Auto Presentation Finalprint
Content
Automotive OEM Coatings
Bill Wulfsohn Sr. VP, Industrial Segment Tim Knavish VP, Automotive Coatings - Americas
February 23, 2010
PPG Industries, Inc. 1
Core Themes
At $4B - $6B, Automotive Coatings is a key segment of the coatings market PPG has broad strength and balance within the Automotive industry PPG has a long history of aggressive actions driving profitable growth and successful leadership PPG has clear strategies to capitalize on significant growth opportunities
February 23, 2010
PPG Industries, Inc. 2
Coatings Industry
Global Coatings = $87B
Global Coatings by Region Global Coatings by Mix
Others 11%
North America 24%
Special Purpose 49% Arch 51%
Aero 5% Pkg 6% Auto OEM 9% GI 44% Refinish 18%
Asia Pacific 35% Europe 30%
M&P 18%
Automotive Coatings is a $4B - $6B market
Source: Orr & Boss February 23, 2010 PPG Industries, Inc. 3
Automotive Coatings Industry
Global Coatings = $4B - $6B
Global Coatings by Region
South America 4%
Other 6% North America 18%
Asia Pacific 36% Europe 37%
Asia is expected to be the largest market in 2010 More cars are produced in China than U.S.
Source: PPG Estimate February 23, 2010 PPG Industries, Inc. 4
Automotive Coatings Industry
Business Overview
Pretreatment Electrocoat Primer Basecoat Clearcoat
Excluding Japan and Adjacencies
Core Layers
Pretreatment Electrocoat Primer Surfacer Basecoat Clearcoat
Source: PPG Estimate
Description
Conversion coating that improves corrosion resistance and paint adhesion Electrically deposited coating that protects metal from corrosion Spray applied coating that improves surface smoothness, durability and protects against chip Color coat that adds the decorative chroma and aesthetic effects Final coating layer that provides protection and shine to the vehicle to maintain it’s showroom like finish
February 23, 2010
Size (MM)
$150 $900 $500 $1,750 $750
PPG Industries, Inc. 5
PPG Automotive Coatings
OEM Process
Movie Clip
February 23, 2010
PPG Industries, Inc. 6
PPG Automotive Coatings
2009 PPG Coatings Sales = $9B
Auto OEM
Automotive Coatings Is Core to PPG’s Portfolio
February 23, 2010
PPG Industries, Inc. 7
PPG Competitive Advantages
Strong market position…..
All geographies All technologies Customer mix
History of sustained investment in capabilities and technology leadership Well positioned Joint Ventures and Partnerships
February 23, 2010
PPG Industries, Inc. 8
Strong market positions…..
PPG Industries, Inc. 9
Automotive Coatings Industry
Competitive Landscape
North America
Other Other PPG DuPont PPG DuPont
Europe
BASF
BASF
Asia Pacific
Other KCC BASF Nippon DuPont PPG
South America
Other
PPG
BASF DuPont Kansai
Ex - Japan
Source: PPG Estimates
February 23, 2010
PPG Industries, Inc. 10
Automotive Coatings Industry
Competitive Landscape
North America
Other Other PPG DuPont PPG DuPont
Europe
BASF
BASF
Asia Pacific
Other KCC BASF Nippon DuPont Nippon PPG
China
Other KCC PPG
South America
Other
PPG
BASF Kansai Kansai DuPont Ex - Japan
BASF DuPont
Strong Market Position in All Regions
Source: PPG Estimates February 23, 2010 PPG Industries, Inc. 11
Automotive Coatings Industry
Industry Sales by Layer
PT Clear E-Coat Clear E-Coat
PPG Sales by Layer
PT
Primer Base
Base Primer
Strong Position in All Layers
Source: PPG Estimates
February 23, 2010
PPG Industries, Inc. 12
Automotive Coatings Industry
Customer Base
North American Based European Based
PPG Other Other
PPG
Japanese / Korean Based in NA
Chinese / Indian Domestics
PPG Other Other
PPG
Broad Mix of Customers
Source: PPG Estimates February 23, 2010 PPG Industries, Inc. 13
History of investment in capabilities and technology leadership
PPG Industries, Inc. 14
PPG Automotive Coatings
PPG Structure
1975
1980
1985
1990
1995
2000
2005
2010
PPG Innovations
Continuous Strategic Investment and Innovation
February 23, 2010 PPG Industries, Inc. 15
PPG Automotive Coatings
Research & Development
PPG has been awarded an R&D 100 Award 9 times in the last 14 years
Presented annually by R&D Magazine for most significant technology-related new products and processes
PPG has been a finalist for an Automotive News PACE Award 7 times in the last 9 years resulting in 6 awards 41 percent of Automotive OEMs’ sales are from products that are five or fewer years old
February 23, 2010
PPG Industries, Inc. 16
Well Positioned Joint Ventures
PPG Industries, Inc. 17
Joint Ventures
PKAF Asian PPG PPG Helios
2003 2004 2005 2006 2007 2008
2003 2004 2005 2006 2007 2008
2003 2004 2005 2006 2007 2008
Scope
• Alliance with Kansai Paints • Formed in 2004 • Target Japanese OEMs in
Scope
• JV with Asian Paints • Formed in 1997 • Support growing Indian
Scope
• JV with HeliosPaint • Formed in 2000 • Provide sales and service to
North America and Europe
transportation markets
Russian Domestic and Eastern Europe OEMs
February 23, 2010
PPG Industries, Inc. 18
Historical Performance
PPG Industries, Inc. 19
PPG Automotive Coatings
Historical Performance
Global Builds
70 60 50
MM Builds
PPG Sales
NA EMEA AP SA
NA
EMEA
AP
SA
40 30 20 10 0 2005 2006 2007 2008 2005 2006 2007 2008
PPG Growth Outperforms the Market
Source: CSM Worldwide February 23, 2010 PPG Industries, Inc. 20
Automotive Coatings
Global Chaos
Brazil auto sales fall sharply in October
February 23, 2010 PPG Industries, Inc. 21
PPG Automotive Coatings
2009 Dynamics
16 14 12 10 8 6 4 2 0
2007
2007-2009 North America Builds
MM Builds
Builds
Clunkers
Other
2009
EMEA Builds
25 20
MM Builds
Asia Builds
Excluding Japan
Sales
MM Builds
25 20 15 10 5
15 10 5 0 2005 2006 2007
Europe Other
2008
2009
0 2005
China
2006
India
2007
Australia
2008
Korea Other
2009
Source: CSM Worldwide
February 23, 2010
PPG Industries, Inc. 22
Aggressive Response to Restore Profitability
PPG Industries, Inc. 23
PPG Automotive Coatings
Aggressive Cost and Business Measures
Restructuring Actions
Manufacturing Rationalization
Facility
Clarkson, Ontario Baton Rouge, LA Saultan, FR European Mfg Satellites (3) North America Mfg Global Tech Labs Sales and Admin
Overhead Reduction
Action
Closed Closed Exited Paint Mfg Headcount Reduction Closed Headcount Reduction Footprint Reduction Headcount Reduction
20%
2008
2009
Lean and Cost Focus
Key Projects
Localization of resins and products Logistics Efficiencies Receivable past due reduction 5S system for waste elimination Material Utilization Optimization: Yield loss, Sample expense, Inventory loss
Global Build Breakeven Reduction
Timing
2010 2010 2010 Ongoing 2010
15%
February 23, 2010
PPG Industries, Inc. 24
PPG Automotive Coatings
100 80 60 40
$ MM
Industrial Coatings Segment Earnings Improvement
20 0 -20 -40 -60 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009
Aggressive Restructuring Drives Profit Improvement
February 23, 2010 PPG Industries, Inc. 25
Automotive Coatings
Rebound Build Forecast
Excluding Japan
10% Growth CAGR
China's auto sales hit record high in January
MM Builds
60 50 40 30 20 10 0
2009
NA
EMEA
AP
SA
2010
2011
2012
Source: PPG
February 23, 2010
Source: CSM Worldwide 26 PPG Industries, Inc.
Looking Forward
Leverage market demand growth with strong focus on the BRIC countries Sustain profitability with content growth, cost reduction, pricing discipline and new valueadded technology
February 23, 2010
PPG Industries, Inc. 27
Industry Outlook
North America: Demand Recovery
16 14 12 10 8 6 4 2 0 2007 2009 2011 2013 45 40 35 30 25 20 15 10 5 0 2007 2009 2011 2013
EMEA: Sub-Region Shift
W. Europe Other
Builds MM
Builds MM
Asia: Sustained Growth
30 25
Builds MM
SA: Incremental Growth
6
China
Builds MM
India Korea
20 15 10 5 0 2007 2009 2011 2013
5 4 3 2 1 0 2007 2009 2011 2013
PPG Industries, Inc. 28
Excluding Japan
Source: CSM Worldwide
February 23, 2010
Leverage Growth in BRIC
PPG Industries, Inc. 29
Accelerate Growth in Asia
14 12 10 8 6 4 2 0 2004 2006 2008 2010 2012 2014
E-coat Waterborne
Largest Supplier in China
MM
China Builds Impact
Asia Capacity Expansion
Technology Action Plan Timing
Solventborne
Wuhu Phase II Add WB Capability in Tianjin New ZHG Plant
2010
2010 2011
India Builds
Builds MM
#2 Supplier
Asian PPG
• New Sriperumbudur facility • Integration of Farber acquisition • Eight primary OEM customers • Recent Awards: • Tata – Pune • VW – Pune • Ford – Chennai • GM - Talegaon
February 23, 2010 PPG Industries, Inc. 30
5 4 3 2 1 0 2009
Source: CSM Worldwide
2010
2011
2012
Automotive Coatings Industry
• Over 80 OEMs • PPG is fully owned • Global OEMs require Chinese partner (max 50% ownership)
Asia Pacific Perspective: China
Toyota Chandchun II Hyundai Shunyi III BAIC BDA Hafei Auto FAW-VW
New plants announced to be built between 2010 and 2014
Beijing-Hyundai FAW Tianjin SGM-Dong Yue BYD Xian II R/Nissan Zhengzhou II Ford Chingqing II BBDC Chery
Changcheng Greatwall SGM Beisheng Auto NJ-Iveco Anhui Jianghuai
NJ-Fiat
Shanghai Auto Shanghai GM Honda Wuhan II Shanghai VW Proton Hangzhou PSA Wuhan III R/Nissan Xiaogan SAIC-GM-Wuling PSA Chenzhen BYD Auto Nissan Southeast Fujian Daimler GEELY DongFeng-Peugeot-Citroën
Top 20 Customers New OEM plants
BYD Changsha Zotye Changsha
Note: Map is a sample of OEM plants
February 23, 2010
PPG Industries, Inc. 31
Automotive Coatings Industry
Asia Pacific Perspective: India
Tata Maruti Suzuki Honda Honda Force Motors Man Force Tata ULCC
Top APPG Customers New OEM plants
15 new plants announced to be built between 2009 and 2014
GM ` Tata
Mahindra Renault Mahindra Tata GM Bajaj Renault Bajaj Tata Fiat VW Mercedes Mahindra Toyota Ashok Leyland Ford Nissan Renault Hyundai Motor Ford
Daimler Hero
Nissan Ashok Leyland
India Will Become a Leading Exporter of Vehicles Industries, Inc. 32 February 23, 2010 PPG
Automotive Coatings Industry
Emerging Regions Driving Growth in Small and Midsize Segments
2007 2010 2014
2007 vs. 2014 Builds
37% 34% 29%
Source: CSM Worldwide Large Vehicle
30% 41% 29%
Mid Size Vehicle Small Vehicle
40% 29% 31%
Small Medium Large
+7.8 MM +6.2 MM +0.6 MM
PPG Maintains Content Per Vehicle
Pretreatment Electrocoat Primer Basecoat Clearcoat Products Pretreatment Electrocoat Primer Basecoat Clearcoat PPG DuPont BASF Henkel X X X X X X X X X X X X X X
February 23, 2010
PPG Industries, Inc. 33
Automotive Coatings Industry
Emerging Regions Driving Growth in Small and Midsize Segments
2007 2010 2014
2007 vs. 2014 Builds
37% 34% 29%
Source: CSM Worldwide Large Vehicle
30% 41% 29%
Mid Size Vehicle Small Vehicle
40% 29% 31%
Small Medium Large
+7.8 MM +6.2 MM +0.6 MM
Sealants Services Durabed®Sprayable Bedliner Specialty Products
PPG Maintains Content Per Vehicle
Products Pretreatment Electrocoat Primer Basecoat PPG DuPont BASF Henkel X X X X X X X X X X X X X X X X X X X X X X PPG Industries, Inc. 34 X
Adhesives
Clearcoat Acoustic Sealants Bedliner
Audioguard®Acoustic Coatings Systems
Services Specialties February 23, 2010
PPG Automotive Coatings
Sustain Profitability Drivers Actions
February 23, 2010
PPG Industries, Inc. 35
PPG Automotive Coatings
Sustain Profitability Drivers Actions
February 23, 2010
PPG Industries, Inc. 36
Automotive Market Trends
Environmental
• • • • Eco-efficiency to improve resource use Vehicle interior emissions Resource availability Product positioning based on ‘Green’
Energy
• Move to fuel efficient platform designs, conservation approaches • Shift in vehicle segment sales • Local production • Alternative fuel sources
Technology Political / Commerce
• • • • • • Government mandates, regulation Government involvement in car co’s Cost to supply globally Rise of China and India IP Protection Technology transfer Demographics • Light weight materials • Nano technology • New processes and designs
• Builds growth in the emerging regions
• Urbanization movement • Consistent quality standards • Personal customization, convenience
February 23, 2010 PPG Industries, Inc. 37
Sustain profitability with……
PPG Industries, Inc. 38
PPG Automotive Coatings
New Product Technology 2010 - 2014
Pretreatment Electrocoat Primer Basecoat Clearcoat Compact Process ZircoBond 2 High Throw ED7000 / Dura-Prime® Waterborne OPP3e / OPP4 Next Gen Topcoat System Increased Scratch Resistance / Self Healing Clear / UV Cure Clear B1:B2 & 3C1B: Solventborne & Waterborne
Market Drivers
Energy Cost / Durability / Environment Appearance / Chip / Environment Cost / Energy / Appearance Appearance / Environmental Energy
February 23, 2010
PPG Industries, Inc. 39
Automotive Coatings Industry
Industry Trends
Conventional Process
E-Coat
Rinse Cycle
Cool
Bake
Primer
Sealer + Gel Bake
Sanding
Sanding
Basecoat Booth
Inspection
Cool
Bake
Clearcoat
Pick-Up
February 23, 2010
PPG Industries, Inc. 40
Cool
Clean, Pretreated Body-in-White
Bake
Automotive Coatings Industry
Industry Trends
Conventional Process
Compact Process
E-Coat
Rinse Cycle
Sealer + Gel Bake
Sanding
Compact Process Booth
Inspection
Cool
Bake
Clearcoat
Pick-Up
Eliminates ~20% of the Automotive paint line cost BMW example
February 23, 2010 PPG Industries, Inc. 41
Cool
Clean, Pretreated Body-in-White
Bake
PPG Automotive Coatings
Industry Trends
Compact Process Impact – Customer Cost Model
$255 / unit Customer Value: • Reduced Footprint • Reduced Capital • Less Paint Usage PPG Value • Differentiated Coatings • Technology Driven $227 / unit
Indirect Mat'l Energy Labor Capital Paint
Conventional
Compact Process
Compact Process Generates $28 / unit Savings
Source: PPG Estimate February 23, 2010 PPG Industries, Inc. 42
Strategic Summary
At $4B - $6B, Automotive Coatings is a key coatings segment PPG has broad strength and balance within the Automotive industry
Strong global presence utilizing technology with a healthy mix of customers
PPG has a long history of aggressive actions driving profitable growth and successful leadership
Tough restructuring actions combined with an energized focus on Joint Ventures Proven sustainability through investment in capabilities and technology
PPG has clear strategies to capitalize on significant growth opportunities
Leverage growth in BRIC countries Mitigate margin pressure with content growth, cost reductions, pricing discipline and technology
February 23, 2010
PPG Industries, Inc. 43
PPG Automotive Coatings
Recent Successes at BMW
• Compact Process Paint share gain
• Mini Cooper in Oxford
•
Launch of Compact Process Basecoats • Spartanburg
• APO Clearcoat at BMW • Munich • Spartanburg
Early Technology Adopter
• Powder Clearcoat
• Waterborne Primer • APO Clearcoat • B1:B2 Compact Process
February 23, 2010 PPG Industries, Inc. 44
ForwardForward-Looking Statement
Statements contained herein relating to matters that are not historical facts are forward-looking statements reflecting PPG’s current view with respect to future events and financial performance. These matters within the meaning of section 27A of the Securities Act of 1933, as amended, and section 21E of the Securities Exchange Act of 1934, as amended, involve risks and uncertainties that may affect PPG’s operations, as discussed in PPG’s filings with the Securities and Exchange Commission pursuant to Sections 13(a), 13(c) or 15(d) of the Exchange Act, and the rules and regulations promulgated thereunder. Accordingly, many factors could cause actual results to differ materially from the forward-looking statements contained herein. Such factors include global economic conditions, increasing price and product competition by foreign and domestic competitors, fluctuations in cost and availability of raw materials, the ability to maintain favorable supplier relationships and arrangements, difficulties in integrating acquired businesses and achieving expected synergies therefrom, the realization of anticipated cost savings from restructuring initiatives, economic and political conditions in international markets, the ability to penetrate existing, developing and emerging foreign and domestic markets, which also depends on economic and political conditions, foreign exchange rates and fluctuations in such rates, the impact of environmental regulations, unexpected business disruptions, and the unpredictability of existing and possible future litigation, including litigation that could result if the asbestos settlement discussed in PPG’s filings with the Securities and Exchange Commission does not become effective. However, it is not possible to predict or identify all such factors. Consequently, while the list of factors presented here is considered representative, no such list should be considered to be a complete statement of all potential risks and uncertainties. Unlisted factors may present significant additional obstacles to the realization of forward-looking statements. Consequences of material differences in results compared with those anticipated in the forward-looking statements could include, among other things, business disruption, operational problems, financial loss, legal liability to third parties and similar risks, any of which could have a material adverse effect on PPG’s consolidated financial condition, results of operations or liquidity. All information in this presentation speaks only as of February 23, 2010, and any distribution of this presentation after that date is not intended and will not be construed as updating or confirming such information. PPG undertakes no obligation to update any forward-looking statement.
February 23, 2010 PPG Industries, Inc. 45
Bill Wulfsohn Sr. VP, Industrial Segment Tim Knavish VP, Automotive Coatings - Americas
February 23, 2010
PPG Industries, Inc. 1
Core Themes
At $4B - $6B, Automotive Coatings is a key segment of the coatings market PPG has broad strength and balance within the Automotive industry PPG has a long history of aggressive actions driving profitable growth and successful leadership PPG has clear strategies to capitalize on significant growth opportunities
February 23, 2010
PPG Industries, Inc. 2
Coatings Industry
Global Coatings = $87B
Global Coatings by Region Global Coatings by Mix
Others 11%
North America 24%
Special Purpose 49% Arch 51%
Aero 5% Pkg 6% Auto OEM 9% GI 44% Refinish 18%
Asia Pacific 35% Europe 30%
M&P 18%
Automotive Coatings is a $4B - $6B market
Source: Orr & Boss February 23, 2010 PPG Industries, Inc. 3
Automotive Coatings Industry
Global Coatings = $4B - $6B
Global Coatings by Region
South America 4%
Other 6% North America 18%
Asia Pacific 36% Europe 37%
Asia is expected to be the largest market in 2010 More cars are produced in China than U.S.
Source: PPG Estimate February 23, 2010 PPG Industries, Inc. 4
Automotive Coatings Industry
Business Overview
Pretreatment Electrocoat Primer Basecoat Clearcoat
Excluding Japan and Adjacencies
Core Layers
Pretreatment Electrocoat Primer Surfacer Basecoat Clearcoat
Source: PPG Estimate
Description
Conversion coating that improves corrosion resistance and paint adhesion Electrically deposited coating that protects metal from corrosion Spray applied coating that improves surface smoothness, durability and protects against chip Color coat that adds the decorative chroma and aesthetic effects Final coating layer that provides protection and shine to the vehicle to maintain it’s showroom like finish
February 23, 2010
Size (MM)
$150 $900 $500 $1,750 $750
PPG Industries, Inc. 5
PPG Automotive Coatings
OEM Process
Movie Clip
February 23, 2010
PPG Industries, Inc. 6
PPG Automotive Coatings
2009 PPG Coatings Sales = $9B
Auto OEM
Automotive Coatings Is Core to PPG’s Portfolio
February 23, 2010
PPG Industries, Inc. 7
PPG Competitive Advantages
Strong market position…..
All geographies All technologies Customer mix
History of sustained investment in capabilities and technology leadership Well positioned Joint Ventures and Partnerships
February 23, 2010
PPG Industries, Inc. 8
Strong market positions…..
PPG Industries, Inc. 9
Automotive Coatings Industry
Competitive Landscape
North America
Other Other PPG DuPont PPG DuPont
Europe
BASF
BASF
Asia Pacific
Other KCC BASF Nippon DuPont PPG
South America
Other
PPG
BASF DuPont Kansai
Ex - Japan
Source: PPG Estimates
February 23, 2010
PPG Industries, Inc. 10
Automotive Coatings Industry
Competitive Landscape
North America
Other Other PPG DuPont PPG DuPont
Europe
BASF
BASF
Asia Pacific
Other KCC BASF Nippon DuPont Nippon PPG
China
Other KCC PPG
South America
Other
PPG
BASF Kansai Kansai DuPont Ex - Japan
BASF DuPont
Strong Market Position in All Regions
Source: PPG Estimates February 23, 2010 PPG Industries, Inc. 11
Automotive Coatings Industry
Industry Sales by Layer
PT Clear E-Coat Clear E-Coat
PPG Sales by Layer
PT
Primer Base
Base Primer
Strong Position in All Layers
Source: PPG Estimates
February 23, 2010
PPG Industries, Inc. 12
Automotive Coatings Industry
Customer Base
North American Based European Based
PPG Other Other
PPG
Japanese / Korean Based in NA
Chinese / Indian Domestics
PPG Other Other
PPG
Broad Mix of Customers
Source: PPG Estimates February 23, 2010 PPG Industries, Inc. 13
History of investment in capabilities and technology leadership
PPG Industries, Inc. 14
PPG Automotive Coatings
PPG Structure
1975
1980
1985
1990
1995
2000
2005
2010
PPG Innovations
Continuous Strategic Investment and Innovation
February 23, 2010 PPG Industries, Inc. 15
PPG Automotive Coatings
Research & Development
PPG has been awarded an R&D 100 Award 9 times in the last 14 years
Presented annually by R&D Magazine for most significant technology-related new products and processes
PPG has been a finalist for an Automotive News PACE Award 7 times in the last 9 years resulting in 6 awards 41 percent of Automotive OEMs’ sales are from products that are five or fewer years old
February 23, 2010
PPG Industries, Inc. 16
Well Positioned Joint Ventures
PPG Industries, Inc. 17
Joint Ventures
PKAF Asian PPG PPG Helios
2003 2004 2005 2006 2007 2008
2003 2004 2005 2006 2007 2008
2003 2004 2005 2006 2007 2008
Scope
• Alliance with Kansai Paints • Formed in 2004 • Target Japanese OEMs in
Scope
• JV with Asian Paints • Formed in 1997 • Support growing Indian
Scope
• JV with HeliosPaint • Formed in 2000 • Provide sales and service to
North America and Europe
transportation markets
Russian Domestic and Eastern Europe OEMs
February 23, 2010
PPG Industries, Inc. 18
Historical Performance
PPG Industries, Inc. 19
PPG Automotive Coatings
Historical Performance
Global Builds
70 60 50
MM Builds
PPG Sales
NA EMEA AP SA
NA
EMEA
AP
SA
40 30 20 10 0 2005 2006 2007 2008 2005 2006 2007 2008
PPG Growth Outperforms the Market
Source: CSM Worldwide February 23, 2010 PPG Industries, Inc. 20
Automotive Coatings
Global Chaos
Brazil auto sales fall sharply in October
February 23, 2010 PPG Industries, Inc. 21
PPG Automotive Coatings
2009 Dynamics
16 14 12 10 8 6 4 2 0
2007
2007-2009 North America Builds
MM Builds
Builds
Clunkers
Other
2009
EMEA Builds
25 20
MM Builds
Asia Builds
Excluding Japan
Sales
MM Builds
25 20 15 10 5
15 10 5 0 2005 2006 2007
Europe Other
2008
2009
0 2005
China
2006
India
2007
Australia
2008
Korea Other
2009
Source: CSM Worldwide
February 23, 2010
PPG Industries, Inc. 22
Aggressive Response to Restore Profitability
PPG Industries, Inc. 23
PPG Automotive Coatings
Aggressive Cost and Business Measures
Restructuring Actions
Manufacturing Rationalization
Facility
Clarkson, Ontario Baton Rouge, LA Saultan, FR European Mfg Satellites (3) North America Mfg Global Tech Labs Sales and Admin
Overhead Reduction
Action
Closed Closed Exited Paint Mfg Headcount Reduction Closed Headcount Reduction Footprint Reduction Headcount Reduction
20%
2008
2009
Lean and Cost Focus
Key Projects
Localization of resins and products Logistics Efficiencies Receivable past due reduction 5S system for waste elimination Material Utilization Optimization: Yield loss, Sample expense, Inventory loss
Global Build Breakeven Reduction
Timing
2010 2010 2010 Ongoing 2010
15%
February 23, 2010
PPG Industries, Inc. 24
PPG Automotive Coatings
100 80 60 40
$ MM
Industrial Coatings Segment Earnings Improvement
20 0 -20 -40 -60 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009
Aggressive Restructuring Drives Profit Improvement
February 23, 2010 PPG Industries, Inc. 25
Automotive Coatings
Rebound Build Forecast
Excluding Japan
10% Growth CAGR
China's auto sales hit record high in January
MM Builds
60 50 40 30 20 10 0
2009
NA
EMEA
AP
SA
2010
2011
2012
Source: PPG
February 23, 2010
Source: CSM Worldwide 26 PPG Industries, Inc.
Looking Forward
Leverage market demand growth with strong focus on the BRIC countries Sustain profitability with content growth, cost reduction, pricing discipline and new valueadded technology
February 23, 2010
PPG Industries, Inc. 27
Industry Outlook
North America: Demand Recovery
16 14 12 10 8 6 4 2 0 2007 2009 2011 2013 45 40 35 30 25 20 15 10 5 0 2007 2009 2011 2013
EMEA: Sub-Region Shift
W. Europe Other
Builds MM
Builds MM
Asia: Sustained Growth
30 25
Builds MM
SA: Incremental Growth
6
China
Builds MM
India Korea
20 15 10 5 0 2007 2009 2011 2013
5 4 3 2 1 0 2007 2009 2011 2013
PPG Industries, Inc. 28
Excluding Japan
Source: CSM Worldwide
February 23, 2010
Leverage Growth in BRIC
PPG Industries, Inc. 29
Accelerate Growth in Asia
14 12 10 8 6 4 2 0 2004 2006 2008 2010 2012 2014
E-coat Waterborne
Largest Supplier in China
MM
China Builds Impact
Asia Capacity Expansion
Technology Action Plan Timing
Solventborne
Wuhu Phase II Add WB Capability in Tianjin New ZHG Plant
2010
2010 2011
India Builds
Builds MM
#2 Supplier
Asian PPG
• New Sriperumbudur facility • Integration of Farber acquisition • Eight primary OEM customers • Recent Awards: • Tata – Pune • VW – Pune • Ford – Chennai • GM - Talegaon
February 23, 2010 PPG Industries, Inc. 30
5 4 3 2 1 0 2009
Source: CSM Worldwide
2010
2011
2012
Automotive Coatings Industry
• Over 80 OEMs • PPG is fully owned • Global OEMs require Chinese partner (max 50% ownership)
Asia Pacific Perspective: China
Toyota Chandchun II Hyundai Shunyi III BAIC BDA Hafei Auto FAW-VW
New plants announced to be built between 2010 and 2014
Beijing-Hyundai FAW Tianjin SGM-Dong Yue BYD Xian II R/Nissan Zhengzhou II Ford Chingqing II BBDC Chery
Changcheng Greatwall SGM Beisheng Auto NJ-Iveco Anhui Jianghuai
NJ-Fiat
Shanghai Auto Shanghai GM Honda Wuhan II Shanghai VW Proton Hangzhou PSA Wuhan III R/Nissan Xiaogan SAIC-GM-Wuling PSA Chenzhen BYD Auto Nissan Southeast Fujian Daimler GEELY DongFeng-Peugeot-Citroën
Top 20 Customers New OEM plants
BYD Changsha Zotye Changsha
Note: Map is a sample of OEM plants
February 23, 2010
PPG Industries, Inc. 31
Automotive Coatings Industry
Asia Pacific Perspective: India
Tata Maruti Suzuki Honda Honda Force Motors Man Force Tata ULCC
Top APPG Customers New OEM plants
15 new plants announced to be built between 2009 and 2014
GM ` Tata
Mahindra Renault Mahindra Tata GM Bajaj Renault Bajaj Tata Fiat VW Mercedes Mahindra Toyota Ashok Leyland Ford Nissan Renault Hyundai Motor Ford
Daimler Hero
Nissan Ashok Leyland
India Will Become a Leading Exporter of Vehicles Industries, Inc. 32 February 23, 2010 PPG
Automotive Coatings Industry
Emerging Regions Driving Growth in Small and Midsize Segments
2007 2010 2014
2007 vs. 2014 Builds
37% 34% 29%
Source: CSM Worldwide Large Vehicle
30% 41% 29%
Mid Size Vehicle Small Vehicle
40% 29% 31%
Small Medium Large
+7.8 MM +6.2 MM +0.6 MM
PPG Maintains Content Per Vehicle
Pretreatment Electrocoat Primer Basecoat Clearcoat Products Pretreatment Electrocoat Primer Basecoat Clearcoat PPG DuPont BASF Henkel X X X X X X X X X X X X X X
February 23, 2010
PPG Industries, Inc. 33
Automotive Coatings Industry
Emerging Regions Driving Growth in Small and Midsize Segments
2007 2010 2014
2007 vs. 2014 Builds
37% 34% 29%
Source: CSM Worldwide Large Vehicle
30% 41% 29%
Mid Size Vehicle Small Vehicle
40% 29% 31%
Small Medium Large
+7.8 MM +6.2 MM +0.6 MM
Sealants Services Durabed®Sprayable Bedliner Specialty Products
PPG Maintains Content Per Vehicle
Products Pretreatment Electrocoat Primer Basecoat PPG DuPont BASF Henkel X X X X X X X X X X X X X X X X X X X X X X PPG Industries, Inc. 34 X
Adhesives
Clearcoat Acoustic Sealants Bedliner
Audioguard®Acoustic Coatings Systems
Services Specialties February 23, 2010
PPG Automotive Coatings
Sustain Profitability Drivers Actions
February 23, 2010
PPG Industries, Inc. 35
PPG Automotive Coatings
Sustain Profitability Drivers Actions
February 23, 2010
PPG Industries, Inc. 36
Automotive Market Trends
Environmental
• • • • Eco-efficiency to improve resource use Vehicle interior emissions Resource availability Product positioning based on ‘Green’
Energy
• Move to fuel efficient platform designs, conservation approaches • Shift in vehicle segment sales • Local production • Alternative fuel sources
Technology Political / Commerce
• • • • • • Government mandates, regulation Government involvement in car co’s Cost to supply globally Rise of China and India IP Protection Technology transfer Demographics • Light weight materials • Nano technology • New processes and designs
• Builds growth in the emerging regions
• Urbanization movement • Consistent quality standards • Personal customization, convenience
February 23, 2010 PPG Industries, Inc. 37
Sustain profitability with……
PPG Industries, Inc. 38
PPG Automotive Coatings
New Product Technology 2010 - 2014
Pretreatment Electrocoat Primer Basecoat Clearcoat Compact Process ZircoBond 2 High Throw ED7000 / Dura-Prime® Waterborne OPP3e / OPP4 Next Gen Topcoat System Increased Scratch Resistance / Self Healing Clear / UV Cure Clear B1:B2 & 3C1B: Solventborne & Waterborne
Market Drivers
Energy Cost / Durability / Environment Appearance / Chip / Environment Cost / Energy / Appearance Appearance / Environmental Energy
February 23, 2010
PPG Industries, Inc. 39
Automotive Coatings Industry
Industry Trends
Conventional Process
E-Coat
Rinse Cycle
Cool
Bake
Primer
Sealer + Gel Bake
Sanding
Sanding
Basecoat Booth
Inspection
Cool
Bake
Clearcoat
Pick-Up
February 23, 2010
PPG Industries, Inc. 40
Cool
Clean, Pretreated Body-in-White
Bake
Automotive Coatings Industry
Industry Trends
Conventional Process
Compact Process
E-Coat
Rinse Cycle
Sealer + Gel Bake
Sanding
Compact Process Booth
Inspection
Cool
Bake
Clearcoat
Pick-Up
Eliminates ~20% of the Automotive paint line cost BMW example
February 23, 2010 PPG Industries, Inc. 41
Cool
Clean, Pretreated Body-in-White
Bake
PPG Automotive Coatings
Industry Trends
Compact Process Impact – Customer Cost Model
$255 / unit Customer Value: • Reduced Footprint • Reduced Capital • Less Paint Usage PPG Value • Differentiated Coatings • Technology Driven $227 / unit
Indirect Mat'l Energy Labor Capital Paint
Conventional
Compact Process
Compact Process Generates $28 / unit Savings
Source: PPG Estimate February 23, 2010 PPG Industries, Inc. 42
Strategic Summary
At $4B - $6B, Automotive Coatings is a key coatings segment PPG has broad strength and balance within the Automotive industry
Strong global presence utilizing technology with a healthy mix of customers
PPG has a long history of aggressive actions driving profitable growth and successful leadership
Tough restructuring actions combined with an energized focus on Joint Ventures Proven sustainability through investment in capabilities and technology
PPG has clear strategies to capitalize on significant growth opportunities
Leverage growth in BRIC countries Mitigate margin pressure with content growth, cost reductions, pricing discipline and technology
February 23, 2010
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PPG Automotive Coatings
Recent Successes at BMW
• Compact Process Paint share gain
• Mini Cooper in Oxford
•
Launch of Compact Process Basecoats • Spartanburg
• APO Clearcoat at BMW • Munich • Spartanburg
Early Technology Adopter
• Powder Clearcoat
• Waterborne Primer • APO Clearcoat • B1:B2 Compact Process
February 23, 2010 PPG Industries, Inc. 44
ForwardForward-Looking Statement
Statements contained herein relating to matters that are not historical facts are forward-looking statements reflecting PPG’s current view with respect to future events and financial performance. These matters within the meaning of section 27A of the Securities Act of 1933, as amended, and section 21E of the Securities Exchange Act of 1934, as amended, involve risks and uncertainties that may affect PPG’s operations, as discussed in PPG’s filings with the Securities and Exchange Commission pursuant to Sections 13(a), 13(c) or 15(d) of the Exchange Act, and the rules and regulations promulgated thereunder. Accordingly, many factors could cause actual results to differ materially from the forward-looking statements contained herein. Such factors include global economic conditions, increasing price and product competition by foreign and domestic competitors, fluctuations in cost and availability of raw materials, the ability to maintain favorable supplier relationships and arrangements, difficulties in integrating acquired businesses and achieving expected synergies therefrom, the realization of anticipated cost savings from restructuring initiatives, economic and political conditions in international markets, the ability to penetrate existing, developing and emerging foreign and domestic markets, which also depends on economic and political conditions, foreign exchange rates and fluctuations in such rates, the impact of environmental regulations, unexpected business disruptions, and the unpredictability of existing and possible future litigation, including litigation that could result if the asbestos settlement discussed in PPG’s filings with the Securities and Exchange Commission does not become effective. However, it is not possible to predict or identify all such factors. Consequently, while the list of factors presented here is considered representative, no such list should be considered to be a complete statement of all potential risks and uncertainties. Unlisted factors may present significant additional obstacles to the realization of forward-looking statements. Consequences of material differences in results compared with those anticipated in the forward-looking statements could include, among other things, business disruption, operational problems, financial loss, legal liability to third parties and similar risks, any of which could have a material adverse effect on PPG’s consolidated financial condition, results of operations or liquidity. All information in this presentation speaks only as of February 23, 2010, and any distribution of this presentation after that date is not intended and will not be construed as updating or confirming such information. PPG undertakes no obligation to update any forward-looking statement.
February 23, 2010 PPG Industries, Inc. 45
