How to Navigate Paint Shortages & Price Increases

Painters are scrambling all over the nation to get the paint and supplies they need to get the job done. It seems worse in some areas than in others. In this video, I speak with Rick Garlin, Director of National Accounts at PPG, to answer these 4 fundamental questions. They are (scroll past video)…

1 – What are you seeing from a national perspective and what are the root causes of these shortages?

2 – What strategies do you recommend to painters to help them manage their material costs and keep their projects going in this complicated and unique environment?

3 – How has PPG partnered with the Painters Purchasing Group to help independent painting contractors with acquiring paint, sundries, and tools collectively – similar to how national franchises work together?

4 – What can a Painters Purchasing Group do for an independent painter?

Hello everyone. I’m Brandon Lewis, a founder of the Academy for Professional Painting Contractors, and joining me today is Rick Garland, director of corporate national accounts with PPG. Today, Rick and I are going to talk about the causes of recent paint shortages, the prices of raw materials, and how painting contractors can adapt to meet the needs of their clients and their company. We’ll also discuss when we might possibly see some kind of return to normal in the paint market. Rick, welcome to the program, buddy. Thanks for joining us.

Rick Garland:

Thanks Brandon. Thanks for having me.

Brandon Lewis:

So Rick, tell people a little bit about your coatings industry background and what you do at PPG before we launch into this.

Rick Garland:

Well, I have a pretty extensive background in the paint business. I’ve been in the business for over 30 years, both the industrial side and the architectural consumer side. So pretty broad background in the industry. I’m a corporate accounts manager. So in our position, we work directly with the owners of major companies, both commercial, industrial, and retail. So we work directly with the owners for specifications, planning, color design. So everything that would encompass their paint projects.

Brandon Lewis:

And you started out not just necessarily in the role that you’re in, give folks just a little bit of your background and how you came up in the ranks and ended up where you are.

Rick Garland:

Yeah. So earlier in my career, I actually sold commodities. So it was a good base for me to learn forecasting and sales budgets, because in that business, you had sales budgets every day. And in some cases, you didn’t leave the office until you hit your budget. So there was a lot of long hours. So in that, there was a position opened with Glidden Paint Company at the time, and I took a sales position there, and the rest is history. And I worked for several different divisions in the company, Glidden to ICI, to AkzoNobel and to PPG.

Brandon Lewis:

Some of those things aren’t even around anymore… ICI and AkzoNobel, y’all just bought and merged with them, correct?

Rick Garland:

Yeah. So, Glidden was part of ICI. ICI, basically disbanded the company and sold everything to AkzoNobel, and then, PPG purchased the architectural side of AkzoNobel. AkzoNobel is still in business, but they’re on a limited basis with powder coating, some automotive coatings, and those types of products. But PPG acquired the architectural business in North America.

Brandon Lewis:

Okay. Because I remember a lot of that went on in our own market. We had a good little case study because we had an ICI store and then we had two PPG stores, and the ICI [inaudible 00:03:20] it was just interesting to watch because I was there when all that stuff started happening [inaudible 00:03:26].

Rick Garland:

So in that I had a lot of positions I mean, as you said, I was a salesperson for a long time, regional manager, regional sales manager, the division sales manager, a zone manager, a VP of sales over a fairly large district. So I got to know the business pretty well, from clear down to the distribution side, clear up to the sales side.

Brandon Lewis:

That’s good. That gives a lot of perspective. So big question, painters all over the nation are scrambling to get supplies that they need to get the jobs done. It seems worse in some areas than others, this is anecdotal, you would actually know the data, but it seems to me are more rural and suburban markets, that are a little bit isolated or not having the difficulty of the urban markets, but I could be wrong. What are you seeing from a national perspective and what are the root causes of some of these shortages? I know it’s a combination of things.

Rick Garland:

Yeah. So obviously we’re all experiencing it. It’s something that over my years I’ve never experienced the shortage like we’re seeing now. And you look at the whole picture, there’s a lot of things that have contributed to this. It started actually last year, and it started late last summer and obviously COVID related. And then this manifested itself into the early spring. So raw material companies, even our own factories, there was more protocols being put into place as the months went on. This thing all started last March, but every month new protocols would come out.

Rick Garland:

And by the time we hit the middle of the summer, the end of summer, production levels… You could only have so many people into a manufacturing facility, and not just for us, but that was all the raw materials suppliers as well. So there’s, actually at that point started, not what we’re seeing today, but it also started the process of taking longer to get material. Your demand was still there. We could still get material, but you weren’t getting as much as you would hope to get, and demand was starting to go down a little bit as well, as far as the commercial side and industrial side, and those types. Consumer side was going clear up because people were home, so they were painting. So that actually started the process, that wasn’t a total cause of it, but that started the process.

Brandon Lewis:

Okay. So to recap there, at the beginning of it is basically when you’ve got COVID restrictions in place and you can’t get enough people into various roles to just get production out the door. Then everybody gets a little bit behind and it’s not just everybody’s a little bit behind, at one point in the chain, it’s everybody’s a little bit behind at every point in the chain and a little bit turns into a lot and then, what happened next in this fantastic [crosstalk 00:06:33].

Rick Garland:

So as we went into the late fall into winter, as everybody knows, things started to seem to come back a little bit. We got into January and February with pretty high hopes that even looked better and better, was no problem with materials. I think raw materials are flowing in pretty well. And then the big Texas freeze hit and that started the process. As you know, a lot of suppliers are in the Southern Texas market, that supply a lot of these types of raw materials. With the freeze and no power, these operations were pretty much shut down. And that started the process, even in warehouses that had material, temperature sensitive material froze because there was no heat, as everybody remembers, all the people that all their homes are freezing, the pipes were bursting. And so these are the ramifications of some of these things that you don’t realize, but this is what started the process.

Rick Garland:

And as these shutdowns happened, it threw the whole raw material process into a tailspin. And those people being shut down for weeks, put us months and months behind. And there’s where the root cause really started to manifest itself. And it affected all the paint industry, but it didn’t only affect just the paint industry, plastics were a part of this, and containers, getting and acquiring containers became a problem.

Rick Garland:

And we get notices from caulking companies that they’re discontinuing right now making certain colors, because of raw materials. So it’s bigger than just the paint industry side. There’s a lot of things out there, drywall compound, the same thing. There were many areas of shortages of drywall compound. And then to top it off, a lot of raw materials are imported, and what we’re finding today, there’s containers that can’t be unloaded. And that lends itself into just getting material. When we ship things today, we tell people it’s going to take a little longer to get there because there’s not enough drivers. Truck drivers-

Brandon Lewis:

So you’ve got a combination of… Basically, it sounds, just to recap here, because it’s a lot of things, and it’s a lot of unintended consequences when you start meddling with business and then you have mother nature come in on top of it. So number one is, we just couldn’t get as many people into the various supply lines as we needed to do in different plants. Then we have the Texas freeze, which means that we’ve got a lot of raw materials that can’t be produced, are lost. And then you have the general labor shortage, which not only impacts every single part of this process that leads to a can of paint, well now you’ve got, okay, we finally get some paint made, or we finally get some raw materials. Well now there’s not enough people to unload it or to drive it to where it needs to go.

Rick Garland:

Right. If you look at just containers on the both coasts, there are thousands of containers that are just setting, not being able to get unloaded. There are container ships setting off shore they can’t even unload because there is no room to put the container. So there’s that backup. And again, not all raw materials are made in the US obviously, there are raw materials that are essential, like titanium that a lot of it’s imported.

Rick Garland:

So those particular pieces really are all in combination of what’s taking place now. Now, do we get raw material? Yes, but it’s limited. And so it’s very limited as what we get. And obviously as the company, they look at what we can produce and what we can’t produce. So that’s a really job in itself because each week they try to plan on what they’re going to make and what they’re going to make the next week, and the next week, and the next week, based on if we get the raw materials, and most of the raw materials companies have given us this forced majeure letters.

Rick Garland:

So we’ve received those from many of the raw material suppliers. So that really sums it up from their side, meaning that they can’t even guarantee us when we’re going to get raw material.

Brandon Lewis:

Well, and that’s the whole reason you have a forced majeure in contracts because sometimes things truly do happen that are outside of your control. You’re not dropping the ball, but there’s only so much you can do. So I guess that means that they’re also… I assume that there are certain lines of your products that are number one best sellers in certain regions, those puppies are getting made and everything else that’s kind of specialty orders, probably just having to wait.

Rick Garland:

Right. So the biggest volume items, and the company is pretty good about the regional supplies from history and what products sell and which we know are not the biggest movers. And you’re right, that that’s how production is being scheduled right now. Regionally or national products, and again, those do trickle in, those do come into the warehouse. Unfortunately, like most things, when they come in, they go out pretty quickly because the orders are so far behind that these products just go. Now, this also comes at a bad time when there are so many new projects. Construction just boomed out of going into 2021. So now we’re faced with not having supply, but a whole lot of projects that are coming up and everybody wants to get these projects done, and there’s just a major backlog of projects out there.

Rick Garland:

And you asked the question before, when do you think this will be over? We don’t know for sure. We think that in one part, it looks good and then it falls off a little again. So this really goes month to month, as to when we can be at least somewhere back to normal, but I think indications are, it’s not going to be until probably October. Some companies that I’ve heard are telling people February. So it just depends on what the product is. So it’s going to be ongoing for the next few months, that’s for sure.

Brandon Lewis:

Practically speaking, now that we know, okay, this is a whole lot of moving parts, a lot of things that are outside of even very large companies controls, that the supply chain has been remarkably disrupted, a little bit of mother nature, whole lot of government. And now we’re just trying to get back on the ball from that. So what practical measures, if you are a painting contractor and you’re working with your local PPG store, what are three or four things that you definitely need to do? Things that maybe your typical painting contractor isn’t doing to the degree that he should, that would help him a lot?

Rick Garland:

Well, I think one of the major things that I’ve seen, and I’ve told all of our corporate accounts this, get your order in as soon as you can. Used to be, a lot of contractors would come in and they’d get a project and come in a week before and stamp starting next week, and I need 500 gallons. That in itself sometimes is a challenge because we don’t stock as much of that product or those products that they might need.

Rick Garland:

But we were able to order it and get it in from our distribution centers. Today, it’s one that, put your order in now, you may get it in three weeks, four weeks, could be five weeks out. So getting the order in early, and also the other important part is that, unfortunately, you’re going to have to talk to your customer and let them know that, thank you very much, we love the project, but there are some time constraints that we’re going to be at with actually application. And unless they can find material. So really number one is just to get the order in. So at least the store knows how to order and get those orders and know that they need to get these orders placed. Now we may not have a timeline on it when they place them, but at least they’re in there.

Brandon Lewis:

Well, so it sounds like number one, you might want to, if you can, talk to your paint store and say, “Hey, number one, what’s being made?”

Rick Garland:

Yeah.

Brandon Lewis:

Might be a good place to start, if they can answer that question, can they?

Rick Garland:

They can sometimes. Unfortunately, what happens is that they’re not going to know until they check inventory, because with allocations and looking at product, it’s one that they just won’t know until it’s actually made, but there is no… And going back on that, there is some forecasting that is in place with anticipated dates of manufacturer, doesn’t necessarily mean that’s written in stone. It’s just a planning piece that says, “If all goes well, we get the raw material, here’s what’s going to be made that week.” That’s how it’s working right now. Now we hope that gets better as we get into September, but this month has probably been the toughest month, middle of July, and where we currently stand is probably the toughest that we’ve seen.

Brandon Lewis:

Well, typically speaking, when you look at the aggregate demand of estimates across the nation, and I’ve had opportunity to look at some of this, typically July is the peak month. That’s when your phone rings the most with people saying, “Hey, I want something painted.” That’s definitely the month. And so the thing about it is, all that 2020 demand got slammed into the first and second quarter. And now it’s actually kind of dropped off just a little bit, from my conversations, I’m just talking to the guys about the phone ringing in general. And so all that together with, they’re trying to do the same thing we all are, they’ve got 50% more demand with a third to half as many people and it’s just a challenge.

Rick Garland:

Yeah. Now one thing, I think all of us have been very good about supplying either residential market painters or small commercial projects. So those… There are some shortages of product, but those have been coming through okay. It’s when you get into the mid-level commercial jobs or the big commercial jobs where it’s going to take 1500 gallons of dry fall, or 500 gallons of block filler. So those are the ones that really get a roadblock.

Brandon Lewis:

And even if you’re in residential, I assume, look at your production schedule, and probably… I mean, one I think adaptive method for our men and women would be to take some kind of materials deposit, because right now, typically you didn’t have to pre-order things and then hope you could use it. Now we’re going to have to, so it’s almost like one good thing might be is, “Hey, we’re having to take materials deposits because there’s such a limited amount of it. We can’t be left holding any of it if somebody decides not to go forward with the project. So even if you decide we’re not your applicator, you will own this material and you can take it home with you and put it in your basement or whatever, but we’ve got to,” so just go through that production schedule and start… Stuff that you used to order a day or two in advance, order a couple of weeks in advance.

Rick Garland:

Yeah. Well, and the other thing that’s happened too, is, so a lot of applicators and painters they get used to one material. They really like that material, but that material may not be there. So we may have to sell you an alternate material. And that’s the reality. And sometimes it’s just one of the things, choice number two, choice number three, or choice number four. So it just depends at this point is what you actually have in stock.

Brandon Lewis:

Yeah, well typically, I have found with all of our conversations with our painters, that if they are upfront with people during the quoting process, and they said, “Hey listen, here are all the obstacles, we are booked out, we can’t get materials,” run down the laundry list. “Are you okay with that?” And most people are saying, okay, but you don’t need to surprise them with it after they signed the contract, you need to talk to them about it way up front.

Rick Garland:

Yep. And the other thing too, and we get not only just on the paint side of it, but we get notifications from our sundry suppliers, brushes, rollers all across the board. And they’re giving us notices as well of back orders, products they can’t produce. And it’s all on the same vein of raw materials, again, with the paint materials, but also with plasticizers, some other things that go into making containers. So they’re giving us back orders every week where they’re in the same situation.

Rick Garland:

So again, it covers a broad range of products that are in the stores. It just really does. And again, exasperated by these delivery times, how product was shipped from the warehouse, unless it’s a big carrier, but [inaudible 00:21:20] orders will go to a secondary warehouse, used to sit in that secondary warehouse for two or three days before it’s picked up and moved on, or maybe a day or two. Now sometimes it sets for a week. So it’s their terminals, and the terminals tell us, we just don’t have enough trucks or drivers out there to move this freight. So when we ship products, particularly these sub products, they could be setting in a secondary terminal for twice as long as they normally would.

Brandon Lewis:

Let me ask you kind of an interesting… I don’t know if you would know, or if you see this, but for example, in Tennessee, Georgia, and a few other states, Alabama, I think, for example, and there are others, they’ve gotten rid of this extended incentivizing people not to work, and some states are keeping this. Are you seeing any differences in the markets where these incentives are going away? Are those terminals performing better? Do you even know?

Rick Garland:

I haven’t… I can’t tell in that regard, I do know there… I mean, from some states to states, there are labor shortages though. And whether it can be directly related to that, I can’t tell. I mean, just from the conversations I have. But I know that in some parts of California a lot of contractors that didn’t do business in California are going to California to do painting projects. So I’ve seen that just from some of the corporate accounts that I manage.

Brandon Lewis:

Meaning, there’s such a shortage there that even though there’s labor shortage everywhere, there’s not as big as shortage so they can take some of the labor into California and still do business because they can get people to do it.

Rick Garland:

Yeah. There’s just a shortage, and so many projects too. I mean, there’s so many projects in California and there’s just not enough… I believe contractors, but again, it’s kind of plaguing the whole industry across the country too, though.

Brandon Lewis:

Well, you partnered with us, in other independent painting contractors and the Painters Purchasing Group, and it’s been great working with you. It’s always difficult to get people to change a paint provider, which has been one of our biggest things. But I think now, as we see so many changes coming in the market, you really need to be more thoughtful about who you partner with, and not necessarily always do it out of sheer convenience, because it’s not very convenient anymore. Can you talk a little bit about that program and what that partnership would mean for painting contractors?

Rick Garland:

Well, I think one of the things we try to do for the [inaudible 00:24:16] program is have some real consistency, not only just consistency with product, but with what the financial side of it would be, what you’re going to pay. And give you long-term pricing in that regard. So you know at least outwards, you’re going to have some stable pricing. In the program that we have with you, we have some stable pricing to a certain date. A lot of companies, I see them taking a lot of increases and not that that’s not going to come up, it will come up later, and we all have to look at the cost. But I think too, also getting local people involved with the contractors and local PPG people involved with the contractors is important, just for the day-to-day operations.

Rick Garland:

At our level, we wouldn’t know what the day to day operations is in that market or what that contractor is doing, but our local people do and they work with them close enough, they can even help them in their shortage too, letting them know what possibility is coming up or actually telling me what’s available because they get notices, and working closely with that person in your market, he may say, “Hey listen, this week we’ve got inventory on XYZ products.” So I think that’s an important piece. And particularly working with your group because you manage a good amount of relationships as well. So yeah.

Brandon Lewis:

Well, if you’re out there guys, and you’ve been struggling to get paint and you’re maybe, I don’t know that in that particular market, if PPG is going to be exactly the same or a little bit better, but it’s a great time to explore other options for where you buy materials and to think about maybe getting in a group where there’s more than one little contractor who’s trying to have a relationship with a larger vendor, and Rick and his group have been fantastic.

Brandon Lewis:

Every time we go to a local market, every store is different, every sales rep’s a little different, but we’ve been able to get, knock on wood, everybody taken care of that needs to be taken care of out in this market and our guys have had glowing feedback, and have been very positive and supportive, but painters are stubborn.

Brandon Lewis:

And sometimes they will not… If it’s change, even if it’s a very positive change, change is painful. Even if it’s very small amount of pain, it’s enough to keep a lot of people from improving their business. But we’ve had a lot of folks and we’ll be going back to people and talking to them about this when they slow down a little bit, probably in September, October.

Brandon Lewis:

I’ve learned, it’s hard during the summer. Everybody is so busy. So I do want to thank you for your time to come here on this, Ask The Expert call. If anybody out there is interested in the Painters Purchasing Group, email me brandon@paintersacademy.com, brandon@painteresacademy.com. As we get ready to close this out, Rick, what words of wisdom or summary would you leave contractors with in the current environment, just to recap.

Rick Garland:

One of the things that’s almost critical, is to stay very close to your customer, and inform them all along the way, feed them information. Don’t let it just die for a couple of weeks, and let them know that you’re diligently working to get material, that what you’re seeing and you can just pass on to them exactly what you’re getting, the information you’re getting. Now sometimes it’s hard to do, everybody’s busy, but just giving them information and staying in contact with them, at least they have some comfort that, hey, at least they’re keeping us in mind, and that they’re giving us information and not just letting us hang there, saying, we don’t know when we’re going to get it. So I think that’s an important part. Right now, communication is probably the best thing you can do.

Brandon Lewis:

I agree. And that’s… The guys that are, often it just seems to me that the guys who, and painting contractors, who have middle of the road painting, but excellent communication and processes, are loved more by their clients than the ones who do the perfect, beautiful master painter job, but everything surrounding the experience and the communication is abysmal. And if you had to pick one of the two, especially in residential and commercial maintenance painting and repaints, that communication and process and experience, is honestly, in many cases, more important than the finished product.

Rick Garland:

I agree. It just always plays out. Even if you lose a project because of the material shortages, they’ll come back to you because of your communication and how you treat them.

Brandon Lewis:

Absolutely. Well, Rick, I’ve enjoyed it. I appreciate you. I know you’re a very busy person and you’re juggling a bunch of balls, and it ain’t the easiest time to be doing your job. So thank you for taking some time to speak to a few thousand painting contractors on this.

Brandon Lewis:

And guys, I hope you’ve enjoyed this Ask The Expert call with Rick Garland, I know I have. If you need me, if you have any questions about the Painters Purchasing Group or other things, you can reach us at 423 800 0520. Until next time, I’m Brandon Lewis with the Painter’s Academy, signing off.

Rick Garland:

Goodbye.