Republic of Ireland market report: Paint and coatings industry boosted by buoyant construction sector but Brexit remains a headache

Mark Godfrey, Ballyhaunis, County Mayo, reports for PPCJ on how Irish republic paint sales are being fuelled by a construction boom – however, Brexit remains a hindrance

It is a good time for the paint and coatings industry in Ireland, which has one of the most buoyant construction sectors in the Europe.  

According to building sector forecaster Euroconstruct, the Republic of Ireland’s construction sector grew by 3.2% in 2023 yr-on-yr and will grow by 4.4% in 2024, as the country’s government tackles a housing shortage by promoting home building. By contrast, EU-wide the sector contracted 1.7% in 2023 and is predicted to contract by 2.1% in 2024. 

And the Irish construction sector may grow more – it is growing strongly from a low base compared to the demographic demand – Ireland’s population has grown sharply in recent decades (from 3.8M in 2000 to 5.1M in 2022 – World Bank data), said David Howard, Building Materials Federation Director, at the Irish Business and Employers Confederation (IBEC). While Ireland is now hitting or exceeding government targets for homes (29,000 home completions in 2023, 33,000 in 2024) there is potential demand for 40 to 50,000 homes, explained Howard. 

Not surprisingly, local paint makers see solid demand: “Yes, we are relatively optimistic, sales have been grown year on year since 2016, and we expect growth again this year,” said John Hetherton, Technical Manager at FSW Coatings, based in Virginia, County Cavan, one of the country’s largest paint makers, which sells under the well-known ‘Fleetwood’ brand. FSW Coatings quadrupled its output capacity at its plant in Virginia, County Cavan with a newly expanded plant opening in December last year. 

“Our single biggest product is a façade paint followed by a trade white, both of these are well accepted in our market and recognised for their quality and offering a competitive price for retailers,” said Hetherton. 

Brexit woes

Brexit was bad news for paint makers in Ireland – which has been highly integrated into the British market and its supply chains for paint making – and it has already had an impact, with potential worse problems in future. Trade friction with Northern Ireland was minimised by the initial Brexit protocol between the EU and UK to avoid a hard land border within the island of Ireland. This has left Northern Ireland within the single market with customs checks at the province’s ports for trade with Great Britain. These have been reduced by the 2023 Windsor Framework (detailing how the trading arrangement works) and is “very positive” in the sense that “we are finally able to put a footnote under the Brexit process,” said IBEC’s David Howard. 

“In terms of how it operates there’s not a big difference. Any product transferred from the UK to Northern Ireland that may be transferred to the Republic must go through the red lane when it arrives at the port in Northern Ireland. That means more paperwork but that’s not news,” he said. 

Irish paint companies have reluctantly adapted to the extra paper that Brexit brought according to Howard, and the biggest worry for the paint industry in Ireland is regulatory and specifically REACH, the EU’s code of standards for its chemicals industry. The British government has failed to keep pace with recent edits to the code in Brussels and has suggested it will establish a separate code for Britain, although its establishment has now been pushed beyond the next UK general election, expected later this year. “The process never stopped in the EU whereas in the UK legislation is now behind, it’s not even keeping pace,” said Howard. “If there is any divergence [between EU and UK chemical laws] that’s where there would be a problem. It’s concerning, particularly for anyone looking to bring in manufacture if they’re bringing in product from the UK. There are no answers yet as to how this may be solved.” Under the Protocol, Northern Ireland suppliers and manufacturers remain regulated under the EU’s REACH rules. 

READ MORE:

View from the UK: UK REACH and Net Zero

Mr Hetherton thinks British manufacturers will in the end stay aligned to the EU’s standards. His firm does not ship product to Britian and is “opening up channels” to secure ingredients for its paints from various sources. Yet, he said “we believe that the REACH regulations will be followed by Britian in general. Divergence from these would put British coating manufacturers and a severe competitive disadvantage and would almost certainly kill [UK] exports to the EU.” 

A key industry watcher in Britain, meanwhile, believes Brexit has already prompted Irish paint and coatings firms to look elsewhere for inputs. David Park, spokesperson for the British Coatings Federation (BCF) explained: “This has been one of the bigger changes brought about by Brexit. The UK had hitherto been a big distribution base, either for EU companies supplying into Ireland, or for non-EU countries using the UK as a hub before distributing into the rest of the EU.” 

But because of rules of origin and in some cases, tariffs, written into the UK- EU Trade and Cooperation Agreement that replaced UK EU membership, there is already more direct supply from the EU to Ireland and vice-versa, said Park: “There are also more barriers for UK companies to negotiate in dealing with Ireland in general. Taken together, this constitutes quite a major re-shaping of British-Irish supply chains in our sector, although BCF members are resourceful and resilient and continue to work through and around these additional barriers as best they can.” 

John Hetherton, at FSW Coatings, said his firm has given its suppliers a choice: “We ask our suppliers to ship direct from Europe or for them to handle the freight, duty and associated costs if they wish to ship from Britain.” 

Watching the industry at IBEC, David Howard believes the Irish paint industry for geographical as well as historical and cultural reasons remains close to suppliers and traders in Great Britain. But overall, Brexit, he stresses, has been a negative for his members. 

As for opportunities for Northern Ireland from its special vantage, David Park sees it thus: “In theory, Northern Ireland could be a good place for businesses to manufacture and trade from, as it has one foot in the door of both the EU single market and customs union and the UK internal market. However, in practice this does not seem, thus far, to have proven an attractive enough proposition for members to pursue this as an option.” 

Given the Republic of Ireland’s need for houses and the fact that its market looks set to grow over the coming years, that would seem a pity.