Scarcity of Blue Paint captures the effects of the Supply Chain Crisis

2021-12-04 by EPR Staff

The paint industry is the latest to feel the lingering effects of the global supply chain crisis.The industry has been hit by increasing costs that have resulted in smaller profit margins for its players.

What makes the situation in the industry worse is how complex the supply chain of paint already is, as paint is a commonly used industrial item that is needed in virtually every sector, from cars and construction to aerospace and electronics.

Although the crisis is being felt in several industries and sectors, responses to rising costs of production have varied by industry. Some companies are. opting to transfer the extra costs to customers, while other companies have folded, courtesy of exploding prices.

The problem specifically lies in sourcing materials and additives used for making blue paint in different shades, because more than 50 ingredients are needed to make paint. Getting the additives required to complete the process has become increasingly difficult as the cost of the required raw materials for creating paint has risen more than $323 million over the past year, threatening the survival of the industry players in the process.

The problem isn’t limited to the US either as it is a global one that even Europe’s biggest paint manufacturer, AzkoNobel, isn’t immune to.  According to Bloomberg, the company has nearly exhausted its materials for manufacturing different shades of blue paint. It is also being hit hard by the scarcity of color tint, as the ingredient has become nearly impossible to obtain which is disrupting the paint industry.

The entire paint industry is valued at $164bn, and is dominated by international paint-makers like Azko Nobel, PPG, and Sherwin-Williams. All of these companies are taking the brunt of the crisis, a situation worsened by the rise of DIY brought about by the pandemic and lockdown.

The fact that there have recently been extreme weather events in places like Louisiana and Texas has only worsened the issue, because the refineries that process paint ingredients there have halted operation.

The most direct effect of the crisis on consumers is increased prices, which is the route that several paint makers have opted to take, in light of the crisis. Because oil and natural gas are so linked to the raw materials in paint, the rising costs of these items have also increased the costs and limited the supply of paint.

According to sources, paint additives are the worst-hit of the commodity’s raw materials, yet they remain absolutely vital to the commodity. Paint manufacturers have had to devise a way around this by sourcing for additives in multiple ways which has brought about the realization of the importance of regional supply chains.