PaintSquare.com


The First Word in Protective & Marine Coatings

A Product of Technology Publishing / PaintSquare
JPCL | PaintSquare News | Durability + Design | Paint BidTracker

Free Download of

Paint and Coatings Industry News

Main News Page


Paint Shortage, Roadwork Delays Persist

Friday, June 18, 2010

Comment | More

A global shortage of highway paint is expected to continue through the summer and possibly into the fall, squeezing contractors and transportation departments, upending project schedules, and increasing production pressure on manufacturers nationwide.

At issue is a shortfall in the production of methyl methacrylate (MMA) and titanium dioxide (TiO2), critical raw materials in acrylic-based highway paint, the leading pavement marking material.

The shortages arise from a perfect storm of factors: spiking demand, slumping production, cost increases, litigation, plant malfunctions, and a natural disaster.
 
“This is an industry-wide issue and is due to a combination of strong demand, and planned and unplanned outages across many industry producers globally,” said Rebecca Bentley, a spokesperson for The Dow Chemical Co., one of the suppliers affected.

Hardest hit has been global MMA market leader Lucite International, which supplies 25% of the world’s MMA. That company suffered a double whammy in late April, when its Memphis MMA plant—already scheduled for a four-week shutdown for updates—was caught up in the deadly flooding of the Cumberland River. The disaster forced Lucite to declare a force majeure, shut down the plant for an additional week, and resume with only limited production that required rationing MMA to customers.

“We anticipate that our ability to meet supply commitments will be limited, and we will be allocating our supply of MMA on a fair and reasonable basis and in compliance with applicable contract terms,” the company told its customers in a letter May 28. The rationing plan began June 1 and “remains in place until Lucite resumes the levels of inventory that existed prior to the declaration of force majeure,” said company spokesperson Hannah Sloane.

 A force majeure (“greater force”) clause relieves a party of liability if it is unable to perform its obligations in cases of natural disaster or other factors outside the company’s control.

Dow also announced a force majeure in early May, due to unspecified “production issues” at the company’s MMA plant in Deer Park, Texas. Those issues “slowed down our manufacturing rates for a very specific period of time,” Bentley said. She declined to elaborate but said the problems had forced a partial shutdown of the unit. Widespread news reports of a fire at the facility were erroneous, Bentley added.

Global industry consultant Gerhson Lehrman Group attributed the Dow shutdown to mechanical problems that “rapidly led to a suit” by chemical manufacturer Arkema Inc. “for a temporary restraining order, which was granted on May 14  and effectively forced Dow to supply Arkema at 100% of contracted rates” when the plant returned to its full manufacturing rate on May 16. “Arkema claimed successfully that they had prepaid to Rohm & Haas Corp. for capacity rights and that the contract specifically gave them preference in the event of FM,” reported Gerhson Lehrman Group analyst Ian Davenport.  The ruling further tightened supplies for Dow’s other MMA customers, he reported.

“Supplies are still constrained as material makes its way through the supply chain,” said Bentley.

The plant problems came on the heels of already-tightening supplies of both MMA and TiO2 across the industry. Inventory was reduced and production capacity slowed as construction plummeted in 2008 and 2009. Price increases followed.

That was the situation when billions of dollars for “shovel-ready” projects were suddenly approved and released with the passage of the American Recovery and Reinvestment Act in 2009. Production could not be ramped up in time for the busy road-construction season this year.

The upshot has been project delays and frustration nationwide, said Brian Turmail, spokesman for the Associated General Contractors of America.

“What we’ve heard is that most of the highway paint suppliers were telling contractors that they would get 50% of the paint they got last year, and it would come at a higher price,” said Turmail.

The shortage has led state and local departments of transportation to defer projects and relax some rules, Turmail said. Texas, for example, has halted all road repaints, saving its paint for new roads only. And Virginia has chosen to use a lower-quality paint for its repaints. Those states, as well as Washington, North Dakota, Ohio, and Illinois, have been “most vocal about the challenges,” Turmail said.

Concerned that private (non-DOT) contractors would be held responsible for the delays and on the hook for the price increases, Associated General Contractors contacted the American Association of State Highway and Transportation Officials in mid-May, seeking flexibility for contractors and projects.

“Our primary concern is that we don’t want contractors to get penalized by states for a product chain supply that is beyond their control,” Turmail said.

Since then, “a lot of states have become more flexible” with contractors about both cost and deadlines, he added.

Although frustrating, the current predicament is beyond the manufacturers’ control, Turmail says. It may take another three months for the situation to return to normal, he says, but that’s an improvement over the estimates he had last month.

“The situation is clearly better,” he said. On the other hand, he added, “We suspect contractors will have a tough time acquiring paint and will pay more than they did before.”

   

Tagged categories: Construction; Dow Chemical Company; Roads/Highways

Comment Join the Conversation:

Sign in to our community to add your comments.

CS Unitec
Peening Preparation Tools

CS Unitec’s hand-held scarifiers are an ideal alternative to small-area shot blasting for cleaning and preparing concrete & metal surfaces. info@csunitec.com


LS Industries
LS Blasters: Optimum Steel Cleaning Efficiency

Simplify surface prep with the precise shot control of LS Blasters. Our blast technology delivers optimum coverage and finish. 800-533-8008


US Minerals
US Minerals -
Black Magnum

With nationwide production and distribution capabilities, U.S. Minerals supplies a complete range of coal slag and other abrasives to meet all of your blasting needs.


JPCL Europe
Don’t miss an issue!

JPCL EUROPE offers essential news and knowledge for protective and marine coatings professionals in Europe, the Middle East and Africa. Subscribe now: www.jpcleurope.com


SSPC: The Society for Protective Coatings
http://www.sspc.org/

Join SSPC and Enhance
Your Career !


ABKaelin, LLC
Quality is our bottom line

Services include:
• Environmental, Health &
  Safety
• Contractor QP Certification
• Quality Assurance Programs
  and Auditing
• SSPC C3/C5 and other
  Training
• Coatings
• Design/Construction
See our website at abkaelin.com or contact us today abkaelin@comcast.com


MMLJ
Superfast Dustless Abrasive Blasting - Watch Video

Dustless Blasting creates no dust plume so others can work nearby unaffected. Maximize Productivity! Watch our numerous YouTube videos to learn more.

 
 
 
Technology Publishing

The Technology Publishing Network

The Journal of Protective Coatings & Linings (JPCL) PaintSquare
Durability + Design Paint BidTracker JPCL Europe

 
EXPLORE:      JPCL   |   PaintSquare News   |   Interact   |   Buying Guides   |   Webinars   |   Resources   |   Classifieds
REGISTER AND SUBSCRIBE:      Free PaintSquare Registration   |   Subscribe to JPCL   |   Subscribe to PaintSquare News
MORE:      About PaintSquare.com   |   Privacy policy   |   Terms & conditions   |   Site Map   |   Search   |   Contact Us
 

© Copyright 2000-2014, Technology Publishing / PaintSquare, All rights reserved
2100 Wharton Street, Suite 310, Pittsburgh PA 15203-1951; Tel 1-412-431-8300; Fax 1-412-431-5428; E-mail webmaster@paintsquare.com