Economies of scale for cost savings



Economies of scale for cost savings

According to a recent Smithers Rapra report, “This market, including specialty and complex inorganic colored pigments (CICPs), will be worth $6.73 billion in 2018 and reach $7.97 billion in 2023, expanding at a year-on-year growth rate of 3.4%”. Volume consumption will rise across the same time period from 239,120 to 282,694 tonnes. For the past few quarters, the global pigment market has experienced unforeseen cost increases in key raw materials. These increases have impacted all levels of the pigment supply chain, from basic chemicals to specialty raw materials. Paints and coatings are a critical end use for HPPs and in 2018 accounted for 115,000 tonnes of material worth over $3.1 billion, or 47% of the overall HPP market by value.

Expectations for pigments used in paints and coatings are increasing as end users seek more cost-effective, environmentally friendly solutions that last longer and do much more than protect and beautify. A newer hurdle adding complexity to this situation is the rising cost and limited availability of many raw materials. While these issues create challenges for pigment manufacturers, they also offer opportunities for innovative companies with effective supply chain management capabilities to develop unique pigment solutions that are more durable, expand the color space, and provide a broad range of functionality.

Companies need to develop robust supply chains and good supply chain management capabilities which will definitely be an advantage, because they can ensure access to high- quality raw materials even under these challenging conditions, which is what Voxco has been working on and strengthening during these difficult times.

Economies of scale are cost advantages reaped by companies when production becomes efficient. Companies can achieve economies of scale by increasing production and lowering costs. This happens because costs are spread over a larger number of goods. The size of the business generally matters when it comes to economies of scale. The larger the business, the more the cost savings. To this end Voxco has been putting its resources in expanding its capacity to achieve economies of scale as also expanding its footprints across the globe.

High performance pigments (HPPs) need to be of value for the end users for various performance characteristicsand hence justify the price difference. The importance of lead-free pigments particularly for the decorative paints is now becoming a necessity all over the world and more so in India. In recent times, lead chrome based pigments due to environmental concerns are being replaced by similar shades of organic pigments. Though these organic pigments does offer different colours but do not have the required hiding power and equivalent properties of light and weather fastness due to which they are not comparable to the chromes. VOXCO Lead Free Pigments have drop in colour pallet to the chromes with good opacity and exterior durability as compared with organic pigments. These pigments can be used as replacement to inorganic chromes under special consideration.

 


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