In South Philly, Axalta’s new R&D temple of paint
"They are all the same colors, but they aren't. This is metallic, this is pearled, this is layered. This sparkles"
If there's a temple to color in America, Axalta Coating Systems has erected it, at the former Navy Yard in South Philadelphia.
"This is where we build colors," Barry Snyder, Axalta's chief technology officer, said last week during a tour of its new research and development center that serves its 34 worldwide automotive paints and industrial coatings factories.
Axalta, which had $4.4 billion in revenue last year, moved into its new block-long, 170,000-square-foot, 200-employee, 1½-story building over the summer. It was an upgrade on the two aging buildings Axalta labs used to occupy at the DuPont Experimental Station in Wilmington. The official opening will be Wednesday.
Axalta moved its offices from Wilmington's Rodney Square to Philadelphia's Market Street after it was spun off by DuPont in 2013. The company's Americas headquarters is on U.S. 202 in Glen Mills. The lab is close to the airport, and to the universities and recruiting grounds of Philadelphia, and a couple of hotels lured by developer Liberty Property Trust to serve businesspeople at WuXi AppTec, Urban Outfitters, FS Capital, Glaxo, and other Navy Yard employers.
Instead of sheltering among DuPont's many former divisions, Axalta now competes as a stand-alone paint company against AkzoNobel, PPG, and a few other global giants in a fast-consolidating, highly competitive global paint business, where share prices trail the market and the economic slowdown in China, for example, is felt quickly in the form of lower manufacturing orders.
Axalta has specialized. "White isn't white anymore," said Snyder, gesturing to a row of sample colors. "Look at these. They are all the same colors, but they aren't. This is metallic, this is pearled, this is layered. This sparkles."
Company scientists create these effects with polymers and resins, selling $1.7 billion a year to new-car manufacturers, including electric-motor paints and coatings that line the motor wires wound into electric vehicles to reduce friction so they don't grind down.
Indeed, Axalta sells about as much paint for an electric car as it does for an internal-combustion vehicle, making electric vehicles far more sustainable for the paint company than for internal-combustion auto-parts suppliers whose sales are threatened. (Another locally-based global automotive supplier, Berwyn-based TE Connectivity, says it now supplies more parts for each electric car a customer builds, than it does on traditional vehicles.)
They don't just sell new-car paint: Axalta engineers also match it, for collision shops, making allowance for weather wear and aging. Refinishes are often heavier, using oil-based paints, with sales totaling $1.7 billion more a year. Axalta also sells $1 billion a year in industrial powders, coils, and extrusions, wood paint and coatings, wire insulation, and other products, many from recent acquisitions.
It's easier to work in Axalta's new labs — fewer walls, more storage, easier access to supplies of materials and pigments, updated sprayers and formulating machines, a better work flow for the small-batch manufacturing an R&D lab performs to show how to do it in local plants. The facility was designed with guidance from staff researchers and technicians — the people who use it, said Joanne Hardy, Axalta's global director of technology strategy.
A bar-code inventory-tracking system "gets the mundane out of the way so people can focus on inventing," Hardy added. The building was designed by Philadelphia-based Erdy McHenry Architecture (they also did the Marriott and Tastykake at the Navy Yard for Liberty Property Trust) and built by Driscoll Construction.
Snyder says he's thinking of his paint posterity as well as his peers. "We had the opportunity here to build the biggest, most modern coatings and colors lab in the world. I wanted to make sure we built a place where, 10 years from now, 20 years from now, it's going to be a very functional, very effective lab facility. I don't want my successor to be thinking, 'What was he thinking?'" I asked if that happened to him a lot at the Experimental Station. He laughed, and noted that facilities change with the times.
This is Axalta's biggest and most basic lab, supporting both the factories and the three major regional centers — Detroit for U.S. automakers, Germany's Wuppertal for Europe, Shanghai for Asia — where color fashions sometimes vary.
There's a lot riding on the lab for Axalta and its 600 area employees. With material costs rising and demand in some markets weakening, the company has lately closed a plant in Belgium and demanded cost cuts elsewhere. Robert Bryant, named acting CEO last month after his predecessor, Terrence Hahn, left due to an investigation into conduct "unrelated to financial matters," was asked by Citi analyst P.J. Jukevar whether the big paint makers are going to have to continue merging in order to keep automakers from forcing down prices.
"We will continue to see consolidation in the coatings industry," Bryant affirmed.
If Axalta were merged or sold tomorrow, the new lab makes it more likely an Axalta presence will endure in Philadelphia.
(This story has been updated to correct an error regarding electric-car parts supplied by TE Connectivity.)