Is captive colorant production worth the investment?

June 17, 2016

Relatively few companies have the financial means and production capacity to produce their own raw materials. But if your company does, why wouldn’t you? More control is better, right?

If your company uses colorants, maybe not.

Most companies that manufacture coatings, paints and thermoset plastics only produce small batches of colorants and may only produce those batches a few times a year. However, the time and cost involved remains largely the same whether you’re producing small batches of colorant or large quantities.

Because volume has little impact on production time and costs, many companies captive production of colorants may not be worth the investment. Here are some reasons that producing your own colorants is more expensive and time-consuming than you might think.

Colorant production cost considerations
Colorant production has costs that may not be readily apparent but that affect a company’s bottom line. Cost challenges include:

Smaller batch sizes. In a captive production scenario, a company produces colorants in much smaller batches than a third-party colorant manufacturer would. Pigments are generally much more expensive when compared to other raw materials, meaning the colorants produced from those pigments are less cost-effective to produce as the batch size shrinks.

If your company produces 60 batches of colorant per year, the cost of the smaller batches adds up faster than the cost of the larger batches – which still aren’t cheap to produce in-house.

Uneven usage. If your coating, paint or thermoset company stocks 15 colorants to produce its entire line of colors, you won’t use those colorants evenly. Maybe five of those 15 colorants produce 50 percent of your catalog of colors, and the remaining 10 colorants are used less frequently and in smaller amounts. Meanwhile, the same amount of work, testing, line maintenance and quality control measures go into each batch, regardless of whether it is 1,200 liters or 600 liters.

Lower volume. Cost efficiency in colorant production doesn’t start to become apparent until individual batch sizes reach 2,500 liters. In virtually every case, only colorant manufacturing companies need to produce batches of that size, and they are able to pass those savings on to their customers in the form of lower prices.

Dedicated time and resources
The costs of captive production don’t end with raw materials. At smaller production volumes, the process of producing colorants becomes inefficient as well as expensive.

At face value, your company might have the capacity to produce its own colorants. But that capacity dries up relatively quickly once you factor in downtime for cleaning and loading of machines.

The machines used to manufacture colorants must be clean of prior residue or impurities when switching out pigments to produce new colors. The time it takes to meticulously clean, test and reload pumps can take capacity and manpower away from production in other areas of the plant.

Ultimately, keeping the colorant production process running smoothly takes up valuable time and resources that could otherwise be spent on your core products.

A perceived benefit of captive production is that it allows companies to scale production of colorants up or down as needed. While this gives manufacturers a degree of flexibility, it can actually make it more difficult to reproduce products with high quality and consistency – particularly if production occurs on an infrequent schedule and is overseen by people who are not experienced in the production of colorants.

Perhaps the biggest argument for partnering with a colorant manufacturer is the fact that these companies manufacture colorants all the time. They are highly skilled at producing reliable colorant products with batch-to-batch consistency on a weekly, monthly and annual basis. Therefore, it is incredibly difficult for businesses producing colorants as infrequently as once a year to replicate that experience and expertise.

Third-party colorant production
For the above reasons, it almost always makes sense for companies to partner with an outside colorant manufacturer rather than invest in captive production. Partnering with a colorant manufacturer is not only more cost-effective and efficient, it brings valuable colorant expertise to your company.

Colorant manufacturers can devote their entire production capacity to producing colorants so that no other product suffers setbacks. A third-party colorant manufacturer will also employ experts who are familiar with the production and usage of colorants in your space and who have extensive knowledge of laws and regulations governing VOCs and other restricted materials. Those experts will work closely with your materials experts to fashion a colorant solution that works for your products – and your bottom line.

Interested in learning more about third-party colorant manufacturing? Chromaflo Technologies is a leading provider of colorant technologies for the coatings and thermoset plastics industries. Contact a representative to discuss your colorant requirements.

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