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2016 PPG ANNUAL REPORT AND FORM 10-K 9
Part I
Item 1. Business
PPG Industries, Inc., manufactures and distributes a broad
range of coatings and specialty materials. PPG was incorporated
in Pennsylvania in 1883.
PPG’s vision is to be the world’s leading coatings company
by consistently delivering high-quality, innovative and
sustainable solutions that customers trust to protect and beautify
their products and surroundings.
PPG’s business is comprised of three reportable business
segments: Performance Coatings, Industrial Coatings and Glass.
In October 2016, PPG completed the sale of its flat glass
business. As such, all historical information has been recast to
present the flat glass business as discontinued operations and
assets held for sale. Refer to Note 2, “Acquisitions and
Divestitures” under Item 8 of this Form 10-K for further
information relating to this transaction.
Performance Coatings and Industrial Coatings
PPG is a major global supplier of coatings. The
Performance Coatings and Industrial Coatings reportable
segments supply coatings and specialty materials for customers
in a wide array of end-use markets, including industrial
equipment and components, packaging material; aircraft and
marine equipment; automotive original equipment (“automotive
OEM”); as well as for other industrial and consumer products. In
addition to supplying coatings to the automotive OEM market,
PPG supplies refinishes to the automotive aftermarket. PPG also
serves commercial and residential new build and maintenance
markets by supplying coatings to painting and maintenance
contractors and directly to consumers for decoration and
maintenance. The coatings industry is highly competitive and
consists of several large firms with global presence and many
smaller firms serving local or regional markets. PPG competes
in its primary markets with the world’s largest coatings
companies, most of which have global operations, and many
smaller regional coatings companies.
Performance Coatings
The Performance Coatings reportable segment is comprised
of the refinish, aerospace, protective and marine, architectural –
Americas and Asia Pacific and architectural – EMEA coatings
businesses.
The refinish coatings business supplies coatings products
for automotive and commercial transport/fleet repair and
refurbishing, light industrial coatings and specialty coatings for
signs. These products are sold primarily through independent
distributors.
The aerospace coatings business supplies coatings, sealants
and transparencies for commercial, military, regional jet and
general aviation aircraft, and transparent armor for specialty
applications and provides chemical management services for the
aerospace industry. PPG supplies products to aircraft
manufacturers and maintenance and aftermarket customers
around the world both on a direct basis and through a company-
owned distribution network.
The protective and marine coatings business supplies
coatings and finishes for the protection of metals and structures
to metal fabricators, heavy duty maintenance contractors and
manufacturers of ships, bridges and rail cars. These products are
sold through company-owned architectural coatings stores,
independent distributors and directly to customers.
The architectural coatings-Americas and Asia Pacific
business primarily produces coatings used by painting and
maintenance contractors and by consumers for decoration and
maintenance of residential and commercial building structures.
These coatings are sold under a number of brands, including
PPG
®
, GLIDDEN
®
, COMEX
®
, OLYMPIC
®
, DULUX
®
(in
Canada), SIKKENS
®
, PPG PITTSBURGH PAINTS
®
,
MULCO
®
, FLOOD
®
, LIQUID NAILS
®
, SICO
®
, CIL
®
,
RENNER
®
, TAUBMANS
®
, WHITE KNIGHT
®
, BRISTOL
®,
,
and HOMAX
®
. Architectural coatings – Americas and Asia
Pacific products are sold through a combination of company-
owned stores, home centers and other regional or national
consumer retail outlets, paint dealers, concessionaires,
independent distributors and directly to customers. At the end of
2016, the architectural coatings-Americas and Asia Pacific
business operated about 920 company-owned stores in North
America, about 40 company-owned stores in Australia and about
75 company-owned stores in Central America. In addition, PPG
sells coatings and related products through more than 4,200
stores that are independently owned and operated by
approximately 700 concessionaires, primarily in Mexico.
The architectural coatings – EMEA business supplies a
variety of coatings and purchased sundries to painting
contractors and consumers in Europe, the Middle East and
Africa. The coatings are sold under a number of brands,
including SIGMA
®
, HISTOR
®
, SEIGNEURIE
®
, GUITTET
®
,
PEINTURES GAUTHIER
®
, RIPOLIN
®
, JOHNSTONE’S
®
,
LEYLAND
®
, PRIMALEX
®
, DEKORAL
®
, TRILAK
®
,
PROMINENT PAINTS
®
, GORI
®
, and BONDEX
®
. Architectural
coatings – EMEA products are sold through a combination of
about 690 company-owned stores, regional home centers, paint
dealers, and independent distributors and directly to customers.
Price, product performance, technology, quality,
distribution, brand recognition and technical and customer
service are major competitive factors in the performance
coatings businesses.
The major global competitors of the Performance Coatings
reportable segment are Akzo Nobel N.V., Axalta Coating
Systems Ltd., BASF Corporation, Benjamin Moore, Hempel A/
S, the Jotun Group, Masco Corporation, Materis Paints, Nippon
Paint; RPM International Inc, the Sherwin-Williams Company,
and Valspar Corporation. The average number of persons
employed by the Performance Coatings reportable segment
during 2016 was about 28,400.
Industrial Coatings
The Industrial Coatings reportable segment is comprised of
the automotive OEM, industrial coatings, packaging coatings,
coatings services and specialty coatings and materials
businesses. Industrial, automotive OEM, packaging coatings,
and specialty coatings and materials products are formulated
specifically for the customers’ needs and application methods.
The industrial and automotive OEM coatings businesses sell
directly to a variety of manufacturing companies. PPG also
supplies adhesives and sealants for the automotive industry and
metal pretreatments and related chemicals for industrial and
automotive applications. PPG’s industrial coatings business