Paint Shortages & Price Volatility

by Brandon Stendal, Stone Valley Painting

The past year has been marked by paint shortages and cost increases that have been unprecedented in my 20 years working in the painting industry and nearly 30 years working with common interest communities.

At the Painting Contractors Association Expo in Orlando in March, I took the opportunity to talk to representatives of major paint manufacturers and distributors to learn their perspectives. To promote candor, I promised each of them I wouldn’t identify them by name or company. Their thoughts and opinions are woven together throughout this article.

Supply Does Not Meet Demand

Perhaps not surprisingly, it all came down to simple supply and demand. We currently have limited supply due to a variety of factors which are detailed below, while demand increased due to Covid, with people cooped up in their homes and filling their time with home improvement projects.

Raw Material Shortages

Initial constraints on supply in 2021 came with the February freeze in Texas and the ensuing power crisis, which took many manufacturing plants offline due to major damage from freezing pipes. This affected many raw material suppliers for paint manufacturers, among other manufacturers that rely on resins. Weeks later, an alkyd resin manufacturing plant explosion occurred in Ohio, further reducing raw material supplies.

Raw material suppliers invoked force majeure clauses of contracts, and paint manufacturers could not receive sufficient raw materials needed to make their products. Allocations were made for raw materials based on purchase history.

Labor, Shipping, Oil, Gas & Paint Cans

Labor costs increased, which impacted all phases of production and shipping. Additionally, there were cargo ship delays in California. Surging oil prices and high gas prices increased transportation costs.

The one and only metal paint can manufacturer in the United States increased their price by 30%. You read that right, there’s only one manufacturer of metal paint cans in the country!

More Price Increases on the Horizon

Paint price increases in the double digits have been the norm, not the exception, and multiple price increases in a matter of months are not uncommon. One manufacturer had a 17% price increase in November, followed by another 17% price increase in March.

Some manufacturers predicted another price increase in June. The largest of the year so far came in May, at 20%, followed by price stabilization. Others are predicting one, two, three, or even four more price increases before year’s end.

Record Sales, Diminishing Profits

With all these price increases, I expected to see extraordinary profits on the part of our largest publicly traded paint supplier. Instead, according to their 2021 Annual Report, they increased sales by $1.58 billion in 2021, but profits were down by $166 million year over year. Needless to say, we already received another price increase from them in 2022.

What You Can Do

First and foremost, plan ahead. I am confident more price increases are likely this year. If you have a project you plan on getting done this year, it’s best to bid it sooner rather than later and get it under contract. This will enable your contractor to pre-purchase materials for your project or to alert the supplier of the materials needed for your project and lock in material prices to protect against future increases.

Rely on the experts. If you have an existing relationship with a painting contractor, they will be able to guide you to the most appropriate products to use for your project that will provide the best value for your community. This does not always mean the most expensive product or the least expensive product, but the best product for the application.

Another approach is to have a specification drawn up by a paint manufacturer representative. While you will receive recommendations for that particular manufacturer’s product line only, they will give you their best recommendation of the ideal solution that their company offers for your community’s needs. Again, this does not always mean the highest grade/most expensive paint, but the paint that is best suited for the job.

Price volatility is such that equivalent products between one manufacturer and another are sometimes three times more expensive. This is more typical for specialty coatings, yet these are wide price variations that previously did not exist.

What’s Next

I expect pricing will stabilize by the end of this year. Some manufacturers did not increase prices as drastically as others and enjoyed record profits on increased sales in 2021. Yet, due to “market forces,” they still pushed through a 20% price increase in May. My hope is that as prices stabilize, we will see “market forces” cause some prices to retract. Time will tell.

This article originally appeared in the Summer 2022 Issue (Vol. 22, Number 3) of CIC Midwest News, published by the Common Interest Communities of the Minnesota Multi Housing Association.