Sherwin-Williams bought the historic Minnesota paint and coatings firm Valspar in June 2017 for nearly $11 billion. The move cost Minneapolis another corporate headquarters and stoked fears that 400 Valspar jobs could potentially exit the city.
But in the months since Cleveland-based Sherwin-Williams combined the corporate headquarters in Ohio, the business has allayed local fears by retaining a significant presence in downtown Minneapolis. Valspar’s influence in the new organization has grown, with five businesses based in Minnesota and a growing research-and-development operation on the old headquarters campus.
“Minneapolis is like our second headquarters,” said Sherwin-Williams spokesman Mike Conway. “We continue to invest in our people and product there.”
Sherwin-Williams will not disclose current employment numbers and has pointed to cost reductions from synergies in merging corporate operations. But Conway said the company also has added information technology jobs in Minneapolis.
“In research, we have grown jobs in this group by 25 percent,” he said. “We added chemists and other scientists. We also closed another lab in [Chicago] and brought those workers to Minneapolis.”
Valspar gave Sherwin-Williams an additional $4 billion in annual sales, a significant paint business and a larger presence in the industrial coatings field.
Conway said Minneapolis is “our global hub for R & D for the [whole] industrial coatings business.”
Industrial coatings and paints were a big part of Valspar’s business. It was famous for creating the signature paint that characterizes nearly every John Deere tractor and for coatings that prevent food from touching the inside of a metal can.
Sherwin-Williams is betting on growing that business going forward. It only had a retail presence in Minnesota before the merger. Now, Minnesota is home to five of its businesses.
Four of them — colorants, industrial coatings, coil coatings and protective/marine coatings — are based at the old Valspar headquarters campus near U.S. Bank Stadium. The company also continues to operate a blending facility in Edina.
As proof that they intend to further invest in Valspar’s legacy, officials point to Sherwin-Williams’ continued support of two of Valspar’s biggest nonprofit investments: Twin Cities Habitat for Humanity and the Hearts and Hammers program.
Habitat for Humanity has been told the support will continue, said Chris Coleman, the nonprofit’s president.
“Valspar was always an incredible partner. It started the Brush With Kindness program in the late 1990s and now that is a national model,” said Coleman, a former mayor of St. Paul. “Valspar donated all the paints for Habitat across the country for years. So far, Sherwin-Williams is continuing that program [and] a lot of their volunteers are continuing to come out and paint.”
Analysts said the integration of the two giants is largely complete and that Sherwin-Williams is on track to meet its two-year $320 million “synergy savings” target. By 2020, the company hopes that number grows to $420 million.
“We continue to make great progress in the integration of Sherwin-Williams and Valspar into a faster-growing, more-profitable enterprise,” CEO John Morikis told analysts during a conference call last month. “For the full-year 2018, we expect our consolidated net sales will increase by a high teens percentage, including incremental Valspar sales of $1.85 billion for the first five months of 2018.”
With much of cost cutting integration-work behind it, “there is going to be a growth opportunity next year,” said Bloomberg Intelligence analyst Christopher Perrella.
“Sherwin had an industrial-coatings business, but Valspar really turbocharged that,” he said. “Valspar brought with it the leading positions in packaging coatings where Sherwin had no presence. And in wood coatings, and coil coatings and general industrial coatings, Valspar was No. 2 or 3 [in the industry], whereas Sherwin was a very small player.”
Still to come is integrating the best technologies from both the traditional Sherwin-Williams and Valspar in all areas. It already is happening on the consumer paint side, he said.
Valspar also filled out Sherwin-Williams’ retail potential, Perrella said. While Sherwin-Williams had its own stores, “Valspar gave it a massive presence in those big-box retailers, especially with its deep relationship with Lowe’s.”
While Sherwin-Williams’ HGTV Home brand, sold at Lowe’s, caters to the professional or design audience, “Valspar has really been a workhorse brand covering a pretty broad cross section in the do-it-yourself market,” Sherwin-Williams spokesman Robert Wells told analysts last month.
Company officials are betting that the bigger show inside big box hardware stores and the expanded might of industrial coatings should help drive revenue growth in the future. The merged company also will benefit as it boosts product prices to keep up with rising raw material costs.