Sigma Paints has announced the formation of the SigmaKalon Group, the result of a merger between Sigma Coatings and Kalon.

The SigmaKalon merger itself is the result of a recent merger between the parent firms of both firms, Petrofina for Sigma Coatings and Total for Kalon.

SigmaKalon is now the fifth largest paints and coatings manufacturer worldwide with a combined annual turnover of $2 billion. The SigmaKalon Group has a presence in 40 countries with 10,000 employees worldwide.

Sigma Paints is the company responsible for all business activities of the SigmaKalon Group in the Middle East.

With the regional decorative paints market valued at SR1.7 billion annually ($461 million), Sigma Paints views the merger as a strong move for consolidation in the industry.

"Sigma Paints is already the leading paints and coatings manufacturer regionally," says Jo Paffen, general manager of Sigma Paints Saudi Arabia. "The merger will bring about two clear benefits for our group. The first benefit is the immediate strengthening of the group's technology and research base. The second is the expansion of our reach into global markets."

Paffen's views are based on developments in the paints and coatings market in the region. "The last two years have been tough for the industry," explains Paffen. "The industry itself is facing a change in terms of how we reach our customers at the retail end. There is also a strong pressure on pricing, but that is where we also face the challenge of educating the market about quality."

One immediate benefit will be that of strengthened expertise. "Sigma has a very strong base in the Middle East region, where we have been manufacturing since 1980," says Paffen. "Kalon's strengths have primarily been in Europe's decorative paints market. Combining our Middle Eastern expertise with that of Kalon can lead to several products that are unique for this region."

Paffen is especially enthusiastic about the prospects for environmentally-friendly paints in the region. Although these are not yet in high demand here, he believes that Sigma's leadership in this segment can only be strengthened as a result of the merger.

Paffen also emphasises that the merger would not reduce Sigma's own commitment to the region. In fact, he points to the 1999 addition of a second production facility, as evidence of their confidence in the regional market.

"The new facility increased our production capacity from 40,000 to 60,000 tonnes annually," he says. "We also have in place one of the strongest localisation programmes of any company in our industry. Today, approximately 25 per cent of our staff in Saudi Arabia are nationals. We have also put in substantial investments in IT and use this extensively in developing our thrust into retail markets."

"We see the formation of SigmaKalon as addition to strengthening our presence here and in further refining our ability to bring the best of paint and coatings technology to the region," he said.