Axalta Appoints Steven M. Chapman To Board Of Directors

Axalta Coating Systems has announced the appointment of Steven M. Chapman to its board of directors, where he will serve on the company’s audit and environment, health, safety and sustainability committees.

“I’m pleased to welcome Steve to our board of directors,” said Mark Garrett, Board Chair, Axalta. “He brings extensive China and emerging markets experience from his long and distinguished career at Cummins Inc., a global Fortune 500 manufacturing leader. Axalta continues to focus on growing our customer base, and Steve has a proven track record of building a successful business in China and he understands the M&A market in the region, as well as how to leverage partnerships and joint ventures to drive performance. His guidance will help Axalta further build our leadership position in the coatings industry around the world.”

“Steve’s background and 30-plus years of experience in China and emerging markets where he successfully grew Cummins’ China business make him a great fit for Axalta’s business goals and priorities,” said Robert Bryant, CEO of Axalta. “Moreover, Steve will complement our board’s current expertise in the automotive and commercial vehicle markets, particularly in China.”

Chapman, 66, is currently Group Vice President – China and Russia at Cummins, and is responsible for driving business growth in both countries. He is a senior advisor to the US-China Industrial Cooperation Partnership, a private equity fund managed by Goldman Sachs, and also serves on the board of directors for Cooper Tire & Rubber, the board of trustees for Carthage College in Kenosha, Wisconsin, and the Yale Greater China board of advisors.

Axalta Begins Building Netherlands Refinish Facility

Axalta Coating Systems, a supplier of liquid and powder coatings, has broken ground on its advanced refinish facility at Business Park Medel in Tiel, Netherlands. The 7250 square-metre facility will be equipped with the latest technology and energy-saving features, and the company hopes to have construction completed by mid-2021.

Tiel Councillor Ben Brink and Yves Kerstens, President of Axalta in Europe, the Middle East and Africa (EMEA), broke ground at a ceremony to mark the event. It was attended by members of the Axalta European leadership team and the management team in the Netherlands.

“The investment in this facility is important to the future growth and long-term success of our refinish business in Europe,” said Kerstens. “Our new Tiel facility will feature state-of-the-art technologies that will enable productivity and sustainability, which will benefit our business and help us maximise service to customers. We are committed to investing in the future of Axalta in ways that will help us keep the needs of our customers at the forefront.”

The Axalta global refinish brands in the Netherlands will relocate to the new Business Park Medel facility, which is described as being in the centre of the Netherlands and offering easy accessibility to major transport routes, allowing the company to remain close to its customers around the country.

Axalta says that when completed, it will have three floors of office space, a warehouse and a new refinish training centre where customers can hone their skillsets using cutting-edge technology and advanced techniques. The facility will also have a separate mixing room.

“The new training centre in Tiel will further our commitment to customers with training that will help them be more efficient and more productive,” said Kerstens. “It will be the latest of 47 other training centres that Axalta offers to customers around the world that are helping them improve their business performance.”

BASF Supervisory Board Elects New Chairman

The supervisory board of BASF has elected Dr. Kurt Bock as its new chairman.

Bock had been previously elected to the board by the annual shareholders’ meeting as a shareholder representative and will remain so until the end of term in 2024.

Bock succeeds Dr. Juergen Hambrecht, who resigned from the Board at the end of the 2020 annual shareholders’ meeting, as he previously said he would do before his election to the board in May 2019.

AkzoNobel Weathering COVID-19 Storm

As the global pandemic continues to evolve, AkzoNobel has given an update on steps it is taking toward ensuring employee health and safety and maintaining business continuity.

AkzoNobel says the various steps it has taken to continue operating and to reduce costs are working, while also keeping the company intact and able to respond quickly to changes in market demand.

During the first quarter, the pandemic reduced company revenue by around five per cent with Asia the most affected, while other regions were affected more from the second half of March onwards. The company says it successfully predicted customer demand for recent months, and that market headwinds were strongest during April which resulted in revenue being almost 30 per cent lower from 2019.

AkzoNobel says distribution channels for Decorative Paints have mostly reopened in China and Europe, with demand returning toward previous levels, however Asia and South America are still facing varying degrees of market disruption. Automotive and aerospace industries continue to be more impacted than others, but the company believes market headwinds will ease further throughout June but will differ per region and segment.

The company is continuing to implement its cost-saving measures and strict margin management and intends to maintain a strong balance sheet due to its cash management and working capital controls.

“We’re weathering the COVID-19 storm, taking care of our employees while protecting our business,” said Thierry Vanlancker, CEO of AkzoNobel. “Thank you to everyone at AkzoNobel for working hard to continue serving our customers and provide many essential products for critical industries, while following all necessary health and safety measures.

“Although the pandemic situation forced us to pause key parts of our transformation, our teams have focused on minimising all discretionary costs, as well as carefully managing cash and working capital. The actions we’ve taken, together with our strong balance sheet, provide a solid platform for AkzoNobel to perform as an industry frontrunner.”

PPG Kicks Off Global Restructuring

PPG has begun a series of cost cutting measures it blames on weakened global economic conditions from the COVID-19 pandemic and the related pace of recovery in some countries, and it includes a voluntary employee redundancy programme in the US and Canada.

The company expects it will deliver US$160 to US$170 million in annual pre-tax cost savings, with around US$25 to US$35 million of savings projected this year after the cuts. PPG believes the remainder of the savings will be substantially achieved by the end of 2021.

“Given the broad economic impact relating to the COVID-19 pandemic and the recovery timeline in a few end-use markets, we are taking decisive action to further adjust our cost base,” said Michael H. McGarry, Chairman and CEO of PPG. “These measures will enable the company to come out of the crisis with lower structural costs. As a result of these actions, along with continued discretionary cost controls, we expect strong operating margin leverage as economic activity continues to improve. Despite efforts to reduce our total costs, we remain committed to continuing our investments in growth-related initiatives, including fully funding our research and development for products, services and digital capabilities that will drive long-term growth.”

PPG says it will record a restructuring charge of US$160 to US$180 million pre-tax, US$125 to US$140 million after-tax, or US$0.52 to US$0.58 cents per diluted share, in the second quarter of 2020, which is nearly all related to employee severance. The company will also incur other associated restructuring-related costs of around US$10 million over future quarters. The total cash sum to complete these actions is approximately US$180 million, with about US$110 million expected in 2020 and the remainder in 2021. The total includes capital expenditures to relocate certain operational activities.

The company says the aggregate impact and pace of recovery falls in line with its expectations, which it noted in its 28 April earnings teleconference. In aggregate, company sales volumes were lower against the previous year in April by approximately 35 per cent. The company saw continued improvement throughout May, with aggregate monthly sales down less than 30 per cent versus 2019.

PPG will provide more details during its second quarter earnings update in July.

All Auto Recalls Working With UK Recycler Association To Eliminate Recalled Parts

The Vehicle Recyclers Association (VRA) UK has worked closely with All Auto Recalls (AAR) to develop a mechanism through which automotive recyclers in the UK can identify and remove recalled parts from inventories. The collaboration has led to the development of a tool that is now available to VRA members.

AAR says that with the cost of repairing vehicles increasing sharply in recent years, Reclaimed Original Equipment (ROE) parts offer a quality, cost-effective solution to the problem. However, the increased use of ROE vehicle parts can lead to the increased risk of dangerous recalled parts being fitted to a car.

Chris Daglis, Managing Director of AAR, says that every driver should be asking their mechanic, insurer or parts seller if the car part is safe, not the subject of a recall, and whether or not the part can be traced to the vehicle if it ends up being recalled in the future.

With the launch of the UK certification programme in the middle of this year, the VRA says it has foreshadowed a need for this service and can now deliver it through AAR.

“VRA is delighted to be working closely with Chris and the team at All Auto Recalls to make available to UK vehicle recyclers a user-friendly facility to identify any parts in their stocks which are still subject to outstanding recalls,” said Chas Ambrose, Secretary of VRA UK. “This will make the challenge of dealing with rising numbers of recalls a much more manageable task. Furthermore, not only will this ensure that vehicles dismantled in the future are screened for outstanding recalls in real time but it will allow recyclers to retrospectively screen their existing parts stock for current and, significantly, future recalls.

“Effective recall management really is integral to the ongoing professional development of the UK reclaimed parts sector and will make a valuable contribution to ensuring reclaimed parts are safe and operate correctly, but also demonstrate the commitment of UK recyclers to building consumer confidence in reclaimed parts and their suppliers.”

AAR says it has been developing the capability since early 2018 and is now servicing multiple stakeholders.

“Our purpose is to develop and provide traceability solutions to the automotive industry that reduce risk, increase confidence and ensure customer safety,” said Daglis. “It’s not something many of us would give a second thought to – you have been in a collision, or your car is due for routine repairs and maintenance, and we pass our vehicle over into the hands of our local collision repairer, garage or insurer.

“Once our car is returned, repaired and ready to drive, how many of us would question where the parts had been sourced and if they were safe? How would we know if one such part was in fact a dangerous part on the recall register? And how would we know if, it were to be recalled in the future, the part could be traced to us and our vehicle?”

AAR says ROE parts for collision repair are used in high volume across the globe and make up around five per cent of all parts used. However, with the massive demand following the outbreak of the COVID-19 pandemic, being driven by cost pressures on insurance claims and the environmental benefits that can be derived from using reclaimed parts, experts are already seeing the effects and are expecting to see demand rise dramatically – beyond 20 per cent:

  • Australia currently uses around 10 per cent of such parts, the USA 12 per cent, New Zealand as much as 40 per cent and the UK around two per cent
  • Manufacturers recalled 29.3 million vehicles in 2018, according to National Highway Traffic Safety Administration (NHTSA) data
  • The total number of vehicles affected by recalls spiked between 2014 and 2016, reaching 50.5 million
  • There are millions of insurance claims each year in the UK, with parts making up approximately half of a vehicle’s repair cost
  • Over a million vehicles are repaired due to road accidents every year, with more going to mechanics for routine repairs

AAR says everyone needs to know if a part that has been added to the vehicle is from a licenced automotive recycler and, more importantly, that they have a lawful and robust recall process in place. That recall process must go beyond the day that the part is added to the car – it needs to be for the life of the car and the time it is owned. If this information does not reach either the owner or the mechanic that fitted the part, there is zero traceability. This also applies no matter where the part was sourced and by who it was fitted, including the online marketplace.

“It is critical for mechanics, collision repairers, insurers and any on-seller of parts to have a recall checking capability so that they can alert their customer to a safety problem on their vehicle,” said Daglis. “Sometimes these recalls are critical – they are death traps in the Takata airbag scenario. We are talking about some airbags being in vehicles that are now 24 years old, yet they were only recalled three months ago.

“The All Auto Recalls UK system offers the Auto Alert function – this will alert the auto recycler if any of the vehicles they have entered into the system have a recall against them at any time in the future. Remember, a vehicle may be clear today, but recalled at some time in the future.”

CIECA Names Paul Barry Executive Director

CIECA has selected Paul Barry for the role of Executive Director. Barry will work with CIECA’s board of trustees to develop a clear mission and objectives for the organisation and an effective strategy to accomplish them.

“With the rapid changes to vehicles driven by technology, including autonomous vehicles, the Internet of Things and artificial intelligence, the landscape is evolving very quickly,” said Barry. “My goal as Executive Director is to help the board identify challenges faced by the industry and work with all segments of CIECA’s member companies to develop a strategic roadmap to take us to the next chapter.”

CIECA said Barry has over 30 years of experience in the insurance and technology industries. Over the last 20 years, he has held executive and senior leadership positions with a focus on claims and automotive repair technology.

“We are excited to welcome Paul Barry to the CIECA team,” said Kim DeVallance Caron, CIECA Chairwoman and Director of Global Product Development, Enterprise Holdings. “His years of industry experience, combined with his prior involvement with CIECA, will be instrumental in taking the organisation into the future.

“On behalf of CIECA’s board of directors and members, we want to show our appreciation to Ed Weidmann, who has acted as CIECA’s Interim Director over the last year. Ed played an essential role in helping the organisation continue its mission to develop and promote electronic standards that allow the collision industry to be more efficient.”

Barry has worked with CIECA in different roles for many years. From 2011-2013, he served on the executive committee as Secretary, Treasurer and Vice-Chairman and has also attended committee meetings as a company representative and/or board member.

“CIECA has come a long way in recent years with the development of the BMS [Business Message Suite],” said Barry. “I am very excited about the opportunity to work with a lot of great companies and people at a time when the industry is going through major changes and look forward to meeting with industry leaders in the coming weeks and months.”

Hertz Car Rental Files For Ch11 Bankruptcy

Hertz Global Holdings has filed for US Chapter 11 bankruptcy protection due to the COVID-19 pandemic which has crippled global travel, causing what the company called an “abrupt decline in revenue”.

After many US states began to declare stay at home orders in March, car rentals dried up and Hertz reduced spending, implemented furloughs and laid off 20,000 employees. The company missed a payment on its debt in April, and while it managed to reach a short-term deal with its creditors, it couldn’t secure a long-term agreement.

The company has accumulated US$18.7 billion of debt as of March and has around US$1 billion in cash on hand which it says it will use to support its ongoing operations while it proceeds with the bankruptcy process. The company will continue to honour reservations, promotional offers, vouchers and rewards points programmes.

“Today’s action will protect the value of our business, allow us to continue our operations and serve our customers, and provide the time to put in place a new, stronger financial foundation to move successfully through this pandemic and to better position us for the future,” said Paul Stone, CEO of Hertz. “Our loyal customers have made us one of the world’s most iconic brands, and we look forward to serving them now and on their future journeys.”

Hertz is another in a line of companies feeling the financial pain of the crisis. Retailers J.C. Penney, J. Crew and Neiman Marcus have all filed for bankruptcy protection this month, while the home decor chain Pier 1 Imports announced it will be closing permanently, with final closing sales beginning now.

BASF And DiDi Form Partnership

Mobile transportation platform DiDi has signed a strategic cooperation agreement with BASF in the Hangzhou, Zhejiang Province of China, where Xiaoju Autocare, a subsidiary of DiDi, is headquartered.

According to the agreement, BASF will provide DiDi with sustainable automotive refinish products developed at its research and production site in Jiangmen. The products, designed for the Chinese market, are intended to help reduce VOC emissions and meet the standards implemented around China.

RODIM paint products will be provided to help body shops enhance workflow and overall performance for automotive refinishing, and an expert team from BASF will perform timely professional technical services for DiDi, including training for body shop operators.

DiDi owns 25 body and paint shops in China and plans to expand to over 200 owned and franchised shops globally by the end of the year.

“Simplification is in our DNA,” said Gu Haijie, President of Xiaoju Autocare. “We focus on simplifying processes and operations while our business is expanding. BASF is the one-stop solution provider that can help us standardise the painting process of our new shops. This will help us increase efficiency by integrating the whole value chain of contractors, dealers, and repair centres.”

BASF first approached DiDi and Xiaoju Autocare in late 2019 and had secured first business opportunities by early 2020, when BASF started the conversion of DiDi’s first shops in Shanghai.

“DiDi is a typical unicorn company,” said Patrick Zhao, Senior Vice President Coatings Solutions Asia Pacific, BASF. “One of the factors that connect us is our ability to respond to market needs quickly. The strategic cooperation will enable us to explore the car sharing market and bring this partnership to a new level. DiDi will offer consumers a preferred choice of car sharing. At the same time, BASF will contribute to the sustainable development of the refinish industry with our global network of presence, comprehensive automotive portfolio and a vast talent pool.”

LKQ Takes GM To Court Over Part Design Patents

LKQ Corporation has begun legal proceedings against General Motors over the infringement and validity of collision repair part design patents on 6 May in a US district court.

LKQ says it has a Design Patent License Agreement (DPLA) with GM that includes parts with design patents, and that while LKQ has a license agreement to sell its own versions of GM parts and pays royalties for it, LKQ is alleging that GM demanded changes to the license agreement and also tried to get LKQ parts removed from electronic parts ordering platforms to pressure the company.

“Where the relationship between the parties was once amicable, GM stopped acting in accordance with the expectations of the parties when they entered into the DPLA, and the course of conduct in the years immediately after entering into the DPLA,” the complaint claimed.

“In the middle of the licensing period, GM also issued a unilateral demand to alter the terms of the DPLA. Further, notwithstanding the fact that GM and LKQ were in the midst of direct negotiations regarding a revised DPLA, in an effort to undermine LKQ’s business relationships and pressure LKQ into agreeing to unfair licensing terms, GM sent correspondence to a third party making baseless allegations that certain automotive parts sold by LKQ and listed on the third party’s vehicle part platform, Certified Collateral Corporation’s (CCC) platform, infringed certain GM design patents.”

The complaint also said that GM’s March 2019 letter to CCC included a list of approximately 250 replacement parts that allegedly infringed GM design patents, including parts sold by LKQ. GM was contacted by LKQ about the allegations contained in the letter, but further communications by GM to CCC continued including LKQ parts in the list of parts it stated were infringing its design patents.

LKQ said it received a letter from CCC on 4 March 2020 identifying over one dozen LKQ parts that GM claimed were violating its design patents. LKQ included the CCC letter as an exhibit with its complaint, which asked LKQ to remove the parts from its system but ended with a statement that read: “If you feel your parts do not infringe on GM design patents, please provide specifics that can be shared with GM or contact General Motors directly.”

LKQ’s complaint claims it does not infringe three of GM’s design patents as they are covered under its license agreement with GM and that four others should be declared invalid for various reasons. The company wants a judgement from the court for these issues.

The complaint also asks for “an order that GM and each of its officers, employees, agents, attorneys and any persons in active concert or participation with them are restrained and enjoined from further prosecuting or instituting any action against LKQ or the purchasers of LKQ’s products claiming that the alleged patents are infringed or from representing that LKQ’s products or their use on networks operated by purchasers of those products infringe the alleged patents.”