Charles Shaver has just wrapped up the post-lunch press conference and is now ready for the one-on-one interview.

The Chairman and CEO of Axalta Coating Systems has had a packed schedule since the time he came in from the US. The first half of the day was spent in the inaugural of his company’s new coating plant in Savli near Vadodara, Gujarat. This facility will double Axalta’s coating manufacturing capacity to meet the growing demand in light vehicles, commercial vehicles and industrial segments.

Shaver is only too aware of India’s importance in the overall growth strategy. With transportation coatings taking up a good chunk of the business, it is imperative to be part of a country that is on its way to becoming the third largest player in the world by 2020.

China, though, seems light years ahead with annual production of nearly 30 million cars which makes India’s output seem almost lilliputian in comparison. It also puts in context why Axalta’s recent investor presentation last month spoke of China being a huge growth opportunity.

Could all this be jeopardised with the recent trade war between the US and China? In fact, protectionism now increasingly seems the new world order with the US, ironically enough, leading the charge. Beyond China, there are issues relating to NAFTA (North American Free Trade Agreement) and so on.

Not too worrying

Shaver is not too worried, at least for now. He reasons that there has been always been some level of protectionism, be it in Argentina, Brazil or Germany. “Certainly, this has increased over the past couple of years in Europe, the US and Brexit where it is all about tax reforms, trade and protecting jobs. World economies are changing and this is a direct outcome of low growth,” explains Shaver. From Axalta’s point of view, this is not a big deal since it produces most of its coatings locally in regions and, therefore, has not seen any direct impact on its business “even while we are watching and listening”. In the case of China, the majority of coatings produced are for domestic consumption and not exports.

Fall-back options

Additionally, as Shaver points out, the company has spread its investments evenly across the world. “We are not concentrated on one location and our capital is distributed pretty evenly. What I invest in the Americas and Europe or emerging markets are pretty balanced,” he says.

The fact that Axalta is not wedded to any single country for success, be it India, China or Europe, means that it is also reasonably well insulated from risk. Hence, even if the US were to slow down, it may “hurt a little bit for sure” but then there are other markets to fall back upon.

Shaver, however, admits that with the growing pace of protectionism, he needs to spend a lot more time listening to people, thinking about things, talking to customers and “be a lot closer to Ford, VW and Honda” while checking what they have to say.

For instance, in the the last five years, majority of the new car growth outside China has been in Mexico. If automobile companies now begin to rethink their manufacturing plans there because of issues like NAFTA, “we need to think carefully and spend time talking more to customers”.

Optimistic outlook

Yet, it is not as if everything is grim with no silver lining. On the contrary, insists Shaver, the world may be in the most stable place it has been in, over the last 20 years.

“Global GDP is fine, India is stable, China is pretty stable, Europe is doing OK and so on. The world is always a dangerous place but overall when you look at conflicts, it is pretty quiet now,” he says.

This means that if things continue to stay stable and grow, the power of politicians to push for silos of protectionism goes away. “As long as the world stays stable, GDPs continue and we lift people up, protectionism will play less of a role,” says Shaver.

Moving on to happier topics like colour, which is an important component of Axalta’s business, there are a whole lot of interesting dynamics at play. While it is perfectly natural to see brightly colored motorcycles and SUVs, this is equally true for trucks, especially in the US and Europe.

“I think it is to do with mobility’s independence. Social media is also driving that because it is about you driving and people looking at you. It is about being unique,” reasons Shaver. In India too, young people travel around the world and “pick up stuff” from different countries.

Axalta is soaking in all these trends as it gets ready to splash the world with new colours. This becomes even more exciting in emerging markets like India where youth power can be seen across new businesses and wearing colorful sneakers and T-Shirts are par for the course.

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