ECONOMIES OF SCALE

In recent years, the major suppliers of paint have derived significant economies of scale through rationalisation of operations and concentration of particular endeavours at specific plant locations.

For example, building paints will be manufactured in one state, marine paints in another and industrial products in a third. Whilst this may enable manufacturers to reap some economies of scale it necessitates the establishment of inter-state stocks.

The transport and warehousing expenses with this operation further mitigate against such arrangements. However, continuous production and improved quality of paint is seen as compensation to these logistic problems.