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'No boom, no bust': members of the prepainted coil supply chain see nonresidential building, remodeling and increasing conversion opportunities as ways to offset declines in new-home construction.

Article Excerpt
WITH RESIDENTIAL CONSTRUCTION on the decline, demand for prepainted steel and aluminum coils is likely to soften in 2007, say the experts. Executives from all levels of the supply chain remain largely upbeat, however, despite the troubling home-building forecasts.

Building and construction drives the market for prepainted coil, accounting for an estimated two-thirds of demand. That includes building materials, such as gutters and siding, and appliances to equip the new homes.

Coil coating lines--which basically unroll each coil, clean it, treat it, run it through primer and paint baths, cure it in hot ovens, then reroll it--can apply a high-quality finish to coils up to 72 inches wide at speeds up to 700 feet per minute. More importantly, using prepainted coils helps OEMs meet government air-quality and solid waste regulations. For some, such as appliance makers, it makes more sense to stamp and form a stove or refrigerator from prepainted metal than to form the product and paint it afterward, generating solvent emissions and paint overspray that are environmental liabilities.

With residential construction off about 10 percent in 2006 and projected to decline a further 7.8 percent in 2007, coil coaters and distributors of prepainted products are feeling the effects of fewer new-home starts. Yet the overall market is holding up pretty well, says John Mitchell, president of Nichols Aluminum, Lincolnshire, Ill. "It has had an impact. We're seeing some short-term slowdowns," he admits. But he also sees moderating interest rates as a sign that the economy's downturn won't be as severe as predicted....

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