External Forces Drive Paint Cost Increase
Remember how hard it was to find toilet paper, hand sanitizer and sanitizing wipes in spring 2020?
The same forces that led to runs on basic supplies a year ago – increased demand and blockages in the supply chain – are now driving significant increases in paint cost. H.J. Holtz & Son President Rick Holtz says it’s been hard to watch the steady climb.
“One paint company has raised prices 13% this year,” Holtz says. “Consumers are seeing that in stores, and we see it, too, when we go to buy from our suppliers.”
According to PaintMag.com, which reports on the painting trade, the worldwide paint supply was hit early on by lockdowns and business closures, just as other industries were. Once businesses were allowed to reopen, a shortage of containers made it hard for paint to actually be moved from manufacturing sites to distribution locations.
Other problems in the supply chain can be traced to issues at specific plants. Facilities manufacturing epoxy resins in China and Korea experienced fire and other fabrication problems, which halted and slowed production. The Institute of Coating Technologies, a Greek organization that monitors the worldwide industry, noted in February 2021 that nearly all the raw materials involved in the coating industry increased in price. With raw materials responsible for more than 50% of the cost of paint, a hike in component prices drive the final cost up.
Then, in February 2021, a deep freeze in Texas shut down the approximately 150 petrochemical facilities in the Houston region for three days. According to Vertical Research Partners, a Connecticut equity research firm, the cold snap took three-quarters of the ethylene production capacity offline for days. Ethylene is a component of paint, used to improve flow and stability, and enhance application properties.
On top of supply and manufacturing challenges, demand for paint has soared. Homeowners spending more time than usual in their spaces have turned to paint to comfort and inspire. Thanks to low interest rates, home sales hit a 14-year high in 2020, according to the National Association of Realtors. New homes need paint, and older homes going on the market often get a fresh coat, too.
“We hear from clients every day how important their homes are to them now,” Holtz says. “We love being able to help people make their spaces feel fresh and new.”