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  Future of industries - Hardware Industry  
     
     
 
Hardware indudtry
 
Shining Perspective
Paint Company’s global strategy is linked to protecting the environment for future sustainability
Stringent environmental laws are forcing companies towards eco-friendly innovation
Eco-friendly product innovation is always a costly affair
High cost of product innovation could be managed by volume and increasing per capita
consumption to bring affordability
Affordable innovation will have far reaching impact on the society
 
 
Most rapid gains will come from emerging markets like India and China. DIY (Do Your own paint) jobs will become
an industry norm in developing world as home size continues to decrease and cost of occupancy continues to rise
and consumers find it convenient and economic to paint their own houses.
 
Industry will wake up to the increasing consciousness about environment among consumers and their demand for eco-friendly paints. This will drive the shift to water based paints.
 
A single most important phenomenon with face-altering consequences for hardware industry is demand for lower energy consuming buildings and use of eco friendly raw material.
 
 
  Industry Growth Drivers
  Population growth
  Economic growth
  Decorative
    Construction level growth-Residential & Commercial
    Architectural and other display purposes
  Industrial- Quantity of specific end-use products manufactured such as:
    Automobiles- cars, trucks and planes etc.
    Engineering & Consumer durable
    Furniture
    Containers
  Easy availability of loan
    It will drive both construction and automobile segment
  Increasing investments in infrastructure
  Govt. favorable policy
    Fiscal incentives given by the government to the housing and auto sector
  Product innovation
    Lower energy consumption in a building and use of more eco-friendly raw materials even
if it pushes up costs
  Emerging markets
    Growth is expected to be particularly strong in China and India, as well as in Russia and Brazil
  Globally, the decorative coating segment has grown at an annual rate of more than 5% in volume
and ~8% in value over the past five years
  Similarly, industrial coatings have grown more than 6% annually in volume and slightly more than
7% in value terms globally. Geographical contribution (%) by Volume
    Asia Pasific- 40%+
    Europe- 25%+
    NAFTA- ~20%
    Latin America & Rest of the world- 14%
     
  Industry Competitive Scenario
  Intensifying competition between Global/ national players
  The Global paint & coating industry is dominated by large, globally oriented firms for which
coatings are a core product line
    The industry encompasses over 10,000 firms, although most are small, batch oriented producers
  Companies are focusing on brand building
     
  Industry Complexity
  Taxation policy
    Custom duty
  Entry barrier- Huge capital investment
  High input cost
  Raw material intensive
    Paint is a raw material intensive industry
    It takes over 300 different raw materials to produce paint, most of which are petroleum-based
    It constitutes approximately 30%-40% of the total manufacturing cost
  Stricter environmental Norm
    Stricter environmental controls are forcing the paint industry to adjust many of its products and
processes, forcing the sector to become more dynamic
  Raw material Intensive
  Price sensitive sector
  Market runs on credit
  Managing distribution since distribution is the key
  Managing product differentiation
 
  Industry Pain Areas
  Economic recession/ slowdown
  Crude oil price fluctuations
  Currency risk- exchange rate fluctuation
  Product commoditization
    Identical range of products for the decorative paint market
  Profit margins are low
    Thus volumes play a major role
  High investment in technology
    Modern and updated production technology needed
       
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