The German surface industry is facing an increasingly complex environment. While the demand for sustainable and technologically advanced solutions is growing worldwide, regulatory changes, rising costs and geopolitical tensions are making business more difficult. Current developments such as stricter supply chain regulations, the planned ban on bisphenol A (BPA) and the threat of punitive tariffs on titanium dioxide from China are particularly challenging.
Stricter regulations along the supply chain
The German Supply Chain Duty of Care Act (LkSG) and the planned EU Supply Chain Directive (CSDDD) are forcing companies to scrutinize their entire supply chain more closely and ensure compliance with human rights and environmental standards. According to the Association of the German Paint and Printing Ink Industry (VdL), these requirements mean a considerable amount of additional work for many companies - especially small and medium-sized enterprises (SMEs).
"The documentation and tracking of risks along global supply chains presents many companies with enormous administrative challenges. At the same time, there are no clear guidelines on how to implement these regulations," says the VdL. Companies have to invest time and resources to carry out the legally required risk analyses and develop preventative measures. This is all the more problematic as many companies in the surface industry are already heavily burdened by bureaucracy and are under considerable cost pressure overall.
The ban on bisphenol A: a danger for epoxy resins
Another issue that is keeping the industry busy is the planned ban on bisphenol A (BPA) in food contact materials. Although BPA is not used directly in the coatings and printing ink industry, numerous polymers - especially epoxy resins - are based on this substance. The VdL warns that the discontinuation of BPA-based materials could have far-reaching consequences: "For many applications, there are currently no equivalent alternatives. A ban could jeopardize the innovative strength and competitiveness of European industry." The search for substitutes and the conversion of production processes pose not only technical but also economic challenges, as research and development require considerable investment.
Is there a threat of a price shock from titanium dioxide tariffs?
Possible anti-dumping duties on titanium dioxide imports from China are particularly critical for the industry. This key pigment is used in numerous paints and varnishes and is indispensable for the manufacture of white and highly opaque products. The EU Commission has imposed provisional tariffs of between 14.4 and 39.7 percent on Chinese imports. The VdL sees this as a significant risk for the industry: "The additional costs resulting from punitive tariffs could further exacerbate the already tense cost situation for companies." For many companies, especially SMEs, which cannot fall back on alternative sources, this would mean a noticeable burden.
An already difficult environment
These challenges are occurring in an environment that, according to a joint study by BCG and VCI, is already considered difficult. 86% of the companies surveyed cited bureaucracy as the biggest obstacle to investment, followed by high energy costs (59%) and lengthy approval procedures (51%). The surface industry, which is heavily dependent on chemicals and energy-intensive processes, suffers particularly from these factors. The study also warns that without targeted measures, around 30 percent of production in the chemical industry - and thus also related sectors such as the surface industry, if this is feasible for the companies - could be threatened by migration.
How the industry should respond
Strategic action is needed to meet these challenges. The VdL recommends greater diversification of supply chains in order to reduce dependence on individual suppliers or markets. Companies should also make targeted investments in research and development to promote alternative materials and sustainable solutions. This could not only meet regulatory requirements, but also open up new markets, for example through environmentally friendly coatings or circular products.
Another important lever is digitalization. AI-supported processes offer great potential to reduce production costs and increase resource efficiency. At the same time, companies must seek dialog with political decision-makers in order to develop practicable solutions for the industry. Among other things, the VdL is calling for clearer guidelines for the implementation of supply chain regulations and greater support for the development of alternative materials.
An uncertain but promising outlook
The surface industry is facing considerable upheaval. Stricter regulation, rising costs and geopolitical tensions pose major challenges for companies. At the same time, sustainability and innovation are opening up significant opportunities. Those who make targeted investments in resilience, research and cooperation can not only overcome the current hurdles, but also secure competitive advantages in the long term. It is up to the players in the industry to set the course for the future.
Sources: Association of the German Paint and Printing Ink Industry (VdL), VCI-BCG study "Germany as an industrial location" (2024)