Blog: Q&A with Coatings Industry Expert, Phil Buck.

We caught up with coatings expert, and Hexigone board member, Phil Buck, to learn about his career and gain some industry insight. Read about his predictions for the future and what’s changed during his time in the industry…

Please tell us a bit about yourself…

I spent over 40 years in the coatings industry working for some of the best-known companies including Hempel, Berger, International Paints and Macphersons. In 1995 I was made redundant by Akzo after they acquired Macpherson. I sold my house and combined it with my redundancy and used the money in partnership with two Venture Capital funds, 3i and Aberdeen Asset Management to buy Spencer Coatings Limited in Aberdeen.

I started in the industry in the technical area as a Chemist and then followed the typical career path at the time by moving to technical service, then sales then sales management and finally general management.

Some of my successes included becoming the youngest General Manager at International Paints at the age of 28, and a Main Board Director at Macpherson Paints at 34, overseeing growth in the Trade Paints Division from £19M turnover to £55M in six years.

I spent twenty years at Spencer Coatings building the company from a turnover of £3M to £25M with an EBITDA of £5M. I sold the business to Axalta Coating Systems in 2016. I then set up Sunnybarn Investments Ltd and we take equity stakes in business start-ups, focusing mainly on Welsh companies,

When I am not working I like to split my time between our houses in Portugal and Brecon and enjoy sport. I have a suite at the Principality Stadium, a box at the Dragons and I am a season ticket holder and member of the 1878 Club at Manchester United, and I am a director of my local rugby club in Brecon.

How and why did you become a Hexigone board member?

I was first made aware of Hexigone by the Development Bank of Wales when they were assisting them in the last fund raise. I investigated the technology and with my industry experience realised that this business had huge potential. The coatings industry has been trying for decades to find an effective anti-corrosion technology and this is the best I have ever seen. I was keen to invest, which I did and delighted to be asked to join the Board. I try to use my industry knowledge to advise and mentor the team where I can, scale up will be a challenge and I have a strong track record in this area, particularly at Spencer Coatings where we grew from one small plant in Aberdeen to three in Nottingham, West Bromich and Tewksbury.

One of the reasons that I set up Sunnybarn Investments Limited was to support Welsh entrepreneurs. The level of Angel investing in Wales is the lowest in the U.K. at a miserly 4%. In the “golden triangle” Oxford/Cambridge/London it’s 62% and in Scotland, it’s four times higher than Wales at 16%. There are great business ideas and entrepreneurs in Wales not getting the levels of investment they need. Thankfully Hexigone has been successful in raising funds but many companies struggle.

The coatings industry has many different sectors, how would you describe this to someone new to the market?  

The industry has a segmentation approach to markets. The total market is split between decorative and industrial on an almost 50/50 basis. Within these two super segments there is further segmentation, particularly in the industrial segment into: Automotive OEM (original equipment manufacturer), Automotive VR (vehicle refinish), Marine, Yacht, Protective, Agriculture & Construction Equipment (ACE), Coil Coated, Drum, Powder and Glass. In decorative, there’s further segmentation into Masonry, Woodcare and Internal walls.

Many of these divisions have specialised technology, distribution channels and technical service support. Different segments also have different margin levels. For example, in the automotive industry for both OEM and VR, there are three global players: Axalta, PPG and BASF. For OEM the global customers are huge including Volkswagen, Ford, GM, Toyota, with huge buying power related to volume. Volkswagen for example before Covid were spending over $1 billion - they can drive prices down substantially to levels where margins are very tight. However in VR the customers are distributors and body shops making up thousands of companies therefore given the much lower buying power, the prices and margins are amongst the highest in the industry, and ultimately the bill for a crash repair is paid by the insurance company.

How has the coatings industry changed from when you started vs. now?

The biggest change I have experienced in the coatings industry is the consolidation and globalisation. The top twenty producers control over 60% of the volume. I was part of the consolidation process at Spencer Coatings where we acquired a number of our competitors making us the largest independent paint company in the UK, then selling the business to global giant Axalta. When I joined the industry in 1976 all the paint companies were British owned but now very few are. The other changes are in technology with the rise of powder coatings and water based industrial coatings - in the 1970’s everything was solvent based liquid.

There’s big push for environmentally friendly products at the moment, has this always been the case?

The coatings industry has been at the forefront of the green agenda for over forty years. In the early days of my career red lead was being replaced by zinc phosphate during the 1970’s, here we are fifty years later looking to replace zinc phosphate by Hexigone, it’s taken that long to find a replacement that is more efficient than red lead, zinc chromate and zinc phosphate.

The coatings industry was an early innovator in response to climate change. Starting during the 1980’s it has driven down the release of dangerous oil-based solvents into the atmosphere. A combination of higher solids solvent based, the introduction of waterborne systems and powder coatings has meant 80% reduction of hydrocarbons into the atmosphere.

Today efforts continue to reduce CO2 by the global coatings companies, for example in the automotive industry, virtually all new cars are coated with water solvent systems.

How do you predict it will change in the next 30years? And have you spotted any companies that you think are the ‘ones to watch?’

I think the next thirty years will see further consolidation with particular expansion of Asian companies, for example, Kansai Paints are now the largest coatings company in Africa, employing over 5000 staff.

Nippon Paints has also recently announced that it will carry out a reverse takeover of the Hong Kong based coatings group Wuthelam and relist in Tokyo. The deal will be followed by the buyout of all of Wuthelam’s JV partners in Asia and create enough financial firepower for further global expansion. So this is obviously one to watch!

The globalisation continues at pace and with Covid-19 depressing company valuations there are bargains out there. I expect the next major acquisition to involve Axalta. In 2019, both Akzo Nobel and Nippon tried to acquire them, do not be surprised if there isn’t a deal within the next twelve months!