Executive Interview: Axalta Coating Systems - BodyShop Business

Executive Interview: Axalta Coating Systems

Top executives at Axalta Coating Systems (formerly DuPont Performance Coatings) discuss their name change, global strategy and predictions for the collision repair industry.

michael bennett, north american marketing manager.The Carlyle Group recently finalized its acquisition of DuPont Performance Coatings, and announced the renaming of the company to Axalta Coating Systems. 

 With many in the collision repair industry wondering about the company’s new name and strategy, BodyShop Business and aftermarketNews.com interviewed two top executives at Axalta with the intent of answering the industry’s questions: Michael Bennett, North American marketing manager, and Michael H. Crickenberger, global marketing, communications and strategic planning director.

BSB: Why are you changing the name from such a universally recognized one?

Bennett: The red oval and the DuPont name is a strong brand and enjoys fantastic recognition in the marketplace. But today, we’re no longer owned by DuPont, so we must change with that transition. We plan to ensure that our market understands that while the name is changing, the same people, products and services that have been in this marketplace for 90-plus years are not changing. And so the trick here is to transition that recognition from the DuPont name to Axalta by giving the clear understanding that, while the name is changing, the legacy will remain.  
Michael H. Crickenberger, global marketing, communications and strategic planning director.

Our brands such as Standox, Cromax Pro and Spies Hecker will not change. Our product lines enjoy great recognition in the market today, and we have no plans to change any of them.

Crickenberger: This was the result of a fairly long and intensive process to come up with a name that was unique. And when you do business in 130 countries like we do, that’s a significant process. The name is derived from other words, but like many names, it’s made up. But we can look at it and build from it, and it’s really what this business stands for. When you say ‘Axalta Coating Systems,’ we’re emphasizing the systems we supply to our customer and the systems we utilize in our own plants and processes.

Having ‘coatings’ in the name now signals to customers that these coatings are the sole and only focus of our business. There’s no need to repatriate revenues to parent company DuPont – we’re now an independent business. And Axalta does resonate with the concept of a heightened purpose, to exult, to drive the performance of the business. The combination of ‘Axalta’ and ‘Coating Systems’ makes a name the company felt really wrapped up who we are into a good package.

BSB: How long will body shops and jobbers be able to display the DuPont logo on their business cards, stationery and buildings? What’s going to happen if they ignore that and just continue to use the logo?

Bennett: The DuPont logo can remain at shops for many months. Once our full new logo and design is ready, our sales teams will be in direct personal contact with all of our customers to help them switch over a period of time. Nothing needs to be done in the meantime. Also, our customers can continue to use all of our products that have the DuPont name on them indefinitely.  

BSB: How aggressive do you plan to be as far as boosting your market share? Who do you intend to target?

Bennett: Our primary strategy is to effect this transition in a seamless manner for our existing customers. We want to make sure our customers understand that we’re focused on them and will deliver the same products and services to them.

For quite some time, we’ve had a growth strategy. Because of this transition, I think this now gives us a greater opportunity to focus on that. This is a bit of a liberation for our business in that we now get to focus solely on our market segment. The profits and earnings that were being funneled back to the parent company, DuPont, for some time now get to stay in our business so we can fund growth.

What customers are we going to target? My answer is simple: If cars are sitting in front of a body shop and they’re spraying paint, those are the customers we want to focus on. If they’re repairing cars, we want to sell paint to them.

BSB: Does this strategy take into account the consolidation currently occurring in the industry?

Bennett: We have a lot of programs in place to focus on protecting and supporting our existing customers. But in addition to that, with a dynamic occurring in the marketplace, we have to understand that dynamic. And given that we intend to grow and invest in this business, you can’t ignore the dynamic in this marketplace. We have a clear understanding of this consolidation effort going on, and our growth plan takes that into consideration. But the first thing is to protect and support our existing customers, helping them to grow so we can grow organically through the shops we already have. Then we also need to effectively target sustainable shops and grow with them as well.

BSB: Does The Carlyle Group owning both Service King and Axalta Coating Systems indicate a desire to integrate the two?

Bennett: Carlyle has made it perfectly clear to us that, while they’re invested in Service King, they expect [Axalta] and Service King to operate our businesses in our best interests. There is no grand strategy of integration. They expect us and Service King to make business decisions that suit our respective business needs.

When I get asked this question by a lot of my customers, I point out that paint companies have invested in body shops for awhile. In fact, one of our largest competitors is heavily invested in The Boyd Group (Gerber) and some other types of customers, but it’s only this relationship where there seems to be this perception of integration.

Carlyle has been very forthright with us in telling us to operate our business to suit our needs and give Service King the same attention we would give them whether they were owned by Carlyle or not.

We currently do provide Service King paint and have enjoyed some business with them for a period of time. They’re not just supplied by our competition.

Crickenberger: When Carlyle makes an investment, they do it through various funds that they’ve raised inside of Carlyle, and these two acquisitions (Service King and DuPont) were made with different funds. So, from Carlyle’s perspective, those investments need to be managed independently and for the best interest of the fund they’re part of.

BSB: How much will the new business focus on growing business outside of North America?

Crickenberger: We do business in 130 countries today. We have a significant presence in China, Brazil, Russia and India. We have made new investments in India and China with new manufacturing facilities over the last five years. If we’re talking specifically about the refinishing business, it’s those areas that are driving global growth, whereas the more developed markets like North America and Europe are stable to declining.

BSB: How aggressive are you going to be in converting shops to waterborne/low-VOC coatings?

Bennett: Our waterborne not only enjoys a nice position given the environmental legislation that’s occurring across the globe, but the real value proposition is that it also delivers a productivity advantage over any other competitor in the marketplace. So even in areas that aren’t focused on meeting legislated requirements, we believe our new water-based technology offers advantages from a productivity standpoint. So our effort is beyond just those regulated areas – we’re going to be moving on our waterborne technology globally.

We will continue to be aggressive because we believe [our waterborne product’s] value proposition is such that a lot of customers are responding to it even outside of regulated areas. We’ve seen some states in OTC regions postponing or delaying establishing a deadline for conversion, yet we’re still able to sell on the value proposition of ‘more environmentally friendly and greater productivity.’

Crickenberger: Outside of Europe, the U.S. and Canada, the market is still generally a solventborne market. When you look at emerging economies and BRIC countries, it’s primarily a solventborne market. In China, there are a lot of OEM certifications driving the refinish market there, and some OEs are utilizing waterborne technology for the sake of being green, not because legislation is mandating it. And many are looking at this as a way of driving productivity.

Bennett: Solventborne applications might take four to five passes to achieve effective color development or hiding; our waterborne requires one to one-and-a-half passes, so there is a significant time advantage in moving cars in and out of the booth.

BSB: What predictions do you have for the collision market over the next 10 to 15 years?

Bennett: I think the industry is going through several dynamic changes. Consolidation is one of those changes, and will continue to occur if not accelerate. But there will always be the traditional models in place. If you look at the distribution of some of the big consolidators, they’re focused in the south and even more focused in urban regions, but the more traditional model is prevalent throughout the majority of the country. So we will be cognizant of these trends.

Our first goal is to protect and support our existing customers and help them grow, and then take advantage of our products and offerings to selectively grow as the market is growing. Mike [Crickenberger] talked about where there is growth in the industry on a global basis, but whether it’s Chicago or Shanghai, we seek growth opportunities in North America as well. We think we have an opportunity and the right people, products and services to grow here, and that’s what we’re challenged to do.

More information:

DuPont Performance Coatings to be Renamed Axalta Coating Systems

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