Hidalgo, Ma. Vanessa P.

I. Challenges and Opportunities for the Paint Manufacturing Industry in the

Philippines

II. Abstract
The paint industry is continuing to grow in the past few years. Faced by setbacks, such as
health and environmental concerns, raw material sourcing, and a growing market preference
for wallpapers, the industry must be fast in approaching and countering these challenges
and find solutions that caters to the changing needs of the people. With this, the paper
presents an overview of the coatings industry of the Philippines, its main challenges as well
as possible solutions to these problems.
III. Overview Industry
Coating products are substances used as layers that spread over the surface of objects. The
main application of coating products is to decorate and protect materials. The coating products
can be categorized by morphology: liquid coatings and powder coatings. Liquid coatings can
be categorized further into solvent-based and water-based coatings.
Another classification of coatings is by downstream application: (1) architectural coatings
and (2) industrial coatings. Architectural/decorative coatings are recommended for
application to stationary structures, portable buildings, pavements, curbs, fields and lawns.
On the other hand, industrial coatings mean a high performance architectural coating
recommended for application to substrates exposed to one or more of the following extreme
environmental conditions in an industrial, commercial or institutional setting.
In the Philippines, local manufacturers of paint include BOYSEN, Davies, Nippon and Nation
house paint. Majority of paints in the Philippines are architectural paints. Different kinds of
architectural paints in the Philippines are classified as alkyd enamel and latex acrylic paint.
These paints differ on the type of resin as well as their solvent. For alkyd enamel, it uses oil
as its solvent and alkyd as its resin while latex acrylic paints use water as solvent and acrylic
as the resin.
Coatings according to Bierwagen, is any mixture of film-forming materials such as pigments,
solvents and other additives which when applied to a surface and dried, can result to a thin
film that is functional and decorative. Surface coatings includes paints, drying oils and
varnishes, synthetic clear coatings and other products that protects the surface of an object
to harsh scenarios from the environment as well as enhancing the aesthetic features of an
object by accentuating the object’s feature or by concealing them. Usually, the emphasis is
on paints when referring to the coatings industry however other types of coatings would be
drying oils and varnishes. The primary functions of coatings are decoration and protection.
About 45% is used to decorate and protect new construction and maintain existing ones,
including residential homes, public buildings, plants and factories. About 40% of coatings
produced is used to decorate and protect industrial products called product finishes. These
coatings can improve the product lives and make them marketable. The remaining 15% is
used for miscellaneous applications such as traffic paints, vehicle refinishing and protection
of marine structures and vessels.
The coatings industry is one of the largest consumers of solvents. Most of the raw materials
are derived from petrochemical feedstocks and refinery operations. The coatings industry also
uses nonpetrochemical feedstocks such as pigments and additives which are not very
dependent on crude oil and gas prices. About one-third of the feedstocks is comprised of the
nonpetrochemical feed on a volume basis.

Parent Industry
In order to fully grasp the paint industry, one must assess the chemicals global value chain in
order to analyze the totality of the industry. Philippines participates primarily in the
oleochemicals and petrochemicals industry.
Oleochemicals are chemicals derived from biological oils or fats. The hydrolysis of oils or fats
form the basis of oleochemical industry. Petrochemicals on the other hand are chemicals
made from petroleum and natural gas. They are made up of hydrocarbon molecules.
Currently, oil and gas are the main raw materials for the petrochemicals industry due to its
cheap cost, wide access and easy processing.
In 2014, 69% of the Philippines chemical exports were basic/commodity chemicals, followed
by 15% intermediate chemicals and 14% specialty chemicals. The Philippines petrochemical
sub-sector must rely on foreign naphtha and LPG imports while the oleochemicals sector has
linkages to upstream coconut supply.
In order to simplify the chemicals industry, it is classified into two broad groups: basic
chemicals and commodities and specialty chemicals.
Basic and commodity chemicals
These chemicals are undifferentiated chemicals sold in bulk and require limited number of
processes to produce. Chemicals in this category include both organic chemicals such as
plastic resins and synthetic rubber while inorganic chemicals include chlor-alkali, hydrogen
and nitrogen.
Specialty chemicals
These chemicals are differentiated, requiring multiple process to produce them and draws
commodity chemicals as inputs. These products are destined to end-users such as paint,
adhesives and inks.

IV. Challenges

a. Lead Content in Paint

Different lead compounds are added to the paint as a pigment, creating a specific color
depending on whichever compound is used such as lead carbonate which makes the
paint a white or cream color and lead tetroxide makes a bright red paint. The heavy
metal additive also decreases the amount of time that the paint takes to dry, makes the
paint more durable, and causes the paint to be more resistant to moisture. This made
lead-based paint ideal for use in homes, on metal and even in children’s toys.
Lead content in paint is a major source of childhood lead exposure. According to the
Census of Population and Housing, there are 10 million Filipino children aged 0-5 years
and another 10 million children aged 5-9 years old. Children can be hugely affected by
eating lead-based paint chips, chewing on objects, including toys painted with lead-
based paint, or exposure to dust or soil that contains lead from paint. Lead poisoning is
considered by the World Health Organization as a “scourge to human heath for millenia”
as it can cause adverse health impacts to developing fetuses and young children that
are irreversible and untreatable by modern medicine. Lead attacks the brain and central
nervous system to cause coma, convulsions and even death and that children who
survive acute lead poisoning are typically left with mental retardation and behavioral
disruption. At lower levels of exposure, it can cause loss of cognition, shortening of
attention span, alteration of behavior, dyslexia, attention deficit disorder, hypertension
renal impairment, immunotoxicity and toxicity to the reproductive organs.
Government regulations have been legislated to ban the use of leaded paints however,
despite the regulations on the use of lead paint in the United States, toys containing lead
paint in 2007 showed that not all countries enforce the same standards. Some
manufacturers of children’s toys admitted to using lead paints, because it was cheaper
to purchase, easier to apply and had a richer color than other paints.
This transient rules and regulations imposed on the paint industry will surely have a
significant effect on our health especially to children.
b. VOCs in paint – a vital raw material in paint – can cause major concerns to
health and environment
VOCs are solvents that get released into the air as the paint dries. VOCs or volatile
organic compounds are organic chemical compounds whose composition makes it
possible for them to evaporate under normal indoor atmospheric conditions of
temperature and pressure. If we break down the word, “volatile” means a liquid that
evaporates at room temperature, “organic” means that it is a compound that contains
carbon. In paints, VOCs are used as solvents or thinners that work with resin – the part
that binds together all the ingredients of the paint and sticks them onto the wall or
surface – to achieve excellent performance and durability. These solvents facilitate the
paint’s application, drying and formation. If paints were just water and resins, they would
streak down a wall when applied and create lapping.
However, there are risks associated with VOCs. VOCs are linked to a range of health
problems, and one of several health effects is caner. Other health effects besides cancer
include kidney damage, liver damage, damage to the central nervous system, as well as
minor complaints like headaches and eye, throat and nose irritation.
Aside from health concerns posed by VOCs, VOCs are compounds which contain
carbon including methylene chloride, benzene and formaldehyde. VOCs react in the
atmosphere with oxides of nitrogen in the presence of sunlight to form ozone a precursor
to smog. Photochemical smog has devastating effects on the environment. The
collection of chemicals found in photochemical smog causes problems for plant and
animal life. Some plants like tobacco, tomato and spinach are highly responsive to
ozone, so the photochemical smog can decimate these sensitivecrops, tress and other
vegetation. Ground-level ozone also can interfere with the growth and productivity of
trees. The effects of smog on animals are also similar to its effect on humans; it
decreases lung capacity and lung elasticity.
It is necessary for the industry to look for alternatives that can perform the said
advantages of VOCs as an ingredient in paint without the underlying disadvantages to
health and safety of our environment.
c. Energy-intensive process
The paint industry is considered to be an energy intensive process. Since the process
involves a lot of mixing and milling, wherein these processes consume a great amount of
energy since it handles slurry mixtures and size reduction processes, the industry must
ensure that, they can save energy in other areas of the plant.
d. Rise of wallpapers
Also, there seems to be a increasing sales of wallpapers for covering that continued to
generate the most value share within wall covering for 2017. This demand for wallpaper
was influenced by the number of new houses and house renovations in the country.
Wallpapers are preferred because of a wide range of design and fast and easy
installation, in contrast to wall paint, which is cheaper yet only offers solid colors and
takes several days to set and neutralise. This may negatively affect sales of paint in the
Philippines.

e. Availability of raw materials

A big chunk of the chemicals used in the paint manufacturing is imported. In the
Philippines, the paint manufacturers source chemicals from the neighboring countries that
belong to the top ten of chemicals exporter namely, China, Japan and Singapore. Many
other chemical process industries rely on the chemicals industry as their raw materials.
Examples of such industry are rubber, plastics, soap & detergents, pulp & paper,
agrochemicals and adhesives. In this light, it becomes essential that a secure source of
raw materials must be established due to competition for feed input.
Binders/Resins
According to the article by Pilcher’s, total global sales of resins used in coatings system
are estimated to be $31 billion on 15.2 million metric tons. Globally, acrylic resins are the
most commonly sed binder in paint and coatings industry most especially in decorative
paints. Acrylic systems, both aqueous and solvent systems comprise approximately 27%
of binder demand such that acrylic resins tend to be most susceptible to disruptions in
supply as well as price fluctuations. In 2017, shortage of acetone and decline of two major
U.S. suppliers resulted to shortages in methyl methacrylate and led to monthly increases
of MMA.
Alkyds are used almost in every end-use coating system and represent the second most
common type of binder. It comprises of 20% of resin demand in the global coatings market.
Due to decreasing VOC limits particularly in North America, and Europe, use of alkyd
resins continue to drop and the market has been shifting to other types of resin for water-
based and higher-solids formulation. However, new water-based alkyd systems are being
introduced in the market.
Next, polyurethane coatings comprise 21% of the global demand for resins. They are
widely used in the automotive OEM, other transportation, automotive refinish, wood,
industrial finishes, decorative coatings and high performance industrial segments, The rise
in use of polyurethane resins has been growing over the past several ears since they can
be used with lower VOC emissions and high quality performance. Strict VOC emission
requirements pushed the development of polyurethane waterborne dispersions with
improved abrasion resistance compared to waterborne acrylics.
Epoxy resins comprise of 16% of total global demands for binders, they are widely used
in powder coatings. Liquid epoxy resin is used for 100% solids epoxy formulas applied as
concrete surfacers, tank linings, and to enhance certain performance features.
Other binders are amino, polyester, cellulosic, silicone, silicate and vinyl resins. This sub-
segment comprises approximately 16% of total binder demand in the global market.

Pigments

Pigments, both primary and secondary for use in coatings industry were estimated to be
$16.5 billion on 11.0 million metric tons of product. On a volume basis, fillers and
extenders are the largest subset of the pigments category and represent 56% of total
demand for pigments in the coatings system. Compound under this segment include, clay,
calcium carbonate, talc, silica and other inorganic materials.
Second largest subset would be titanium dioxide. It is widely used in decorative
paintings, industrial OEM coatings and industrial maintenance. Titanium dioxide represent
the 31% of all pigments in the coatings industry.
Color pigments play a vital role in the coatings industry as they are used in decorative,
automotive OEM and auto motive refinish, However, color pigments represent only a small
component of pigment demand. Color pigments are divided into two categories: inorganic
and organic color pigments. For inorganic color pigments, iron oxide is mostly used and
represent over 80% of the volume of color pigments. Organic color pigments are among
the high-priced raw materials thus despite their low volume constitute a significant market
share. Organic color pigments are expected to rise in 2018 most especially in the Asia-
Pacific region where China became pro-active in eradicating chemical processes to
improve air quality. Color pigments constitute <6% of volume of all pigments in the
coatings industry.
 Solvents
Solvents volume and revenue in coatings industry in 2017 were approximately, $8 billion
on 6.5 million metric tons of product. They are the key contributors to the VOC emissions
of paints and coatings. With this it is extremely regulated by local, regional, state regulatory
board around the world. Oxygenated solvents comprise over 60% of demand such as
alcohols, ketones, esters, glycols, glycol esters. Hydrocarbon solvents are either aliphatic
or aromatic and comprise of 40% of total usage within non-aqueous medium solvents.
Total solvent usage has been relatively flat over the past few years due to declining usage
of solvents countered by growth of solvent-based coatings.
Additives
Total revenue for additives used in coatings is estimated to be $8.4 billion on
approximately 1.25 million metric tons.
Rheology modifiers are the largest sub-segment, representing over 30% of demand are
used to control viscosity, flow and levelling. Plasticizers are incorporated into formulations
to improve flexibility of the film and coalescence. Biocides are added to formulations to
prevent growth of bacteria. This comprises of 22% of total additives used in coatings.
Surfactants are approximately 19% of additive demand while foam control is at 15%.
Other additives comprise a significant portion which include adhesion promoters,
antifoaming agents, anti-skinning agents, corrosion inhibitors, drier to name a few.
According to Boysen, they source their raw materials from these companies: Empol
Corporation, Polymer Chemicals, Inc., Coastal Bay Chemical, Inc., and Rezcoat, Inc.
Demand for coatings raw materials is directly linked to coatings demand. Over the coming
five years, demand for coatings would grow at 4-5% annually. This would entail a demand
of raw materials of 42 million metric tons. Asia Pacific is forecasted to experience the
greatest volume growth, followed by Europe, then North America.
Influences on Raw Material Prices and Sourcing
Significant numbers of raw materials used in coatings are derived directly from oil for their
composition or indirectly as a result of energy derived from oil for mining. The price of oil
can be highly volatile. If the price of oil doubles, raw material prices will increase by 50%.
Over the last 5 years, price of oil is stable. This implies that raw materials’ prices are priced
at a similar rate to the rate of inflation to 2022 in the next 5 years.

V. Investments to Focus

a. Tackling the lead content in paint and the transient rules and regulations
regarding lead content

The lack of government regulations that restricts the use of lead paint is putting millions
of Filipino children at risk for lead exposure and poisoning. Recognizing the problem, the
government through DENR has put lead and its compounds in the country’s First Priority
Chemicals List. These are the chemicals that the DENR has determined to “potentially pose
unreasonable risk to public health, workplace and environment.” In September 2013, the
DENR-EMB developed a final version of the CCO for lead and lead compounds that will
cover the importation, distribution, manufacture and use of lead and lead compounds, as
well as storage, transport and disposal of wastes.
Aside from more stringent implementation of regulations, paint manufacturers have replaced
white lead with a less toxic substitute, titanium white, which was first used in paints in the
19th century. Titanium dioxide is considered safe enough to use as a food coloring and in
toothpaste.
b. Tackling VOCs content in paint

As opposed to using solvents in paint as their medium, water-based paints continue to

increase in production as environmental regulations become stricter. These solvents which
readily evaporate, contributing to the formation of greenhouse gases in the atmosphere.
With the use of water-based paints, it develops a premium low-VOC product that meets the
same high standards with that of oil-based paints.
Also, the proper education for government employees as well as to paint corporations
themselves to implement regulations such as air quality monitoring with one and only one
standard that is followed and understood by everyone. These laws are not written to be just
read by the ones who have studied them and made them into laws, but it is for everyone to
follow and must take into consideration. When the government and the corporations have
mutual understanding on this, then it can work well with tackling the VOCs content of paint.
c. Addressing high-energy consumption of paint industries
Improvements in the paint industry mostly relies on how to minimize the energy
requirements as it relies on many mechanical processes such as milling and mixing. These
processes require high energy input and so for BOYSEN, they employed the high but
narrower space for their plant. Their process started off at the top then as the process
progressed, it leads to the first floor of the plant. This kind of plant set-up reduces the
equipment needed to transfer the fluids thus also saving energy.
d. Addressing the shift to wallpapers
Research and development of increasing the range of colors of paint is an area they can
start to work on. Since paint is cheaper than wallpapers, managing the problem that only
solid colors are available for paint will surely make the competition tighter. Also, according to
the discussion above, improving on the characteristics of paint such as its drying time and
smell should also be on their priority. Continuous innovation that will cater to the changing
needs of the consumers will surely maintain the rising trend of the paint manufacturing
industry.
e. Improvement of raw material sourcing
According to Boysen, the company sources its raw materials both locally and internationally.
For imported raw materials, they acquire the materials six months in advance, while locally
sourced materials are obtained just in time. This strategy is of acquiring feed materials is a
good one in a way that it reduces the land area for raw material storage when getting raw
 materials from local companies just in time and securing raw materials internationally six
months in advance to be able to have a stable source of raw materials and will not experience
shortage of supply.

Raw Material
Most of the raw materials for paints are imported. In the Philippines, the neighboring countries
that are part of the largest exporters of chemicals are the main suppliers of feedstocks in the
paint industry namely, China, Japan and Singapore. According to the Cua, EHSS Engineer in
BOYSEN, the pigments used are from Taiwan and United States and the additives are from
Canada and Thailand. However, these local companies also supply raw materials for paint:
Empol Corporation, Polymer Chemicals, Inc., Coastal Bay Chemicals, Inc., and Rezcoat, Inc.
Distribution
BOYSEN employs the First In, First Out strategy in their storage of products in order to
avoid product expiry where the life span of paints is 2 years. They are stored in a rack that
are inclined at a 10 degrees angle so that gravity can govern in the transferring of the boxes
of paints from one side of the storage facility to the other where the trucks are located.
These trucks will then distribute the paint products to retail stores

VI. Conclusion
There is no denial that the paint manufacturing industry faces many challenges to ensure its
growth. This sustainability that we can observe is a product of many research and
development as well as partnership with the government to ensure that there is a continued
customer satisfaction and trust. It is only through well-maintained joint connections with the
government, as well as awareness of the customer needs that one can ensure
sustainability. In the case of paint manufacturing industry in the Philippines, the setbacks are
faced with solutions, and the companies take the initiative and responsibility of producing
paints that are well suited to the Filipino community. Although, it will still have to do a lot of
improvements, the industry’s attitude and take on the issues regarding the paint industry is
remarkable, and conscious to its society and the culture. Thus, the paint manufacturing
industry will still continue to grow in the next few years.

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