Chicago Paint & Coatings
Association
February 17, 2015
The Business of Paint &
Coatings in Illinois
Facts About the Industry
When we talk about paint and coatings, we are
not referring solely to paint used to cover
walls in your home. Enamels, primers,
undercoats, stains, varnishes, industrial
coatings, specialty coatings, aerosol paint,
caulks, sealants and adhesives are all
coatings.
The U.S. paint and coatings industry includes
manufacturers, raw materials suppliers and
distributors. Raw materials for paints and
coatings are derived not only from fossil fuels
and minerals but also from natural products,
such as clays, tree saps and vegetable oils.
Petrochemicals are still among the most
critical raw material, and the industry is
seriously affected by petrochemical shortages
and price fluctuations.
Direct Employment:
Rank among states:
12,108
#6
Establishments:
Rank among states:
2,444
#4
Average Wage:
Payroll:
Rank among states:
Foreign Exports:
Rank among states:
$53,000
$642 million
#4
$258 million
#2
A number of major paint manufacturers have
facilities in Illinois including True Value,
Valspar, Sherwin Williams, AkzoNobel,
Benjamin Moore and Rust-Oleum.
Illinois is the “Aerosol Capitol of the World.”
More aerosol products are manufactured in
Illinois than anyplace in the world.
Spray Paint was invented in Chicago, Illinois in
1949 by Seymour of Sycamore. Ironically, the
City of Chicago banned the retail sale of spray
paint in 1993. The ban is still in effect.
The manufacture of paints and coatings may
be a small industry in the United States as
compared with other industries; but most of
the manufacturing activity occurs in the U.S.
Manufacturing facilities are located in urban
areas like Chicago, Cleveland and Louisville, as
well as in Northern New Jersey, throughout
California, Florida, and Washington state.
The $23.5 billion industry is made up of
roughly 800 companies. The top 10 paint
companies, ranging in annual sales from $700
million to over $3 billion, represent about 70
percent of the U.S. market, or about $16.4
billion.
The next largest paint companies, ranging in
sales from $100 million to $700 million,
represent about 10 percent of the market or
nearly $2.4 billion. The remaining paint
companies compete for the 20 percent balance
of the market, or approximately $4.7 billion.
Although many of the larger companies are
publicly held, many — if not most — of the
remaining smaller manufacturing companies
are privately held and/or family businesses.
State of Illinois
• $7 billion + income tax increase in 2011 – Starts to
expire on January 1, 2015
• @$7 billion Pension Payment - Current Fiscal Year
• $5.124 billion backlog of bills (as of 2/11/15)
• $100 billion + shortfall in state-funded pensions
(teachers, state, university, etc. )
• Governor proposing serious cuts in all GRF programs
to alleviate debt
Loss of People, Revenue
• Since 1995 – Illinois has lost 366,616 tax-paying
households (806,054 people)
• Loss of $26.3 billion in taxable revenue
• 2014 – Illinois is #2 in the nation again where more
people are leaving than arriving. #1 in 2011, #2 in 2012
• More people fled Illinois than were born here in 2014,
sustaining a record net loss of 95,000 people
• Illinois has dropped from #6 in per capita income in
1998 to #15 in 2013
• Illinois’ unemployment rate is 6.4%, higher than the
national unemployment rate of 5.6%. (Dec. 2014)
Largest Costs
• Structural Imbalance – State Pensions,
Medicaid, K-12 Education
• Pensions - Over $7 billion and Climbing
• Medicaid - $7.3 billion
• Education - $8.95 billion – flat through 2015
Taxes & Spending
- Partial expiration of 2011 income tax increase decreases personal income tax rates to 3.75% from
5% corporate income tax to 7.75% from 9.5%, costing
the state over $2 billion just for the current fiscal
year.
- Current Budget & Revenues:
Lawmakers approved $35.7 billion budget
Revenues projected to only be $34.49 billion
Leaving $1.2 billion deficit
Since Illinois has a balanced budget requirement, this deficit was made up by $650 million in borrowing
from other funds and $380 million in postponed bills, and other delayed payments, all of which must be
paid back July 1, 2015.
Largest State Tax Exemptions – as of
4/1/14
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$2.23 billion
$1.64 billion
$1.11 Billion
$548 million
$333 million
$282 million
$267 million
Retirement & Social Sec. (I)
Food, Drug, Medical (S)
Standard Deduction (I)
Property Tax Credit (I)
Tax-Exempt Organizations (S)
Exemption from Trade-Ins (S)
Farm Chemical Exemption (S)
Largest Business Tax Exemptions
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$267 million
$204 million
$146 million
$133 million
$125 million
$114 million
Farm Chemical Exemption (S)
Manufacturing Machinery Exemp. (S)
Gasohol Discount (S)
Biodiesel Discount & Exemption (S)
Retailers’ Discount (S)
Non Motor Vehicle Use (MF)
88% of all Exemptions are contained on these two pages
Other Tax Incentives Targeted
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Return to 3 factor income tax apportionment for non-service companies
$70 million
Repeal Research & Development (R & D) Tax Credit
$30.6 million
Eliminate the Manufacturers’ Purchase Credit (MPC)
$34.5 million
Decouple from federal accelerated depreciation (one-time revenue increase)
$100 million
Include Puerto Rico and outer continental shelf in definition of U.S.
$30 million
Require income tax withholding on gaming winnings over $1000 from non-residents $4 million
Decouple from 2004 federal tax legislation (qualified production activities deduction) $53 million
Repeal deduction for foreign and domestic dividends received by corporations
$90 million
End deduction for company owned life insurance
$9 million
Tax canned software
$65 million
Extend the insurance tax to industrial insurance
$15 million
Repeal exemption for fuel transported to out of state destinations (Stealth Gas Tax) $45-90 million
Limit retailers sales tax discount
$125 million
Challenges Going Forward
Illinois – Financial Problems Continue
• $9 Billion Budget Deficit – Including $5.124 Billion in
Backlog of Unpaid Bills
• 2011 Tax Increase Started to Expire Jan. 1, 2015,
reducing revenue by $2.1 Billion in the Current Fiscal Year
and an Additional $2.7 Billion in the next Fiscal Year
starting July 1. Will Tax Increase be Extended? If so, at
What Rate?
• Pension Reforms Challenged in Court. Constitutional? If
Not, Back to Drawing Board. Over $7 Billion in Pension
Payments due this Year.
Other Current & Future Issues
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Loss of Revenue - Income Tax; Possible Service Taxes
Clean Power Procurement – Electricity Costs
Fracking/Shale Gas/Price of Natural Gas
Chemical Regulation at State Level
Chemical Bans – Triclosan, BPA, Flame Retardants,
Coal Tar Sealers, Polystyrene Containers, etc.
• Asian Carp/Chicago Waterway System/Mississippi
River
• Illinois Pollution Control Board Opening