.
As a result, the top three industry coatings giants -- PPG Industries, BASF and Axalta Coating Systems (formerly DuPont) -- have become too big to fail.
"When you look at a car plant, one of the most significant investments is the paint shop," says Christopher Toomey, senior vice president for coatings solutions for North America at Ludwigshafen, Germany-based BASF. "No plant manager wants their plant shut down because the paint shop isn't working. The pressure ratchets up in a hurry."The actual cost of paint on a car is small, representing 3 to 4 percent of the vehicle's total value. But the paint shop is one of the most complex elements in a vehicle assembly factory and can come with a price tag of $400 million or more.
The multistep process of dipping, spraying and baking gobbles up huge amounts of energy, water and floor space, making the paint shop a major chokepoint in the manufacturing process if trouble hits. And carmakers demand a continually evolving kaleidoscope of new, fashionable colors that are durable and can be applied with maximum efficiency and minimum environmental impact.
As a result, the three paint supplier leaders hold sway over a $10 billion business to a degree found in few other sectors of the supply base.
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