Dive Brief:

• Sherwin-Williams plans a $300 million expansion of its manufacturing facility in Statesville, N.C., to boost paint capacity, the company announced Tuesday.
• The paint maker will roughly double its workforce at the site by adding more than 180 full-time jobs in the coming years. Sherwin Williams also plans to establish distribution and fleet transportation centers in the area, according to the release.
• The project comes as Sherwin Williams invests in its resin capacity amid industrywide shortages. The company bought a resin supplier, simplified product lines and signed deals with new and existing suppliers to avoid further supply challenges, said John Morikis, president and CEO, on a Q4 earnings call.

Dive Insight:

Sherwin-Williams is expanding its in-house manufacturing as it encounters spiraling inflation. Shortages of raw materials and strong demand led to unprecedented cost inflation that outpaced price increases in 2021, Morikis said.

The company is also still having trouble procuring resin after the Texas freeze and Hurricane Ida disrupted U.S. production of resin, a central ingredient in paint, snarling the industry’s supply chains last year. In response, the company purchased Specialty Polymers, a chemicals manufacturer, in September to augment its in-house resin production capabilities.

The growing North Carolina facility does not produce resins, but it will increase Sherwin-Williams' architectural paint and coatings manufacturing and distribution capacity, a company spokeswoman told Supply Chain Dive.

The expansion, which will happen as the plant operates, is expected to begin construction by Q3 and finish by the end of 2024. It will add 36,000 square feet to the 200,000-square-foot manufacturing site, plus four new rail spurs and an 800,000-square foot distribution and fleet transportation center, the company said.

As resin shortages persist, Sherwin-Williams is confident it will be able to meet increased demand due to commitments from new and existing suppliers, CFO Al Mistysyn said on the earnings call.

"As supply improves," Morikis said, "we stand ready with ample capacity to quickly convert those raw materials to paint."

Trimming SKUs also helped Sherwin-Williams respond and adapt more quickly to supply chain issues. As the company weighs which discontinued products to resurrect, it will prioritize those that offer the best return on investment.

"It’s not just going to be going back to business as usual," Morikis said. "The question is going to be, if we survive this long without it, why do we need to bring it back?"

Like PPG Industries, Sherwin-Williams faced a Q4 rise in omicron cases among its 610,000 employees as case counts rose across the country, Morikis said. He did not quantify the number of infections for investors on the call.

"We are excited to try to get this behind us," he said. "We’re tired of talking about this stuff. I don’t want to talk about COVID. I don’t want to talk about raw materials. I want to talk about growing sales and growing profits. … I’d really rather not even answer this and just tell you we’re going to fight through this."

The labor challenges add another layer of difficulty to the company's hustle to build inventory in Q1.

"We're not going to be able to build the inventory that we typically build in the first quarter to be as responsive as we like," Morikis said. "There is going to be some hand-to-hand combat, if you will, as we get through the year. ...We'll build some inventory coming out of the first quarter, but it won't be to the traditional level that we would like going into a paint season."