By Greg Williams, vp-Global Technology and Development, Advanced Coatings
at TC Transcontinental Advanced Coatings

Many companies in our web-processing industry provide toll- or contract-manufacturing services, and this can offer an excellent route for the rapid development and manufacture of converted roll-to-roll (R2R) products. This paper will explore the five most important questions to consider as you select a toll- or contract-coating partner to work with.

What is toll or contract coating?

Let’s consider a couple of important ways that toll and contract coating differ. In the toll-coating relationship, the provider makes its existing coating equipment and ancillary support services available for rent. The charges for this typically are time-based, with the customer paying an hourly or daily fee. The charge may be converted to a product unit-price, but the charge almost always is based on an underlying time-based fee. The customer provides the materials and generally assumes liability for yield losses. In this case, the coating company essentially is a services-only, “best effort” provider.

In the contract-coating relationship, the coating provider often will procure and develop the supply chain for the raw-material components. The provider manages incoming and outgoing quality, assumes the yield risk and takes ownership of continuous-improvement initiatives while delivering coated product to an agreed specification. The relationship generally is more collaborative and often results in strong technical and manufacturing partnerships between the parties.

While toll coating can be a much more transactional business, well-matched contract-coating partners often develop relationships that last for years through many iterations of a product’s evolution.

Timing is vital – now and into tomorrow. How quickly is your potential partner willing to move?

Why do I need toll or contract coating?

Coating plants generally are very complex, highly engineered and capital-intensive operations. The skills and knowledge needed to operate efficiently are developed over years. This, combined with other factors (such as long equipment lead times, environmental concerns and economics that highly favor full or mostly full coating assets), can make the use of toll- or contract-coating partners the ideal way to address the need for new product introductions, overflow capacity and similar requirements for quick-turn coating services.

For example, building a coating facility, purchasing the equipment and hiring and training the staff to operate it can take 24-36 months. Environmental permitting, if required, also can add months to this timeline, as can facility startup activities. While this can be exactly the right approach in some instances, finding the ideal toll- or contract-coating partner can dramatically reduce the time and capital requirements. And in almost every case, successful toll or contract coating does not require the immediate volume to fully load a coating line to achieve acceptable economics.

Why is my prospective coating partner offering its services?

Selecting the right coating partner is critical to avoid unnecessary delays as often the motivation for pursuing toll or contract coating is to meet a new demand in the marketplace in a timely manner. Windows for success in the market open and close, so it is paramount to hit these without wasting time by selecting the wrong coating partner.

A key piece of insight can be had by understanding the motivation for a coater to offer its services. Is your prospective partner looking to fill capacity on an open line? Are they looking for quick ways to boost their financial results? Is providing these services a key part of their business strategy? How long have they been providing these services?

Although any of these are reasonable motivations, it’s worth considering what the future might hold if conditions change. The last thing you’ll want to do is be forced to move business because your partner can no longer offer the services and capacity that you’ve relied on during a new-product introduction or if your product has outgrown the available capacity during an especially successful product launch and scale-up.

Are we aligned?

This is the most important question of all. Not all toll and contract coaters are created equal, so it is important to choose the best fit for your particular product application. Because most toll and contract coaters also offer their own branded products into the marketplace and information on these products usually is extremely easy to access (often on their websites), it is pretty straightforward to assess their fit with your product.

Assuming your existing products aren’t competitive (which creates a completely different set of issues), it’s important to understand the markets that your toll coater serves with its own product line. Although both might be stars, you wouldn’t draft a receiver prospect to play defensive line for a football team. You want to be sure to partner with someone who understands your market space, whatever that may be, as quality, cleanliness and productivity expectations all can be different depending on whether you are targeting a medical or a label coating application, for example. Are cleanrooms required? How about solvent usage and type, energy curing, film pretreatment, in-line lamination? All are important in evaluating capabilities and fit.

Next, consider coating methods. Nothing gets quite as much attention. Is shear (or lack of shear) important in the application of the coating to the substrate? Does your potential toll and contract coater offer multiple coating methods, or is the company an expert with only one or two? What about width – can your potential partner meet all of your width requirements? And you should consider location – will most of your product be shipped within the US, or is your market global? Does your partner offer multiple coating options in different regions? What about contingency planning – will you have more than one line qualified to produce your product? More than one plant?

Timing is vital – now and into tomorrow. How quickly is your potential partner willing to move? Do you need full development services from lab coating through large-scale manufacture? Or do you need large-scale manufacture only? What about in the future?

And finally, are you aligned on costs for both development services (if required), as well as large-volume manufacture? Nothing is more unfortunate for both partners than learning at the late stages of a project that cost expectations are not aligned.

How do we grow the relationship to win in the market?

A good way to look at the partnership is through the lens of a single entity, because that’s how the end-customer expects the two partners to perform – that is, delivering the right product at the right cost right on time. Do your cultures mesh well? Are communication channels clearly established and maintained, and is this someone you can trust with your confidential information? Have you established reviews of capacity requirements and quality at regular intervals? Is there a shared passion for continuous improvement? After all, your toll or contract coater will know and understand your product better than almost anyone else, and they often are the last to handle it before the end-user.

In summary, a well-planned toll- or contract-coating approach can offer huge benefits for both parties. But this successful outcome is achieved only if the required hard work has gone into the selection process. 

Greg Williams, vp-Global Technology and Development for Advanced Coatings at TC Transcontinental, holds a Bachelor of Science in Chemistry (Honors) in 1982 from the University of North Carolina at Chapel Hill and his Ph.D. in Chemistry from The Pennsylvania State University in 1986. After four years at Mobay spent formulating polyurethanes, he joined the Advanced Coatings business in 1990. Since then, Greg has worked in various roles in Technology & Development and now leads TC Transcontinental’s Global Advanced Coatings R&D team. He also serves the converting industry as vice president of the Association for Roll-to-Roll Converters (ARC) and chairperson of the ARC Coating & Laminating Technical Committee. Greg can be reached at 704-589-6125, fax: 704-845-4304, email: [email protected], https://tctranscontinental.com/en-us/packaging/research-development/advanced-coatings-rd.