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Regional leadership driving changes throughout DuPont's global businesses

Lewis Manring; Antônio Carlos Oliveira

Performance coatings VP; Latin America director of automotive systems/DuPont

Published  Monday, October 5, 2009

DuPont's performance coatings division, a large supplier to the automotive industry, expects positive results from markets in Latin America this year, particularly Brazil.

BNamericas sat down with DuPont global VP for performance coatings, Lewis Manring, and the company's director of automotive systems in Latin America, Antônio Carlos Oliveira, during Brazil's national association of paint manufacturers Abrafati's international congress in São Paulo to learn about the importance of the region for the company's performance coatings business.

BNamericas: How would you evaluate the contribution of Latin America to DuPont's performance coatings business?

Manring: There are two important aspects of the performance coatings division in the region. Firstly, it is a very successful business and it is run really well. We have excellent sales, marketing and technical support. It is a good, solid business within our global portfolio of performance coatings. But most importantly, Latin America is the region that is leading our thinking to make our business more profitable and efficient.

BNamericas: Why is Latin America driving these changes and not other regions?

Manring: I would say leadership.

BNamericas: And Brazil specifically? How important is the country within Latin America and also globally?

Manring: We have two major production and business centers in Latin America, one in Mexico City and one in Guarulhos [in Brazil's São Paulo state]. I think the business in Brazil has been an example of how you can make it through [an economic] cycle. We all know how to make money when the cycle is at the top, when demand is peaking, but being able to run the business so that it is effective through the complete cycle is something we are learning from our leadership in South America.

The country continued to make an important contribution to the coatings systems division, not only from a financial point of view, but also from a business process point of view. Brazil is very important for DuPont.

BNamericas: What segments does the performance coatings division supply?

Manring: Our major markets are automotive OEM [original equipment manufacturer] or the automakers, and automotive refinish, which is a quite different business.

Automotive refinish can have some connection [to OEM], using the same colors, for example, but the coatings are quite different, applied in different conditions with different requirements. These two segments account for 75% of our business in South America.

The other 25% is a number of industrial businesses, some of them are related to transportation, like heavy duty trucks, but there are also coatings for electronic applications.

BNamericas: How have these markets been performing since the onset of the crisis?

Manring: I would say from the automotive production point of view there was a big downturn. With the stimulus packages that have been put in place, sales have stood at 80% or 85% of what they were prior to the financial crisis. The question is whether that will continue as the government starts to withdraw incentive programs. It is different in each region but the indications for Brazil, and maybe the rest of South America, is that the economy is a lot more robust than people had anticipated. From the automotive production point of view the US will struggle for a while.

The refinish business to some extent could be recession-proof, except that during a recession people might be more likely not to repair their cars after accidents.

The third business area, the industrial segment, is all over the map. For example, people could just stop buying heavy duty trucks at the moment and it doesn't mean those trucks aren't necessary anymore. For electronics, demand has remained steady and there are a lot of opportunities in environmental sustainability, like windmills which need electrical generators to create the electricity from the wind.

Anyway, in South America, I would say that sales never dropped below 80% of what they were last year.

BNamericas: Is that also the outlook for the full year, with sales at 80% of what the division reported in 2008?

Oliveira: The final quarters of 2009 will be much stronger than we expected. The automotive industry was less impacted in Brazil and has recovered faster than other markets as a result of government incentives. However, the local industry has struggled with export volumes since car sales have declined everywhere else. Brazil will export roughly 45% fewer cars this year than in 2008. But fortunately domestic car sales have been increasing compared to 2008 and there will be an improvement of about 7-8% for the whole year.

As DuPont supplies the major manufacturers in the industry, we are taking advantage of the relatively strong domestic market. DuPont is going to have an extraordinary year in the region, particularly in Brazil due to the fast market recovery.

BNamericas: What is Latin America's share of performance coatings revenues worldwide?

Oliveira: About 25%.

BNamericas: With DuPont's strategy of focusing business development on the emerging markets, do you expect that percentage to increase in the coming years?

Manring: We forecast growth in the revenues, but not a growth in market share.

BNamericas: What have been the most important developments in the performance coatings division in recent years?

Oliveira: One is the new generation of clear and scratch resistant coatings. Also formulations with no heavy metal content, which represent great advantages.

BNamericas: Has there been any important development conceived in Brazil?

Manring: We work with a global R&D team, but what is being exported from Brazil is the key manufacturing philosophy. Brazil actually is teaching us to make better and more reliable paints than in the past.

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