Good morning, everyone. I'd like to welcome you to Galta's twenty eighteen Capital Markets Day. We'll call this the Donner Party Edition. I had e mails from San Francisco yesterday, early this morning. They couldn't get over to Sierra Nevada's.
We are missing a few people, but I'm really happy to see a pretty full house here. Thank you for making the effort on a difficult weather day. We have a great agenda for you this morning. We have six speakers, as you can see. There's a break at 10:30.
That will be about half an hour and a lunch to follow at 12:45. That will be upstairs, by the way, in the lobby level. So when we conclude, please take the elevators up to that. Between the speakers and during the break, I encourage you all to check out our product display. We have a lot of exciting products out there to give you a sense of the breadth and diversity of our product set.
I'd also like to point out some of the additional Axalta attendees that are here to help you describe those products and understand our R and D. From last year, you all may recall Barry Snyder, our CTO. You also may have met Robert Roop, who's back. Dave Heflin is here from Houston, who represents our industrial business. And Matt Boland from Michigan, who runs our Transportation Technology Group.
Before I introduce Charlie, I'd like to note a few points as takeaways. Axalta is a world class global coatings company. Is this a platitude? No. We took over a business with some issues, especially inefficiency and organizational effectiveness.
This is now behind us, and Axalta has accomplished a great deal over the last five years. Our focus now is on keeping the momentum going and driving for growth. Our five year track record is strong, but we're just getting going. Today, you'll hear from each of our leaders about our growth opportunity. Many of you focus a lot on the near term cycles and metrics.
We'd like to remind you that the mean line trend in each of our markets, including Light Vehicle, points up. There's a huge white space for growth in each of our end markets, and we have the capital and experience to enable this growth. We're also far from done on cost and productivity. Axalta Way is not dead. The first $200,000,000 was a key milestone for sure, but we now progress to next levels.
Shareholder value creation underlies every decision we make. To an extent, this makes my job easy. Today, we'd like to connect the dots a little bit for you, though, on our value creation model, and Robert Bryant, in particular, will address that. INVOLT is an independent, nimble and focused company. We're elevating capital deployment to its rightful place, front and center.
All management decisions are viewed through a lens of efficient allocation, so our ample free cash flow goes to building value, not growth for growth's sake or buybacks with no discipline. We appreciate that many of our key shareholders support our approach. And for any new investors, we welcome your interest, and thank you all for coming to hear why we see Xalta's shares today around $32 as an attractive investment. With that, I'll introduce our Chairman and CEO, Charlie Shaver. Yes.
Good morning. And again, thanks for everyone sloughing it out this morning to make it. We were sitting here yesterday trying to think about how we could shrink the number of tables depending on who could make it in. So it's great to see the attendance today. Last year, we did this down at the exchange.
We did a technology day. So today, we really are shifting it. As Chris said, we're kind of shifting our focus a little bit to shareholder value creation. A lot of noise in the industry, a lot of things going on. So we want to be able to give you some new things today that we're thinking about, kind of where we're leading the company, but most of all, how we think about value creation, what we're going do with our free cash flow, how we're going to build the business in times when we got everything from a rising rate environment to raw materials going up to it seems like every week, we get something else new, whether it's tax reform or Trump tariffs or something else we have to deal with around the world and how we think about all that.
So anxious to do that today and spend time with you. So today is less about technology, and it's more about the growth of the businesses, where we're going go and how we're going to take advantage of the changing landscape that's out there. So first off, for those of you who may be a little newer to the story, we are a customer focused organization. We really run two segments: Performance Coatings, Transportation Coatings. And a couple of things, I think, that are noteworthy there as we shift the business.
One, Transportation Coatings in 2017 was 38% of our sales. But most importantly, if you look over on the performance side, what we're doing there is growing our Industrial business primarily not only organic but also inorganic, and we'll talk about that today myself and highlight that throughout the presentation. So in addition to what I think is a really good growth strategy for transportation and for Refinish, you'll hear even more today about industrial. Industrial, two years ago, was about $550,000,000 business. On a run rate basis, 2018, it's going be $1,200,000,000 and it's on its way to being a $2,000,000,000 business for us over the next five years or so.
So in essence, we could end up with five years from now with industrial being maybe not our largest business, but pretty close to our largest end market that we focus on just because of the sheer magnitude of opportunity there. We're happy to talk to you about that today. So again, potential in all the businesses, and I hope that you'll share our passion and enthusiasm for that. As Chris said, we're focused on shareholder value creation. As many of you know, we've been around the story for the last five years.
It's been a significant transformation. We're not going spend time on that today. I think everybody understands where we've come from, who we are. He's a 150 year old child that was separated from DuPont five years ago, but a major shift in culture, organizational structure, what we're doing from a productivity standpoint, and last but not least, now starting to do bolt ons. So really with us, I think what we want to make sure each of you walk away today with is that there's still a lot to come with Axalta, not only driving profitable growth with innovation, customer focus, but solid markets.
We'll give you some additional market data today, talk about some of the trends that I think you'll find interesting. Again, many of you are involved in a lot of these pieces, but we want to point out to you why we like almost every trend that we see out there right now in the business. Even though sometimes people around autonomous or things like that, people have questions about the help of some of these businesses. We're going to talk to that today. And then last but not least, we and the more to come, we really are capital allocation.
Our internal rate of return projects typically target 20% or better. Frankly, we haven't even had any that low, but we have pretty high hurdle rates and we continue to find great opportunities within the company and then also a robust pipeline of bolt ons as well. So as I mentioned, we've established a track record of success. Some days, feels like a long five years. Other days, it seems like it was yesterday we were down in Wilmington spinning out of Barley Mill and moving forward.
And it's been fun to do. It's been fun to watch and go alongside of Chemours, one of our sister companies that Mark McDonough runs. We always prepare a lot of notes about where we were five years ago and where we are today. Although I wish I was a TiO2 producer today as well. But we have established a great track record of success.
In 2016, 'seventeen, I mentioned this in Technology Day last year, we're now on the cusp of being able to do a lot of different things in the company and what we've kind been aiming for over the last five years. We're now when you look at our private equity exit, when you look at our free cash flow, a lot of the one time is behind us, the Axalta Way, now having an operating cadence we'll talk about today, all those things we feel like we're really starting to hit on almost all the cylinders around. Started buying back some shares last year. We've now done 15 deals that total over 500 to $600,000,000 of capital employed. We are launching kind of Exalt Away II for us, which is another $200,000,000 in productivity over the next three to four years.
We'll talk about that today. And really, the operations side of the business, continue to invest heavily in the company. In the past two years, we've put 400,000 square feet of new R and D facilities on the ground in North America, EMEA and in Asia Pacific. So leading in R and D, not only in percent of sales, but what we plan to do with those coatings as we produce them. And then last but not least, starting to be recognized for a lot of our sustainability and our corporate sustainability initiatives across the company.
So again, a great year of highlights for us, but a challenging environment going forward. And look forward to talking to you about why should you invest in Exalt today. It's great we've done all these things, in a great run, we've gotten rewarded for it. But I would argue that in the next couple of years, we're going to have a whole another transformation in coatings, not only in maybe a couple of large acquisitions that go on at the top space, but the amount of companies, the amount of transformation and technology that's going on out there in all these markets is really going faster than certainly I've seen in the past few years. We'll talk about that.
Most importantly, why invest in Axalta today? One, we've got focused we're on focused end markets. We've got structural volume growth in all those that range anywhere from 3% in Refinish to 6% to 8% in some of our industrial businesses. There's technology change going on in all of those, in many cases, pushing out local players, regional players, weaker players. We've got the global footprint to be able to focus on that around the world.
We'll talk today also about China. You hear a lot about China. We've talked a lot about China. It remains probably our single biggest growth opportunity in the company just from the standpoint of the amount of coatings they consume, the value in those coatings, and we'll talk about that again as well today. But it is an area of emphasis for us, one that we're now putting even more focus on.
You saw six months ago, we announced our new Nanjing complex. This will be a complex that will probably have three hundred to five hundred million dollars of capital put in it over the next five to ten years. And really, it will join the other seven operations that we have in China. We've been there over thirty five years, 3,000 employees, well positioned, and we have a critical mass in China. So even though the Chinese economy is 6%, 5%, pick your favorite number, that really that understates what's really going on in some of the coatings markets in China and the positions they're taking.
And as China moves much more towards a waterborne, high solids environment, then we're well capitalized to take advantage of that. We'll always continue to be a productivity driven organization. It's our DNA. A lot of us come out of the petrochemical industry. We've got to deliver mid single digits productivity every year.
We've got to offset the cost of inflation. And I think Exalta Way two is an example of where we're going to continue to go at that. Not just people, but overall cost of operations, raw materials, again, of the things we talked about last year in our technology day. Clearly, consolidation opportunity. We've got a proven M and A strategy now.
We have a very defined process. We understand how to look at companies. About 15 acquisitions, again, haven't paid double digit yet multiple for one. It doesn't mean we wouldn't, but we continue to find great bolt on opportunities at reasonable prices. And I think that, that will continue to serve us well.
I would make one comment on M and A is that I think the pipeline today is slower than it ever has been. I don't know if it's because of a lot of the smaller companies are beginning to realize that the potential people to buy their businesses is less and going to get fewer, the top 10 companies, or it's just a time in a cycle where they see rising interest rates, more competition, technology changes. It's really starting to accelerate the rate that some of these smaller players want to get out of the business. So we actually, being one of the few people in the coding space able to do this other than private equity or the other top three, we felt it's a great time for us to continue to look at companies and be strategic about what we want. We look at everything.
We stay focused on our core markets. Strong free cash flow. I think many of you know, we target our free cash flow to be 45% to 55% of our overall EBITDA. So we've got great free cash flow generation. Today, we're going to talk about what we're going to continue to do using that, how we're going continue to protect that going forward.
And then last but not least is just the return on invested capital growth focus that we've got. The shareholder alignment, I think we're very we understand what many of you as a shareholders want out of a company like ours, And I think we're focused both internally and externally on how to do that. Of it all starts with structurally attractive markets. We're sitting today, if you look at coatings today, 130,000,000,000 global coatings market. We participate in 45% of that.
So there's still 55% of the market we're not in. The majority of that 42% is the decorative business. Our strategy on decorative has always been we would only get in it if we can find a market leading position somewhere. So if in a region there was a market leading business, we're not afraid to get in it. A lot of us have backgrounds in coatings and chemicals and aren't afraid of deco, but we're not going to go out and buy a four or five player just to get into deco and learn.
It would have to be and we think there'll be some opportunities coming up. But the reality is when you look at the fact that we already participate, in over 45% of the marketplace today, the white spaces for us, refinish, automotive, transportation and also industrial are just so great that frankly, we'd be opportunistic on the VECO side versus more strategic. There's so many white spaces. You'll hear about some of those today. And but I think what we most like about our businesses is there's technology change going on in all of them that favors us.
There's regulatory change. There's global pressures on a lot of these companies in the white spaces. And last but not least, these are markets that grow anywhere from again, we've listed here some data for you anywhere from 2.7% globally in Refinish to over 5% in most of our industrial markets. So good growth. And again, our strategy is to grow faster than market, and I think we believe we'll be able to do that.
Again, we are a global leader in many of our markets. As many of you know, we're the number one player in Refinish in the world. Don't take that lightly. There's a lot of pricing leadership that has to come with that. You've always heard me say before that if we don't raise price, no one else will.
So we are we have to, by definition, be the price leader in most markets. We're happy to do that. But in some cases, takes risk when you have undisciplined competitors out there. So it tends to take advantage of that. But I think overall, we manage that well.
We take it seriously. But again, if you actually look across our portfolio, even in industrial, being the number two powder coatings player globally, We actually like powder coatings. We're starting to grow to higher technology products, and that will continue to be a good business for us and one that we think we can aspire to even greater heights over time. You saw us do a small acquisition in The U. K.
Last year in thermoplastics. I think we're well suited to continue to take advantage. The number one player is certainly someone we aim at a lot, and we find a lot of success against that. But again, in Refinish, you'll hear from Joe today a lot of our global strategy. In some cases, we're doubling down in Refinish.
We feel like it's been a good business for us, but we've left too many things on the table the last few years. You're going see a much more aggressive posture from us on product introductions, market introductions, acquisitions over the next couple of years in Refinish because of what we feel like the fundamentals are that are going on out there globally against the backdrop of just higher quality cars, higher quality paint on cars and the overall car market continuing to grow at 2% to 3% globally and what that's doing to the global car park out there. Transportation Coatings, again, number two, a really nice solid business for us. We've looked hard to grow it inorganically the last couple of years. It's been hard to find opportunities.
But we really like the position we have, the technology we have and happy with the position we have in that business. Our real focus here's talk today, some is around commercial vehicle. We believe it's a nascent business for us, a niche, but one that is really not just about heavy duty trucks. It's about buses, trailers, all types of commercial transportation. And we feel like there's some pretty big opportunities opening up for us over the next couple of years.
But again, I think in both of these markets, having a global leadership position, it allows us to navigate logistics, raw materials and other synergies in the business much more than some of the other players. Again, when you think about these businesses, just great white space growth opportunities. In Refinish, for example, we put a chart up here just to show you the growth in China. You're putting 30,000,000 new cars a year into China. The global car park has grown by 11% there.
Next year, China's car park will pass that into North America and ultimately will be the largest car park in the world. I'll show you some data in a minute also on around those numbers and why that's important to be doing more in refinishing in China than we have. In industrial, for us, it's an evolving opportunity. We're core and powder. We now have developing opportunities in coil and in wood for us and in general industrial.
But when we look at industrial overall, that's a $40,000,000,000 market. We're $1,200,000,000 of that, and we're one of the bigger players. So when we look at that marketplace, in the end, the industrial market will be dominated by two, three, four big players globally. Maybe 20% of that will be regional, local players on the low end. But we really believe, and I think we have a couple of competitors that believe the same thing, that the industrial marketplace over time will not only increase in margin opportunity, but will continue to grow 4%, 56%.
But for us, it's a great space to play in, and we're very happy with the acquisitions we've done and also the organic growth we're seeing in our powder coatings business. On the light vehicle business, while people say, well, it's only going to grow 2%, that's still a pretty big number. This past year, 96,000,000 new cars built globally. That number will grow to 105,000,000 over the next five years. So the depth of the automobile is greatly exaggerated.
But more importantly, those 105,000,000 cars will all be of higher quality as people continue to demand more efficient cars. Some will have electric motors, some will have combustion engines. That doesn't really matter to us. That's the motor in the car. In fact, we participate in the electric side as well, not only the battery, but the resins and some of the things you've seen.
But that growth is going to continue to be big. And remember, all of that doubles down in the aftermarket into global car park and eventually feeds the refinish business. So the higher quality cars that you build on the front end probably is more to our strengths in refinish over time. But again, I think when you just look at cars per capita, when you look at what's going on in the rest of the world, while the cars per capita in North America may not grow much past about 75 or 80%, the rest of the world has a long way to run, and those are markets that will continue to grow 4%, 56%. Think too many times, people just look at the North America car market and they try to translate that to what goes on in the rest of the world, and you just can't do that.
The dynamics are different, the quality is different, the players are different, and what they're doing with those vehicles is different as well. Last but not least, mentioned earlier the commercial vehicle. That's a $3,600,000,000 marketplace. We have about $400,000,000 Again, we're one of the bigger players, but we're still only about 12% of that market. So we're very anxious to continue growing in that sector.
And again, you'll see it this next year with some focus a focus area. We recently created a complete commercial vehicle team for our top players running that business. A little bit more on Refinish because it tends it's the engine that drives our company at almost half of the profitability. Again, market share in three of the four major regions of the world. This is an industry that continues to be driven on consolidation, higher productivity.
You're now seeing MSOs being created in Europe across borders, people like LKQ, people like private equity Blackstone in there. So that all of that really favors people like us because as these people buy these body shops as they consolidate, they consolidate the distribution. We end up being a preferred supplier in there because of what we can do with our Radar range of coatings. Probably the biggest thing that we've done strategy wise different from the DuPont days is we now want to own the value chain across not only the premium paints, the mainstream and economy. So a lot of our brands, a lot of our acquisitions are in the mainstream and economy segments.
And while those are actually a lower total dollar value, the margins are good in those businesses, and they're ones that we think help us to manage the entire chain out there of body shops in a particular country or a particular region. It also gives us higher than GDP growth because those are segments that tend to grow faster than the premium segment does. Premium under even though premium grows, it's always under pressure because people learn how to use less paint, be productive with them. Good marketplace for us, but only grows at 1% to 2% versus the rest of the market. Again, in this space, over 30% of the refinish market globally is still in the hands of local and regional players.
And again, we continue to see them get out of the business as technology gets in the way, raw materials get in the way of them being successful. Insurance companies, obviously, whether it's China, whether it's The U. S, or whether it's in Europe, are really driving a lot of the technology change going on in the refinish industry because they're demanding productivity and what they'll pay for on a repair cost. I mentioned earlier a little bit about industrial, and you're going hear from Mike Cash today. This is an area for us we're really proud of.
We've over doubled the size of the business, we'll double it again over the next five years. But we've gotten into both opportunistically. We'd always wanted to get into wood coatings. A couple of us have a background running wood coatings companies. We were able to do that opportunistically last year with the business that came out of Valspar.
But besides the acquisitions we've done, we've actually had significant infrastructure investment into both our powder coatings and our industrial liquids eco business over the last couple of years, growing 10% organic growth and new customer adds in the last two years in that business, really making strong gains in e Coats, not only base layers, but also base coats and top coat business. And again, we continue to target mid single digits growth across the business. You'll continue to see us do two, three, four bolt ons a year in this business. Again, that can change depending on what's out there opportunistically. We're very happy with the portfolio.
We'll add other segments as we get a chance in here, but today our business is focused around these five segments. You'll get to hear Mike talk about those today. Synergies for us tend to be distribution breadth of products. For example, we bought Spencer in The U. K.
Last year. We're now moving their products into Europe. We're moving them into the Far East. And ultimately, when we get capabilities, we'll move them into North America as well. So again, taking these products where many of those smaller companies couldn't do it.
And we've got over 55 manufacturing facilities around the world, but over 4,000 distributors. So in many cases, we had distributors looking to do more that are either refinish distributors or industrial distributors. These are great examples where we can move more products to them. And in some cases, displace a competitor's product that one of our distributors was handling because we didn't have something. Again, our commercial vehicle business, I mentioned earlier, this is a great white space for us, not only underpenetrated geographies like China, but also adjacent areas like marine, protective.
People ask me about marine, aero, protective. We're in those markets today. We're not as big as a couple of our competitors. But we're in them today. We understand them.
For us to grow significantly, we'll need to do acquisitions. And you'll see some of our acquisitions targeted over in those markets. Some of these like marine and protective, it's not a bad time to enter them because some of them have been depressed the last couple of years anyway. So we're under no illusions about the cycles in those businesses, but they're great white spaces for us. We've also got in commercial vehicle just in existing markets where we are today, like heavy duty truck, mid class trucks, things like that, just looking at more content, more content per vehicle.
Again, if you look at the bills globally, heavy duty truck only grows about 1%. Globally, however, we're growing share, so we don't we pay less attention to what the overall market is doing. We're just looking at content per vehicle and share. And for example, China, areas like that, we're growing mid to high single digits our share basis there over time. Our technology, we've always had good technology in bus, rail, areas like aviation.
We just never deploy them. And in many cases, you need distribution points, you need approvals, and that's really what we're focused on in the commercial vehicle side of the business. So a little bit more backing up a little bit more about China and the car park I mentioned earlier. That's what's interesting, and I think that you know, it's a the the the the car market in China is changing dramatically. Not only is it almost 30,000,000 vehicles a year, but it's also now moving into the Tier two, three, four cities.
The quality of those cars going into the cities are going up. Those cities are not ones where you sell $100,000 Audis. So they're mainly the more Chinese OEM players than they are some of the multinationals. But the car park today, if you look at 2018, for example, here in our chart, the car park in China is growing by 20,000,000 vehicles a year. Now they're selling 30,000,000, so there's a net of about 10,000,000 vehicles a year that are coming out of that car park, either trashed, thrown away, salvaged, parts, whatever.
But what that's doing, that $20,000,000 is going is all higher end vehicles going into the car park. So interestingly enough, what we're seeing in China is a shift rapidly to waterborne, to high solids, solventborne because of environmental issues where the government is just coming in and saying, you've got to do this. But also the color match, the quality on those vehicles in those cities, and everything else is changing dramatically. So when we look at the car park over the next few years growing by 20,000,000 a year, it's less and less about low end vehicles that are dropping off the bottom, and it's more and more about the customer is more discerning, and they're going to take care of their car. Now that doesn't mean they're going to use a Schizhecker waterborne, highly productive paint.
So we're still driving mainstream products in China, and our mainstream is growing at double digit growth for us. But we are seeing this rapid growth in the car park. And again, we think in the next couple of years, we'll approach that in North America and pass North America as the largest car park. So we're happy to grow with that. You'll see us, if we're successful this year, do one or two acquisitions in China.
We've held off doing any big acquisitions in China the first five years, frankly, just because we had so many other things to do. We also wanted to understand where China was going to go in overall chemical parks, where our facilities were located, and where did we want to play and how do we want to play. So I think we have a great road map now. We know where we want to go, and you'll see us double I wouldn't say double down on China. But take a much more aggressive posture on the business.
It funds itself with its free cash flow, and we're happy to now kind of turn our attention to doing more in that arena. Also in China, not only refinished with the industrial market, I mentioned earlier, consumes over 40% of all the global industrial coatings. And I don't see that changing anytime soon. I think they'll continue to be a large industrial producer as they feed their economy and as they export to other regions. They are shifting to more and more domestic consumption, which is good, and they demand local supply.
So for us, you see we've kind of shown here some of the global coatings, the different markets, 8,000,000,000 of the powder coatings market that's in China, 1,500,000,000 of the electrical insulation market. The real electrical insulation market is important is as you look at electrifying not only cars but other forms of stationary transportation, more and more electric motors, we produce a pretty significant amount of impregnated resins that go in those motors. And it's a business we'll be actually putting some domestic capacity on the ground in the next year to service that business. So I think China, while they do a lot in the high-tech world, they'll continue to be a large industrial producer and chew up more and more coatings. Those coatings will be more and more productive coatings.
There'll be more and more waterborne coatings. And I think us and a couple of the other multinationals are well placed. Not to forget OEM, which is our largest business today in China. Again, our shift has been more and more to the domestic OEMs. We have a very large share of wallet with the multinationals, but we're also doing more and more domestic OEMs.
More and more automotive fleet penetration, the players that are there are Chinese locals working with them. And again, as we highlighted earlier, the per capita gap on cars of where the developed countries are is still relatively large. And China will continue to see this as a source of GDP growth. The automotive industry, whether it's OEM or refinish, will continue to be a critical sector in China's growth and their economy. It also fuels infrastructure spending.
It's something they can't really afford to let slow down because it is the engine that provides per capita GDP across the country. Again, commercial vehicle for us, I talked earlier about really focusing on that white space for us. Over 1,000,000 trucks a year being built there. And again, what we're seeing with our JV partners there is they're all being demanded as the OEMs were on light vehicle side a couple of years ago to go to Waterborne. We only have 6% market share of the commercial vehicle market in China, so we have a long way to go to get where we want to be.
Preston, so shifting gears a little bit from business, just a couple of other comments on why why they invest in us. You know, operating excellence, Axalta Way continues. People have always asked me, gosh, have you now gotten out of everything out of the company this post DuPont era? Absolutely not. We've actually just kinda moved on to other things now.
As we do bolt ons, that actually continues to fuel the engine for Axalta Way. We are targeting another $200,000,000 over the next four years to ensure that we remain a low cost producer in the industry. And even if anything, we're going have more of an obsession than we do the last couple of years. Our investment, we continue to invest about $180,000,000 in R and D as a company, about 4% of sales. And we're turning out about 200, two fifty new products a year.
That's the way we get pricing. That's the way we get in to see a new customer. New products, innovation, I think it will continue to be in our DNA as we go forward. Last but not least, you'll start to see us do a lot more in the area of e commerce. A lot of talk about digital getting closer to customers.
We invest about 1.9%. We have all of our infrastructure in good shape. In fact, we don't even run a data center anymore. Everything's in the cloud. We'll move into S4HANA and SAP later this year.
So our infrastructure is in really good shape. Now our IT investment really turns to e commerce and to the customer and building out those platforms. We have multiple platforms in all of our regions and all of our businesses around e commerce and doing business faster with the customers. And so looking at how we do blockchain, how we would change our whole order process for customers, how we would deal with them on currency is something you'll start to see us really work on over the next couple of years. Real quick on M and A, just leveraging the consolidating sector.
Clearly, there's a lot of noise at the top of the world among the big players. I do believe there'll be one or two large consolidation moves in the next couple of years. You can all kind of guess the chessboard there. I think the world remains active there, and that we'll continue to see that happen. More importantly for us, though, is we continue to do good bolt ons, I mentioned earlier, a transaction in 2017, over $560,000,000 of capital deployed towards those acquisitions and a run rate of over $365,000,000 last year.
We'll target top line to add about 100,000,000 to $200,000,000 a year in acquisitions. That's kind of our goal. We kind of overachieved last year. A lot of that was because of the wood coatings business of Foul Spar. So bolt ons for us are great.
It's a great business. There's still hundreds and hundreds of those kind of companies out there. There's four of them we're looking at right now. And you know, we won't do all four, but but clearly, there's no there's no dirt for places to go in coatings and people who have good market and good technology or good market access. And that's really what we look for in acquisitions.
Free cash flow, I mentioned earlier that we generate about 45% to 55% of our free cash flow from our EBITDA. That's kind of our target. We have industry leading margins. That's really a function of our mix, market mix as much as anything at 20%. But it does generate substantially a substantial amount of free cash flow for us.
So we're at a great place. I'll show you here in a minute how we kind of think about the chessboard, if you will, on all this. Our free cash flow this coming year, we expect it to be $420,000,000 to $460,000,000 This year, capital will be about $160,000,000 for us. And then on top of that, we'll layer our acquisitions. We did start our share repurchase program last year.
It was modest, about $58,000,000 I actually thought this past month, we'd get an opportunity with the market swoon to step on it and get some more, but we really never saw our share price move very much during all this swoon. But we will be opportunistic of that. We've got a big plan out there, and we'll take advantage of that over time and as it makes sense with our free cash flow. We have put over $1,000,000,000 back in the business over the last four years, both in capital and acquisitions into the business, and I think that we're being rewarded for that with our performance. So shareholder value creation, real quick.
We're kind of where we wanted to be over the last five years. We've got a multitude of growth opportunities, technology, innovation drivers. From a productivity standpoint, we've got high IRR projects. M and A to the Codex consolidations will continue, as I've talked about. I think bolt on deals minimize risk for us.
We have yet to have an acquisition that isn't performing where we want it to be. And we're very happy with those overall. It doesn't mean eventually you won't have one that you stumble on, but the bolt ons really are such that very minimal risk for us. We can also add significant synergies to the returns for those. And then last but not least, we're focused on that whole capital allocation.
What is going to be our targeted return on invested capital? How are we going to continue to increase that for all of you as shareholders and as investors? And over time, we want to continue to at least in this current market, we target about 50 of our free cash flow back towards acquisitions. So 100,000,000 to $200,000,000 a year going back towards bolt ons. Again, we won't do them just to do them.
They have to make sense for us and have a good return, and then we'll continue to do share buybacks. So key goals for 2018, really this follows along the guidance a lot of you have seen, mid single digit organic growth rate. Xalta Way execution, still focused, the majority of the company focused on better execution, incremental cost actions. We've got over 100,000,000 of raw material increase year over year, hitting the company. So we're busy out raising prices.
We started that, as many of you know, last summer. We kind of got the jump on most of the coatings industry as they were kind of denying it was going to happen. But when you look at oil, when you look at what's going on in short, especially in specialty chems, specialty chems continues to get the high get with high operating rates, a lot of force majors. So we deal with that. But we're security of supply.
We're taking advantage of that as we deal with customers on our overall raising prices. And you'll continue to see us this year banging on the fact that value propositions have to go up in coatings. And I think you've seen announcements by competitors to the same extent over the last couple of months. But for us, it's about driving innovation, being able to price that into new products and stay ahead of what inevitably is always going to be an inflationary environment, some years more than others. And then last but not least, disciplined capital allocation.
It takes up more and more my time, more and more Robert's time as we truly make sure we put our free cash flow to the right opportunities. We've got a great balance sheet. We don't really have to pay down any debt right now, not interested in doing that. So we really want to put that capital to work in the highest area that we can. Long term targets, again, I've mentioned these.
I don't think our short term targets and our long term targets really vary. We really aim for where we want to be three years from now, five years from now and where do we think the market is going. That really promotes most of our thinking in the business. And again, we're very happy with the improvements we've made around working capital, but I think we still think we've got another 100, 200 basis points to go there in the business. As we do bolt ons, we continually have to look at balancing all that across the company.
So in summary, as I wrap up, I think we've developed a good, strong five year execution record, but this is a world where it's all about what have you done for me lately. So hopefully, what you'll hear from my team over the next couple of hours is how we think about the future, where we're going, and I look forward to kind of the Q and A as we then shift and finish up today and about that. But I hope also in each one of the discussions today, you get something new to take back with you from how we're thinking about our business, what's going on in the marketplace that helps you as you analyze our company. But I would leave you with we're still a company that differentiates on technologies and service, and we don't ever want to lose that. We'll always be a low cost producer.
I'm not worried about that. We don't always have to be the lowest cost producer somewhere. We can differentiate with certain you have to always have to make sure that even as we pursue Exalt Away, as we pursue efficiencies in the business, and we balance that with what the customers' needs are out there. Because at the end of the day, that's really how we grow. Most people already have coating suppliers, as one of our customers have said.
What they really look for is relationship and someone who can grow with them. It's understood you've got to be lowest cost, you've got to have good service. But that's really how we win business. If we just go in on price, we'll all of us are kind of at the same level on that. You've got to do something different for yourself.
So we're all focused 100%, as you'll hear from Robert and my team, on shareholder value creation. I think you'll hear that in all our business leaders as well. And look forward to spending the next couple of hours with you. And again, hopefully, there's some tidbits we can deliver to you over the next couple of hours to give you a little greater insight into our confidence about the business, but more importantly, where we're going for it or where we're going with the business for all of you, shareholders. So thank you.
Alright. Well, thank you, Charlie. Good morning, everybody. It's, great to see everybody. We had a a few people who didn't know if they were gonna be able to make it in because of the weather conditions, but I'm glad to see such a full room here.
Really look forward to sharing with you, as Charlie mentioned, a lot of new information as well as new material and new views and looks at businesses today. You're going to hear some interesting market insights from our business leaders. I think Charlie hit the nail on the head when he talked about basically, we've had a great first five years at Axalta, but it's about what are we going to do from this point forward. The presentation today and a lot of the discussion focused on where we are today and what the plans are moving forward. So with that, move to the first slide here.
So Axalta has, as you know, multiple value creation levers. We have growth opportunities in all four of our end markets. You'll hear more about each of those today from our business leaders, and there are significant opportunities, as you know, in industrial. And we talk a lot about that given our market position. You hear about the M and A.
But there's also significant opportunities for us in Refinish, where we're already the global leader, but not necessarily in every market in the world and not necessarily in every segment in the world. And we want to be the leaders in all segments and all markets. So you'll hear John Masood will talk about that. I also think you'll enjoy hearing today from Steve Markovich. Our transportation business is much bigger and much broader than just light vehicle and just the certain segments of commercial vehicle where we play in today.
And there's a great amount of white space there, and Steve is going to talk about that. I also think you're going to find that very interesting. We also expect to see continued efficiency and productivity opportunities. And today, we talk about the launch of Axalta Way Phase II, which we've formalized. That will be an incremental $200,000,000 in net savings over the next four years.
The other lever that's important for us, and Charlie talked about this at the end of his remarks, is around capital allocation. We have and will continue to deploy a significant amount of capital towards M and A. And then now that we've moved our leverage down, you'll also see more capital go to share buybacks and then always the high return IRR projects. And on those high IRR return projects, our organizational or our operations metamorphosis inside the company is still in its infancy. And Dan Key is going to talk to you more today about the nature of those opportunities with a fair amount of specificity.
So I think you'll also enjoy Dan's points. Moving on, this slide really tees up and just goes through what our EBITDA and our free cash flow algorithm is expected to be. And we really expect this to continue to result in ever increasing higher return on invested capital. As Charlie mentioned, we expect low to mid single digit growth in organic volume. We expect to continue to capture price in the low to mid single digits depending upon where we are in the cycle.
From a productivity perspective, Dan and the rest of the organization were all keenly focused on inflation plus as a minimum from productivity capture. So each year, offsetting the fixed cost inflation that we experience. And then because of the nature of our evolution, we have a lot of incremental opportunity beyond that, and that's exalted away the Phase I, the $200,000,000 that we've already achieved and the $200,000,000 that we're targeting to achieve over the next four years. Our growth drivers are diverse, and we expect growth to come from basically four areas, not only four end markets but also four areas. The first is really around clear strategies and greater resources.
So what we strive to do today and we strive to do today is to provide a little bit more insight into some of the strategies in each one of the businesses and how we're thinking about and targeting growth in each one of those. We're also, as Charlie mentioned, continuing to invest heavily in the business, and the amount of free cash flow that we generate allows us to do that. So we'll have CapEx of around $150,000,000 a year, is a good rule of thumb. And our R and D spend is about $180,000,000 a year, one of the highest in the industry, and I'll talk about that in a minute. We also see market share gains in our core markets.
Refinish, as an example, has increased its share by 500 basis points over the last five years, but we still have significant opportunities in Refinish in the mainstream segment, just below premium, as we've highlighted, selectively in the economy segment in certain markets, and most importantly, as we'll talk a lot about today, China, where our position in Refinish, although number two, it's still a relatively small overall share. We do see other strong headway in multiple coatings verticals. We talk a lot about industrial. But today, Steve Markovich is going to talk to you about transportation. And it's also exciting to see some of the opportunities that we have in our transportation business.
Emerging markets. We've significantly expanded in Asia Pacific, The Middle East and certain parts of Africa since our inception, and we continue to be heavily leveraged toward emerging markets. And given the growth that we expect to see in coatings markets and emerging markets, it's a good place to be. We're also working on globalizing our existing products. And it's important, we'll make acquisitions in certain geographies with certain products, certain technologies, certain brand portfolios, and then we'll leverage those globally.
So one great example of that is the really high level of industrial products that we had in Europe when we bought the business that we've now expanded into Asia, and we've also taken some of those products to The Americas. The Cyrox waterborne refinish mainstream technology, Joe is going to talk to you about that. We've also begun to move that technology into other regions of the world, and it's having very good success. Wood. Our acquisition in wood in North America is our first foray into the wood coatings segment but will not be our last from a geographic perspective.
And you'll see us look at acquisition opportunities in wood coatings and other areas of the world to leverage that technology and to be close to our customers. And then lastly, our e coat technology that we've developed, high technology e coat process that we've developed that we're now leveraging in multiple areas of the world. So again, coming back to Axalta Way, as you all know, we achieved our first $100,000,000 from our European Fit for Growth program at the very beginning. We've achieved another $200,000,000 on a run rate basis in the first phase of Axalta Way. And now we are going on to a Phase II of Axalta Way, and we're targeting another $200,000,000 over the next four years.
We might actually get there, a little bit faster than that, depending on how quickly Dan's team is able to implement all the changes that he's going to talk to you about, which is pretty exciting. Over here on the right, you see a breakdown, again of what some of the components of Axalta Way Phase I is. And then here at the bottom of the page, kind of our philosophical view on how to think about ongoing productivity and what Axalta Way is. But if we use that basis and come on to the next page, I just want to talk a little bit about Axalta Wave Phase II. So Phase I, where were we and what was it about?
So Phase I, as you see here, was very much focused on headcount reduction in certain areas, functional overhead cost reduction, putting in place a world class procurement organization and getting some of the early wins in that. A lot of the commercial excellence initiatives in terms of customer intimacy and also having much more sophisticated pricing and analytics tools And really, the transformation of technology, which Barry wherever you are here in the room, has Barry in the back, has led very successfully across the company in terms of organizing the technology function globally instead of regionally as it was under DuPont. Then as kind of the first two years of the program, as we got into the third year, we began to focus, a little bit more on the nonmanufacturing footprint part of headcount reduction as well as additional improvements in procurement. And we began to formalize the Axalta Way a little bit more as our operating system of choice at the company. And then we began, led by Steve Markovich in the Transportation business, in our complexity reduction initiative, which you'll hear more detail about with some really interesting examples of Dan Key today.
So as we now go into Phase two, what's in Phase two? Well, Phase two really captures a lot of the ramping of productivity I'm sorry, a lot of the ramping of complexity reduction. And that's in transportation, but it's also in other areas of the businesses. And this is something that has a long tail and will provide a lot of opportunity for us for a multitude of years. We've also taken a hard look at our manufacturing strategy and our manufacturing footprint.
Dan will walk you through how we're thinking about that and some of the changes that we plan to make moving forward. In the procurement area, we're also developing a number of additional suppliers and key raw materials where we're single sourced or dual sourced. And then finally, from the regional consolidation perspective, we have put together our Latin America and our North America regions into one, and we're now running that as an Americas region. And those benefits will also start to flow through as we move forward in 2018. This is a page on capital allocation, which all of you have seen before.
We did just want to highlight that we're very disciplined on capital allocation. And when we think about capital, it's not just when you think about classic capital of free cash flow, how am I going to spend that money, but also every dollar of cost that we incur, we think about that as an investment. And just because something is budgeted doesn't mean it should be spent. And so every dollar that's spent is very carefully scrutinized, and we're focused on that. Over on the right, you see here where our main focus for capital allocation is going be in the next few years.
That's organic investment. So it's CapEx, it's R and D, mergers and acquisitions and then also opportunistic share repurchases and some share repurchase just to offset standard dilution. Given our low weighted average cost of debt in the direction of debt markets and interest rates, probably won't see too much debt reduction, but we will continue to build up cash over time. And then currently, as you all know, there are no plans to institute a dividend. Moving on to capital expenditures.
So we continue to invest roughly 3% of sales and CapEx with a focus on productivity and growth. I'll just highlight here some of the projects on the right side of the page. You can see that much of our growth CapEx is focused on emerging markets where we're building more capacity, and we're also building greater capabilities. And you should expect that trend to continue. Charlie talked a little bit about M and A, and I would just complement what Charlie said, that it has been and will continue to be an important growth vector for Axalta.
We make acquisitions in all regions, and we make acquisitions in all of our end markets. And we do M and A here for a multitude of reasons. And you can see a few that we've highlighted, the Jiscentury, Ellis Spencer, Plastcoat and ChemSpec, where it's really product line extensions of existing types of products that we have or it could be a geographic expansion like a HiPic in Malaysia and Indonesia or adjacencies. And you will see us in our industrial portfolio look to fill out the industrial segments in which we don't participate today. So with DuraCoat and coil coatings, United Paint and vehicle interiors and then Valspar wood and industrial wood coatings are good examples of that.
And then there are market access type of opportunities such as metalac and CH coatings. I would just highlight as it relates to Valspar Wood, given the size of that transaction, The integration of that business is going extremely well and is actually ahead of plan both in time as well as budget. Next, let's move on and talk about our return on invested capital. This slide lays out for the major coatings players based on publicly available information what the return on invested capital is. Our number currently is about 10.5%.
That's still heavily impacted by a lot of the accounting adjustments related to the carve out. But we really believe that we will see over the next several years, Exalt to move up into the mid teens from that 10.5%. And we're focused not only on the earnings side of the equation, but we're also heavily focused on more efficient use of our asset base. Next, I'd like to touch a little bit on our results and more specifically on some of our financials. Over the last five years, we have grown net sales, excluding the impact or in other words, that we've grown net sales in constant dollars, $20.13, at a CAGR of about 4.7%.
And what we wanted to show you on this slide is the dramatic impact that foreign currency has had on our top line. You can see in the gray bars what our sales have been as reported. And then if we pull out the impact of currency and adjust it back to 2013 in constant dollars, you can see that our trend line has been quite positive. So again, foreign currency has masked a lot of the top line growth that we've achieved. We experienced significant currency headwinds in 'fourteen, 'fifteen and 'sixteen, but we've seen those headwinds attenuate in 'seventeen and '18, and the outlook is currently for that to continue.
So it will be nice to have a tailwind from currency instead of such a strong headwind. Consistent with our strategic plan, if you look over on the right hand side of the page, where you can see net sales by region and by end market, consistent with that plan, we've grown in North America and we've grown in Asia and Asia Pacific. And we've also increased the proportion that Industrial Coatings represents of our overall portfolio quite significantly. So again, some of the early strategies that we established as a senior management team and that the Board established in terms of the portfolio geographically and by end market, that transformation is happening. Moving on to talk a little bit about technology and R and D.
Our growth trajectory is heavily based on our investment in technology and innovation and service, but especially technology. We invest more in R and D and technology than any major player in the coatings industry as a percentage of our sales, at north of 4%. We have a strong pipeline of new products and customer innovation that business leaders will share with you today, and I think you'll enjoy hearing about those. We also wanted to show, in addition to adjusting some of the sales for constant currency, also wanted to show a view of what the EBITDA progression has been for the company. So in the gray bars, you can see here the as reported number, and the red line is basically eliminating the impact of currency and the special items that are noted in the footnote.
So what you see is that adjusting for the impact of foreign currency and a few onetime items, our adjusted EBITDA displayed a steady and upward trajectory over the last five years. Volume growth, price capture, further exalt away savings and increased operating leverage are expected to drive our EBITDA higher in the ensuing years. We've also made good progress in working capital. In fact, we've made about 150 basis point improvement in working capital as a percentage of sales over the past two years. But as Charlie mentioned, we believe that we have the opportunity to decrease to the high single digits.
Now much of this opportunity lies in inventory and accounts payable, and Key will cover more on this in his talk later this morning. Looking at leverage. We've made steady progress in reducing our leverage over the past five years and our interest rate expense. Through multiple refinancings, we've lowered the cost of our debt to approximately 3.8 percent, and we've pushed out our debt maturities to 2023 and later for most of our capital structure. If you look at our free cash flow, it's increased by over 50% during the last two years, and we expect our free cash flow to continue to grow moving forward.
As we pay down debt, we've shifted more of our free cash flow to M and A and share repurchases on an opportunistic basis as well as some of the growth CapEx that I talked about earlier. If we look at our guidance for 2018, I'd say at this point in the year, sitting here in the March, we're encouraged by the business conditions that we see and Axalta performance through the first two months of the year, and we maintain the guidance that we provided on February 6. In terms of business conditions, we see stable and growing Refinish demand globally. In Industrial, we continue to see strong volume growth, which is really underpinned by good industry growth along with some of the great things that might cash. In light vehicle, we continue to see some market share gain given our service and our innovation.
And although you may see a slightly lower growth rate this year from a market perspective, I think Steve and the team feel very good about some of the things that they're doing. In commercial vehicle, really bottomed out last year. You saw North America towards the back half of the year snap back. And in Latin America, you've also seen Latin America snap back. So that's been a welcome event in the heavy duty truck portion of commercial vehicle.
But we're going to talk to you today a lot about the non heavy duty truck portion of commercial vehicle. In fact, the non heavy duty truck portion is 75% of the sales in commercial vehicle. It's important that we talk a little bit more and give you a little bit more insight about that. Since someone will ask this question inevitably later on today in the Q and A, I thought I would answer it now. Through the first two months of the year, we are ahead of budget in net sales and EBITDA.
We've also been capturing price in the first two months of the year, predominantly in Performance Coatings. In Transportation Coatings, the Q1 is the toughest compare because we have not yet had the price downs on a year over year basis. March is always a big step up, however, from January and February levels. So as always, our performance in March will be determinant on how we perform in the quarter. In summary, Axalta continues to make it continues to operate a strong business model with multiple value creation levers in growth, productivity, cash deployments and M and A.
We continue to diversify our end markets and also experienced solid margin growth. Although we've made good progress in cost reduction, the opportunity remaining is still significant. Again, Dan Hee will elaborate on this further in his section this morning. Our investment in technology, innovation and customer intimacy forms the backbone of our business model. Of all the major coatings of all the companies in the coatings sector, we really believe that Axalta has the largest amount of white space and the greatest amount of potential upside.
We look forward to sharing that with you today. So now it's my pleasure to introduce Axalta's Head of Global Refinish and EMEA, and that's Joe McDougall.
Ladies and gentlemen, thank you for your patience while they play an in room video
Great. Just like being at home, I walk into a Heist video and somebody hands me two bottles of water. So well, thank you. I'm excited to be here to talk to you about our global Refinish business today. And we have some really exciting things, I think, for us to share.
So first, let me start by talking about the Refinish business and why we should care about it and why it continues to be a big part of Axalta's performance. So first, the refinish market continues to be very stable, consolidated around four major players, and it continues to grow in excess of 3% a year. Axalta holds a 25% global market share in the $7,000,000,000 refinish industry. And I'll share some details in a few minutes that takes it down to a regional level for you as well. We have the deepest portfolio of products in the market, including the world's most productive waterborne coating systems.
That's a really big deal. Why? Because the body shops continue to be put under pressure for their productivity as insurance reimbursements continue to get lower. We also have products that cover all segments within Refinish. Our SpeedyHacker, Standox and Chromax brands are the premium brands in every part of the world and the envy of our competitors.
Nissan and Xerox cover the mainstream, while Doosan and Challenger are focused more on the lower end. And finally, we have a strategy that's focused on both organic and inorganic growth. The market that we play in has many key attributes that benefit Axalta, including distributor and body shop consolidation, growing needs of those body shops, growth of the car park and more competitive technology. At last year's meeting, one of my colleagues stood up here, and he said something that really sums up Axalta's global refinish business: We are the global leader, and that is undisputable. 2017 was a very good year for our business.
And while today, I'm going to focus on today and our go forward plan, I'd be remiss if I didn't at least say a few words about 2017. We continue to expand our technology and our technology leadership by introducing an ultra productive, low energy use clear coat. This new clear coat dries in thirty minutes at room temperature. That's unusual because a traditional clear coat would take two to four hours to dry at room temperature. In fact, many of our competitors don't even offer a product that can dry in air temperature, and we need some sort of oven or baking to do that.
Our Styrox waterborne product in Europe has really started to grow. And you're also going to see us this year introduce a product called Chromax EZ, which is a similar product, and we're going launch that in many parts of the world, including The U. S, Korea and China. Training is an incredibly important factor for us, and it shouldn't be overlooked. You're going hear me talk about this a couple of times throughout my presentation.
We don't just sell paint. The technology and services that Axalta provides is a key part of our partnerships with the customers. Last year, we opened a flagship training center on the grounds of Hendrick Motorsports in Charlotte, North Carolina. This facility has absolutely state of the art capabilities for us to train our customers in both refinish and industrial, and it's been fun to partner with Mike Cash's industrial business to launch an integrated center like this. In China, we're upgrading our training centers at a very, very rapid pace.
And last year, as part of our Asia Pacific Technical Center opening, we opened our flagship training center in China, which we're quite proud of. And then finally, on the customer engagement side, and you got a little flavor of that from that video, we continue to use our motorsports relationships as a part of our customer intimacy strategy. So whether it's NASCAR, F1, MotoGP or Snow Cross, we get to give our customers a sense of what our refinish paint looks like as we put it into action. So 2017, a very good year. What was really important about it was it really set us up for
So in the next several slides, I want to talk to you a little bit about the Refinish market. It's quite a dynamic market, but it's important to understand both the complexities that come with that market but also the opportunities that come with it. And that's the part that gets me excited. On the left here, you see the continued growth of the car park, and the growth by region is listed. But what's more interesting here is as you dig into that data to really understand what's behind just the broad regional rates.
So in Europe, for example, we see much faster growth in Central And Eastern Europe, while Western Europe remains relatively flat. However, the premium markets in Western Europe continue to thrive, while in Central And Eastern Europe, you see more mainstream economy products accelerating the growth rate there. Overall, sustainability and the environmental impact of paint remains a focus of regulators everywhere around the world. So our low VOC and waterboard coatings offer Axalta, we have the opportunity to play a key role in helping our customers as they need to figure out solutions to comply with those laws. Now I mentioned performance earlier.
And the MSOs, multi shop operators, our definition of a multi shop operator, five body shops or more. Now as many of you know, these MSOs own hundreds of body shops in many instances. They measure performance down to the individual painter level. We help them do that measurement. We not only help them do that measurement, we actually help them increase the performance of those individual painters.
And that's a really, really big part of our relationship with them. Distribution not only continues to consolidate but continues to become more and more complex. OEMs now run global tenders around the world for their approvals for refinish products. Part suppliers are growing across regions, and you're seeing that with companies like LKQ, GPC. And you've got consolidation happening right here in The U.
S. So that expertise that needs to happen in distribution is a core competency of ours and must be a core competency of any coatings company. And finally, our customers are becoming more and more demanding. Color match is absolutely critical. Insurance companies no longer reimburse for overspray.
You think about a panel on a car that needs to be repaired. Historically, they would pay for blending, to allow that paint to really blend in and look look quite nice. Today, if you're lucky, they pay to repair that panel. In many instances, they pay to repair that spot. If the paint doesn't match perfectly, the very first time, we have not done our job and the body shop incurs more cost.
So our field technical service becomes an incredibly important part of our value proposition to our customers by helping them solve their problems real time. So even with the pressure that I mentioned from insurance companies, claims continue to grow around the world. And in a few slides, I want to talk to you about some broader market trends, but first, I want to show you a little bit of data around claims. So with all the press out there regarding accident avoidance technology, you wouldn't expect to see the chart here on your left. Both severity and frequency continue to rise in The US.
The number one reason for this, All of us and our behaviors. The U. S. Claim market is 160,000,000,000 market. It's going to grow to about $175,000,000,000 over the next couple of years.
And that growth rate certainly speaks to severity, but over 2% of that growth comes from frequency. So we continue to get in more accidents. It's not just The U. S. Phenomenon.
I'll give you a couple of looks at some global data. In The UK, claims are growing at a 4% rate, about $32,000,000,000. What's driving that? The average cost of repair continues to rise. And that's happening in a very consolidated market where the insurance companies are in absolutely full control of the repair.
In Germany, you see a growth rate of about 3%. Again, another very mature market where you have a very large car park and a growing car park. So claims are important, and it's an important factor for us to think about. But it's really just one factor that we think about when we think about the market. So this slide is probably the most important slide that I'm going to show you today.
You might ask why. Because it shows you on the left the very trends that impact the refinish market. So some of these trends, like growth of the car park, number of miles driven, vehicle leasing and coding innovations, those are all positives. They grow the market, and they help Axalta. Trends like insurance regulation, safety features, vehicle aging, mix changes, those will tend to lower your market growth.
So what's the key takeaway here? The key takeaway is there's a bunch of positive forces, there's a bunch of negative forces that impact what's happening from a market perspective. But the positives outweigh the negatives, and it's why we continue to remain very bullish on the growth trends in Refinish. So don't believe it when you read that singularly focused article, right, that talks about there's never gonna be a crash again. The data tells you something very different here.
Like, the articles will lead you to believe that the Refinish market is in peril, but it is not. You've seen the data on claims. You see the data here on the car park growth, which is a big, big driver. Right? And I'm gonna share some additional data for you in a few minutes that's gonna reassure you that the Refinish market is indeed alive and well.
So I know this is something that's probably on many of your minds. So let me take a minute and talk to you about advanced driver assistance systems, ADAS. Let's simplify that. When you're backing up and your car starts beeping at you because you're getting too close to an object behind you, cars that have automatic braking in them, flashers on your on your side mirrors when a car is in your blind spot, all part of this technology. The technology has good uptake, but what does the data tell you?
The data tells you that in North America, in 2027, only 50% of the cars are going to have that kind of technology. And it grows to about 80% in 02/1934. Even with that technology, if you look at the red bars, it only affects the the claims and the frequency of claims by seven to 12%. Again, why? That's not that's counterintuitive when you look at it.
Well, the why? Look around the room. It's all of us. K? Look at the charts on the right.
Distracted drivers offset the technology. K? The survey data here is pretty staggering. 30% of people say they talk on the phone regularly. 70% say often.
How about texting with driving? And by the way, we're also assuming that people responded to these surveys, honestly. My guess is most did not. But if you look at the texting data, 32% say they send text often, while 42% say they read them often. I don't know about many of you, but I have a rather long commute to the office.
I would say that data is probably double that watching people around me in cars, perhaps me once in a while. So needless to say, we humans, right, we're our own worst enemy in offsetting this technology. But while we're the enemy of the technology, we continue to be the friend of the refinish market. And let me just say a couple of words then about autonomous because actually I've already had a couple of people ask me about that this morning. Since this isn't a crowd from Detroit, I'm going to assume you haven't all drank the Kool Aid on autonomous.
Autonomous technology exists today. Right? There are autonomous Ubers driving around. Right? There are lots of that technology exists, and it will continue to grow.
However, the social and regulatory issues of this becoming a broad reality, it's it's still decades away. Think about it. Even if every government around the world tomorrow mandated autonomous cars, it would take ten to fifteen or more years to change over the car park. We know neither one of those things are gonna happen. So what's the takeaway from all this?
The takeaway is we're on top of the technology. We know what it is, and we watch it carefully. Our transportation team works very closely with the OEMs as they embrace the culture, expand the opportunities in ADAS and autonomous, and we want to continue to grow with them. However, the impact on refinish is very, very limited. And even with that, it's very, very far into the future.
So if you're not excited about seeing some of the trends that are really helping our business in the market, I want to talk a little bit more about Axalta's business more specifically now. As I mentioned earlier, we're the market leader with 25% of the share globally. We bring to the table technology and service that makes us a true differentiator of a company. We offer products really anywhere, anytime and in any part of the world. I promised I'd talk about our regions, so I don't want to do that.
In North America, we have a 31% market share of a $2,000,000,000 market. The key story in North America for us are the MSOs and their continued growth. MSOs are about 28% of the repair market in The U. S. Today.
That's a big deal. We have a strong position with them because of their productivity mindset and our ability to provide them products and services that benefit them. In EMEA, our strength really lies in our distribution and our brands. Our SpeedsHacker and Sandbox brands have deep European heritage and are truly regarded as world class. We also have broad distribution, including company owned distribution, along with access to key distributors across EMEA.
Our waterborne products align with the regulatory pressures in Europe, while we continue to introduce new products like Cyrox to compete in the mainstream. In Asia Pacific, we're two but very, very focused on becoming one. The car park in China is a great benefit for the refinish market. China has 170,000,000 cars on the road. They're going to have two fifty million cars in five years.
The average age of these cars is about 5.5 to six years old. You get newer cars fixed. The OEMs also have broad influence there and across Asia, and we leverage our relationship with our OEM team and our approvals to ensure that we continue to grow in that space. And then finally, in Latin America, we have a very, very strong position in Mexico. And Mexico is the largest refinish market in Latin America.
We own that leadership both at the premium and the economy segment. And in South America, really, the two key markets there are Brazil and Argentina. We have both manufacturing and a broad sales force in both countries to take advantage of that. So today, we only have time to really skim the surface of our strengths in each of these areas. But I hope you see that we clearly have the market access, the products and the technology, coupled with the right strategy, to continue to expand our market leadership.
So you might say, okay, great. That's pretty great, number one in almost every region, right? How can you continue to grow? What are you going to do? Well, we think we've got lots of opportunity and lots of white space to continue to grow our Refinish market position.
In The U. S, we are going to continue to ride the wave of the MSOs and continue to be the one provider to MSOs. They continue to consolidate, and they continue to grow. And our position with them is favorable, and we'll continue to enjoy that. In Europe, growth in Central And Eastern Europe gives us the opportunity to grow in an area that we definitely have room to expand.
The market is fragmented, tends to be focused on the mainstream and a terrific opportunity for some of our products like Xerox, you can learn more about that at the breakout side. And our strength in distribution in Europe really is a differentiator and allows us to move across the region with ease. What you see here in China is you see a shift happening in the market. Premium is going to remain a very large part of the market, but economy and mainstream is really where the growth lies in China. Further to that, you're going to see that growth shift to Tier three and four cities.
We've gone through a sales force deployment exercise in China to make sure that our people are in the right place to take advantage of this growth. In addition, you're going see us be aggressive about inorganic opportunities to position ourselves in the economy segment in China. It's exciting for me to stand up here and see the growth opportunities and see how they align to where our strengths are to provide that continued expansion that we're very, very focused on. Maybe a word or two about our model. The key to our success really is our service.
So while we use distributors for logistics and delivery broadly, and they do that to the end user for us, critical to remember the service model. And that's the lower part of this chart. And that's the key part of our value proposition. We provide customer service, training, technical support and tools to the end user. We provide them tools like scorecards.
That helps them measure the performance of their business to run their business better. Tools like ColorNet gives them access to 100,000 plus formulas as they work on that color match to make sure that, that car is repaired perfectly. And our training gives them hands on guidance to help them get the most out of our products. The model is all about adding value to world class products. Our goal here is simple.
It's to be more than a paint supplier. It's to be a business partner to our customers. So how do you become the business partner? Well, it's really understanding their KPIs. The basic the biggest and probably best example I could give you would be the MSOs.
Their key KPI, very simple, cycle time. Their goal is to move cars through that shop as quickly as possible. They measure everything from time to quality to labor productivity. But the productive leadership that we have in our products, it hits their KPIs head on. However, those products are best when coupled with the training and technical service.
And that's the real trick. That's the magic that we think we bring to the table. We want to allow our MSO customers to become world class themselves in one of the most important parts of the repair. So why would I say the paint's the most important part of the repair? I don't think about it.
For any of you who've ever picked a car up from a body shop, did you crawl under the car to see if the repair was done? Most of us don't even open the hood to look under there. But when you walk up to that car, if the paint matches perfectly, if that car shines, you walk away a happy consumer, and that's incredibly important. That means the shop is happy. The insurance company is happy.
You as a consumer, you're satisfied with both of them. Heat is an incredibly important part of the repair. So before I wrap up, I just want to take a minute and talk about M and A. We've been busy in the refinish front, both on the manufacturing side and on the distribution side. We completed 10 deals across three regions, and we plan to be even busier in 2018.
Given our strength and expertise in Refinish, we view our deals here as very low risk. They all have high IRRs and are easy and well integrated into Axalta. We've built a very robust pipeline, and we'll continue to add to this portfolio in 2018. So to wrap up, Axalta is and will remain the global leader in refinish. That is without question.
The trends in the market favor us, and the market continues to grow. We're going to continue to advance our technology, and you're going to hear us talk more and more about our technology and our market leadership, something I think we haven't done enough of in the past. You've heard me talk about M and A, what we've done, but you're going to see us be even more aggressive in the future. You know, I think about it this way. Leaders don't settle for the league.
When they're in the league, they step on the gas, and they continue to put distance between those that are behind us. I hope that what you heard from me today is that we're going to step on the gas in Axalta Refinish, and we're going to continue to expand our leadership position in the future. Thank you very much for your time. Chris? Thank you, Joe.
We have a break scheduled now, about twenty five minutes. Please, you're welcome to get some drinks, mingle a little bit, go see the product displays. Again, I encourage you to talk to our R and D leads from each of the businesses and our leaders from the segment. Thanks. I'll call you back when it's time.
Ladies and gentlemen, there is a break scheduled for the next twenty five minutes to resume at approximately 10:50AM Eastern Time.
Please hold.
And thank you to all those patiently waiting on today's call. We will resume in approximately five minutes. Please continue to hold.
It is very nice to to to be here with you today. I wanna thank you for taking your time to be with us and for for giving me a few minutes to talk about what's my favorite subject, what's my passion in terms of coatings, and that's our industrial coatings business. Maybe just to to get started and and level set to where we are today. Our industrial coatings business has evolved from a a niche regional business four years ago to a business twice our original size. Going back to the IPO in 2014, one of the things we talked about then was the ability to double this business by 2020.
And it's gratifying for everybody in this room. It's gratifying certainly for all of our colleagues at Axalta for us to be able to say that we've been able to accomplish that two years early. And where we stand today, we've done it through both organic growth and acquisitions. You'll hear a little bit about that over the next several minutes. A business today that's made up of a number of global franchises, with some of the most recognized names in industrial coatings and industrial coatings brands.
But probably the message I want to leave all of you with, is certainly the fact that we've doubled this business. It hasn't been by accident. It's been by design. It's been with a very thoughtful approach. But more importantly, this business is primed for success in the future.
And I'll talk about that a little bit as we go forward. Today, our Industrial business is made up of five growth oriented focused global businesses serving very specific set of end markets. If you think back four years, we had a powder coatings business, we had an electrical insulation business, we had bits and pieces of general industrial businesses, but we identified coil and wood as businesses that we thought would fit into an industrial portfolio well. And here we are today with with the opportunity where we have five good, strong pillars with our general with our industrial business. And you start to think about what's the common thread.
And really, there's three things. Each of our five businesses are very specific technologies and very specific manufacturing capabilities, fit for purpose, fast response. But it's also in how the customers and the relationship that we have with those customers and the ability of these customers to allow us to extract value and to understand their customers and understand that if we're able to bring products to them that allow them to get more value with their customers, this allows us to get more value for our products sold into those five specific market segments. Our five industrial segments sell into a $38,000,000,000 market space. While we're proud of the fact that our global market share has doubled in the past five years, We're also excited by the fact that 96% of the market lays in front of us.
So we continue to have even with the success that we've had over the past four years, we continue to have a great opportunity in front of us, a lot of white space and a big pond to fish in. When comparing our Industrial Coatings business to the rest of Axalta, one of the unique aspects that you'll pick up on is that our market drivers, our end markets are nontransportation centric. So we rely on things like industrial production, building construction markets and also infrastructure. Those are key end markets to us as we think about, our customers and what's important to them. The other aspect that's important to note, and I think Charlie mentioned it this morning, the importance of Asia.
So China represents greater than 40% of the industrial coatings are consumed in China. And if you think if you expand that to look at Asia, roughly 50% of industrial coatings are consumed in Asia today. So that's a battlefield that we started off very underrepresented, relying on a lot of toll manufacturers, relying on importing products. Today, we're in a much different position. We have dedicated focused teams in China.
I can tell you our growth rates in China are very impressive, double digits. We're excited about the opportunity there. And I think we're also excited about the fact that we're just now starting to scratch the surface of this business. When we look back on 2017, it was a good year. We grew 43%, which is impressive.
But while we closed and integrated six acquisitions, we kept our focus on organic growth, and we grew organically last year by 7%, the third consecutive year where we outgrew our end markets and we outgrew our competition by a factor of two. And when you think about growth, it's very easy to be consumed by relying on acquisitions and the ability to lean so heavily on acquisitions. We see that in the coatings world, That's happened in the past to certainly some of our respected competitors. But we're committed to delivering above market organic growth as well as continuing to add on bolt on acquisitions that will enhance our position going forward. Formula for success with organic growth is pretty straightforward.
We had a couple of questions about that in the hallway this morning. And really, the the recipe is simple. Invest in your sales teams, which we have done. Make sure that we've got a steady, rapid flow of new products coming to market, and make sure that those sales teams are bringing and and and hunting new business each and every day. So let me kind of put it in quantitative terms for you.
If we look back over the past three years, where we've outgrown our end markets by a factor of 2x, The two things that we have done very consistently is we have brought at least 80 new products to market each of those three years, and we've captured at least 800 new customers each of those three years. You see 2017, you see the numbers on the screen, we actually had a very exceptional year, and this led us to having a 7% organic sales growth. So as long as we continue to focus on those things and we typically will have a pipeline of anywhere from 100 to 120 new products that are being worked on by people that are dedicated to the industrial business, and we'll have anywhere from 2,400 to 2,600 new accounts that we're chasing each and every day. So as long as we keep those pipelines full, we should be able to continue to outgrow our end markets organically over the next several years. So in addition to organic growth, acquisitions played a big part of our success story to date.
We've used M and A to enter new markets, wood and coil. They brought us fit for purpose products, true industrial products. I think if you look back on our history, our industrial, particularly our general industrial business, primarily built with refinished products that we tried to fit into industrial applications. Today, it's much different. We have true industrial products that we compete each and every day with as well as lower cost, faster response manufacturing, something that's absolutely critical to being successful in industrial markets.
We acquired a number of businesses rapidly. Over a twelve month period of time, we closed on six industrial acquisitions. And the obvious question, the question we typically get asked a fair amount is, how well have we done in integration? And and when you think about acquisitions, there's a lot of moving parts when you try to integrate them. Right?
You have new DRP or new ERP systems. You have, new financial systems. You have operational improvements and standards that you want to get up to speed on. But really, what we found is the real test of integration success is how well we onboard new employees and our customers. Okay?
So think about it this way. In most acquisition models, and it's a coatings business or it's any other industry, typically, when you do an acquisition, you'll factor in some customer attrition. Typically, the range is somewhere between 610%. And that applies obviously to coatings, but also to a number of different industries. And probably the accomplishment that I am most proud of as we look at acquisitions and probably the success factor that we have as we think about our acquisitions is of the 2,850 customers, new customers that we brought into Axalta through these acquisitions, Today, six months at least six months or longer later, we have 2,845 of them, 99.8% retention rate.
And you think about that just from a business standpoint, but you think about it from a growth standpoint and not having to overcome losses as you're continuing to build a business, you think about it from an employee standpoint. I mean, the one single thing that a a great employee hates to do is he hates to lose a customer. And if we're able to retain those customers and make them feel comfortable as as being a customer now of Axalta and the things that we're able to bring to those customers, I mean, it fuels our employees to feel comfortable and to feel motivated and to feel a part of Axalta going forward. As we continue to build our industrial business, we're building from good market positions, serving increasing number of premium and well known customers, many of which you see their products on display in the lobby this morning. Growth for us is about designing and creating a specific value for each customer.
So you think about it, this may be how our coatings enable greater output in customers like James Hardie in building and construction or Hunter Douglas. In some cases, it's how our coatings enable functionality like Tesla, where our coatings insulate their electrical motors up to last up to 20% longer. In some cases, it's how our coatings enable color, like Schutz helmets that have gone from five helmet colors being available ten years ago to 1,800 colors and growing today. That's the specific value we're able to bring to customers, but it works both ways. Customers, if they're able to get that value from their customers, these are great examples of them being able to support the value we need from our products and services.
That leads us to our competitive advantage. Why is industrial coatings why are industrial coatings an important part of Axalta's value proposition today? Well, first of all, we have a much broader portfolio of products than we've ever had available, true industrial fit for purpose products. We're moving these products around the world. So we're taking some of the innovative products you saw glass coatings in the hallway today.
We're taking those products and supplying them into other regions of the world. We're serving customers, customers like Weber Grill, who we've traditionally had a great business relationship here in North America, and we're expanding with them. We're following them as they're opening manufacturing positions in China and other parts of the world. We have today cost efficient, fast response manufacturing capability, true industrial manufacturing capability. We have probably the most impactful sales and technology teams for our customers in the marketplace today.
Today, we have five focused global business segments who do a really good job of protecting the castle. That's part of our DNA. That's something that we've traditionally done well. Anywhere from 12 to 14 times better at gaining customers versus losing customers. 12 to one, fourteen to one in that range.
But I'd also tell you that we are equally focused not only on protecting the cast and not only on creating a moat that our competition has to get over, but also creating a way for us to get into our competitors' tassels. Let's talk a little bit more about each of our individual businesses. Our North American Wood business is a North American leader in building products. This is a great franchise. They have customers like James Hardie, Louisiana Pacific, Shaw.
I mean, they're just an incredibly good, sound, solid business. We're gaining share relentlessly in kitchen cabinets. New customers like Dacor, you see a picture here of some of their beautiful cabinets produced in Canada as well as additional business that we're gaining with Merillat, which is an additional brand of master brand. And that growth will continue. LP, James Hardie, they continue to sell out all of their manufacturing capability and continue to be focused on opening new plants.
We'll continue to grow with them. But our growth also will come from building out our distribution network, primarily using distribution to reach custom cabinet and furniture manufacturers, smaller custom and furniture cabinet manufacturers that we traditionally have not had access to. When you think about Axalta, when you think about our DNA, and one of the things that we're really good at, one of the things that Joe's business has really taught all of us is how to handle and how to attract, how to motivate distribution. So that's one of the great opportunities that we have in front of us. And we started to take advantage of that.
We just recently opened an Axalta distributor in Orlando, Florida that will now start to carry wood coatings products, and we have a number of other ones lined up. Our growth is going to come from the flooring market. We just launched some new UV curable products for both the wood flooring market, but also interestingly enough, when you think about a wood business, luxury vinyl piling market, okay? This business is is something and you can see the picture there. Even if you look at this picture closer up, it looks exactly like wood coatings, wood flooring.
I mean, it is that that pronounced. And we've just launched new products, a new UV curable product that goes on luxury vinyl tiling. And we'll get 4,000,000 worth of new business this year in the luxury vinyl tile market, primarily because we not only have the products and have the technology, but we're able to supply that in North America where our competitor struggles to bring that product in from Europe today. And finally, being able to expand this business globally. Where we've already started down the path in Latin America, we've got a great opportunity to step easily into that market.
We've got capability. We can support it from North America. But what I can tell you, we're also working on plans to expand this business in Southeast Asia and certainly possibly in Europe. And just maybe to illustrate how this market how we believe this market will play out in favor of the wood coatings business as well as impacting our coil and our powder businesses to a certain extent. Over the next several years, you can see new build construction as well as remodel construction is expected to grow at the mid-five percent to 6% range into the foreseeable future.
Moving on to our Powder Coatings business. We're the second largest player in this large market space. Think about an 8,000,000,000 global powder coatings market today, something that's growing at GDP plus because this is an environmentally friendly technology, certainly a technology that has advantages in durability, something that is continuing to take certain bits and pieces of liquid and converting it to powder. We've always said the key to success in powder is having full factories, having a certain percentage of your business with the premium segments of this market and having an efficient cost structure with very low waste. And I can tell you today, as you look across our 19 powder coatings factories around the world, our factories are full.
Our focus today is on what we can do to sell up, how we can sell and gain a bigger percentage of our business in premium segments. Premium segments like the monumental architectural market. This is a market that's grown 10% per year, at least 10% per year for the last three years for us. Launching a new range of metallic products globally. Expanding on our Less to Speed products, which allow us to coat products on customer lines that are moving up to 200 feet per minute and expanding our new thermoplastic product line, a product line that we acquired with Plastcoat last year, which is doing exceptionally well.
One of the examples I want to use, maybe to tie in our architectural monumental business as well as metallics and illustrate maybe how we're focusing on this market space. You'll see in the upper left hand corner the San Francisco Trans Bay Transit project. This is a 1,500,000 square foot project where 11 transit lines come together in San Francisco, basically from all over Northern California. The architect is actually a local architect here in in New York, Pelly, Clark, and Pelly, also with offices in in New Haven, Connecticut. The whole idea of the architect, what we worked with the architect on, was how to bring daylight continuously, day and night, but how to bring a daylight effect above ground as well as below ground.
And if I had a little larger picture, you'll be able to notice that there's actually 118 foot light posts scattered throughout the entire complex. And and the requirement for coatings was to have high UV resistance, high mechanical properties, weatherability that that was something that was very advanced and also being able to have the silvers, cumulus silver is the color that we supply for this particular project, to be able to have the colors that that reflect the light and and sparkle and and actually enhance the light rather than than than detract it. We accomplished this. This has won a number of awards from from architects and from the green building industry. So much so that, actually, the coder, so Kelly, Clark, and Kelly were the architects, but it actually then went through a coder, DSI's, space frame.
And DSI's space frame has now been awarded the business for coating the LA Rams stadium. And they've chosen the exact same color, and they're coming up with a design that will utilize the same functionality, the same type of color for this stadium that will open in 2020. So let's switch over and talk about coil coatings. With our DuraCode acquisition, we acquired a business that over a ten year period of time consistently grew two to three times the market. This was a company that was well recognized by customers as we did our due diligence.
And now that we've we've owned the business for a little over a year and a half, they were recognized by customers as the go to company when it came to some type of special or advanced technology for coil coatings. When a customer needed a consistent product, something that would work and have a wide application window, DuraCoat was typically the product that they would call out as well as responsiveness, being able to gain additional business through how they service and support customers. We've continued this successful formula and a steady stream of new product launches like HydroPond, which is a water based version of coil coatings as well as DuraPond high solids, both environmentally friendly, environmentally advanced to traditional coil coatings products that offer in the marketplace. And both of these products are targeted towards the metal roofing industry, which is something that's growing at a very good clip within our coil coatings business. We've also made nice progress in expanding this business globally, starting with Latin America.
We've begun shipping products down into Latin America to a couple of different brand new customers for us. We're very excited about that. And this business is actively working with our powder coatings business to offer a liquid and powder alternative to architects based on their monumental building needs. Great example of this, we were able to entertain a whole group of industrial customers this past weekend in Las Vegas at the Las Vegas Motor Speedway. And if you can picture a wall similar to the walls that are surrounding this room, but they're nothing but silver and a coated silver facade, those products were coated partially with our powder coatings for the stanchions and the end caps, and then the rest was coated with our liquid extrusion products.
So it's been a great win. Let's talk about our Energy Solutions business. Energy Solutions are made up of coatings that insulate and protect electrical motors. So anything from a hand tool to an electrical motor, an electrical vehicle, to the generator that powers the 3 Gorges Dam in China. Those are anything that you can consider to be an electrical motor would use the types of coatings that we supply into this market today.
This is a $1,500,000,000 market today. But when you think about electrical motors, electrical vehicles alone and the projection that electrical vehicles will grow by a factor of 20% each of the next ten years, this segment obviously will become a lot bigger than what it is today. Today, our insulating coatings products protect the electrical motors for 60% of the electrical vehicles on the road. Customers like Tesla, BMW, Volkswagen, Ford, General Motors and startups like Lucid Motors put their trust in our coatings to help their electrical motors last longer. And we use this market position.
We use this strength and this technology and this focus and the things that we learn in the electrical motor market to help us in hand tools, in generators, in compressors, any other electrical motor application we can find. And we use it to invest in the next generation of coatings. We've been the first to launch a waterborne version of impregnating resins to the marketplace. This will become the coatings of choice, we believe, in China as the requirements for waterborne coatings are increasing. And additional products required by customers like compounds and wire lubricants, things that we have not traditionally offered.
We've developed these products, and now we have a much broader base of products that are consumed by our customers. China continues to present a key growth opportunity for us with the focus being on products developed in China, manufactured in China, specifically for Chinese customers and consumers. Great example of this is corona resistant wire enamel that we just launched at the end of last year. If you think about corona resistant, it's probably the biggest killer to electrical motors are when there's different surges of electrical current. So it may come in at low surge and there's a big increase.
And wire enamels traditionally just convey the circuit. We've developed a coating, corona resistant coating, that will protect and insulate those surges going into a motor and, in essence, help those wires and help that motor to last longer. Finally, our most diverse and also our fastest growing segment is our Industrial Coating Systems business. Hopefully, you've all had a chance to meet Dave Heflin. Dave runs our global Industrial Coatings business.
And many of the products that you see in the hallway, many of the industrial products are he's actually the godfather of these products. So certainly very proud of what we've accomplished there and the products and some of the customers that we take advantage of. Our coating systems go into the agricultural construction earthmoving equipment as well as oil and gas and general industrial coatings for specific segments and applications, things like glass coatings, ski coatings, drum coatings, storage tank coatings, metal components and structural steel. Those are all product lines and customers that we service with a bundle of products with our general industrial business. We've acquired a lot of these general industrial products from Ellis, Century and Spencer, Great technologies that we continue to bundle in the products that we offer to customers as well as spreading them throughout the world, creating a great opportunity.
And pure industrial products that we sell direct to large OEM customers, but also that we're able to package and brand and sell through distribution to smaller OEM customers. So you can tell, this is obviously a great opportunity when you think about a $14,500,000,000 market space, I mean, twice the size of automotive coatings that are sold into the automotive OEM business today. And we have two rules. As we look at the niches, we're not going to be an across the board player to everybody and to every one of these general industrial niches. But the two rules are very simple: Can we win in this specific application field?
And can we extract value? And if the answer to those two questions are yes, then we go after those types of segments. And that's how we've ended up in some of skis and glass coatings and structural steel. Finally, to sum it up, we've achieved our market growth targets two years ahead of our promise. And this didn't happen this happened by design.
This didn't happen magically. It happened by focusing on the right industrial segments, by investing in these businesses, using our global footprint and capability, keeping our energy on organic growth, delivering a wave of new products on a consistent annual basis and a sales team that's intensely focused on delivering the unique value proposition for each and every one of our new customers. We have a lot more capability today than we did four years ago when we first started talking about the aspiration of doubling this business and even more opportunity. So we're on to the next hurdle. You heard Charlie talk about it this morning.
Our sights are set on what we have to do over the next several years to be able to double this business again. So with that, I will turn it over to Steve Markovich. Thank you very much. Thank you for your patience. They are now playing a video in the room.
We will get you connected as soon as the video is completed. Joe, for the record, I am from Detroit. Every car I own has a steering wheel. Gas pedal break, and I expect that we'll have that for quite some time. So, again, good morning, everyone.
Thanks for the opportunity to talk to you about transportation coatings, obviously, a topic that's very near and dear to my heart. For the next twenty five minutes, I'd like to walk you through two important subjects. One, many of you know that we're a market leader in the light vehicle, commercial vehicle coatings market. So I'd like to share with you what we call our strategic market opportunities, some which includes some key organic and acquisitive growth actions to pursue no less than an additional $1,000,000,000 $1,000,000,000 in the transcodings market. After you've digested that, we'll talk a little bit about some of the future trends in transportation coatings.
Many of these trends are driven by consumer preferences, are driven by OEMs and tiers, as you'll hear many legislative trends as well. We think, in part, we'll play a role in many of those trends. And will be advantaged by them as well. Just a definition on trans coatings. Two very exciting end markets for us: the light vehicle body business, which you've heard a bit about also exterior and interior plastics and metal coatings to the tiers and our commercial vehicle business, which includes medium duty truck, heavy duty truck, bus, planes, trains and recreational vehicles.
These two segments constitute about 13,000,000,000 opportunity, dollars 1,600,000,000.0 of that. So we see a lot of opportunity, a lot of upside and a lot of excitement around the coatings in the space. As we take the $13,000,000,000 apart, we identified nine key market segments and sub segments. Again, about $9,500,000,000 of that being in the OEM light vehicle business between the body business as well as interior exterior plastic and metal coatings. The other seven segments in commercial vehicle, and I'll touch on those briefly later in the presentation, another $3,500,000,000 in coatings opportunity for us.
Within those nine segments, we've identified three kind of key customer areas. The core areas include the LV trucks and bus. We tend to have high teens to mid-20s in those markets, developing markets in the center, or generally in the low to mid teens. And then the opportunity segments where we see a significant upside in white space, options for both organic growth and acquisitive growth. Before I jump into the growth discussion and talk a little bit about 2017.
It was a very productive year for us in transcodings. We launched almost 500 new colors and products at 116 sites around the world. Interesting thing for us in transcoding is as we launch new products, new colors, I mean, it really creates opportunity for us to reposition our products, reprice our products, reestablish that value proposition with current economics in the West. One example of the launch that we're very proud of is our new Lemira clear coat products. We really see that as the ultimate in finish protection for gloss, for durability.
When we repriced and introduced that product, we saw an average increase of no less than 25% average selling price across multiple, multiple launches and multiple customer locations. Within LV, we put coatings, body coatings, interior coatings, plastic coatings on no less than 28,000,000 vehicles, almost 30% of everything that you see on the road in 2017. We're very proud of that. Commercial vehicle, we saw a great rebound in part in the North America HDT market, but also significant new wins into the Trans Spray, which is the CV outside of HDT, with key wins with Itong Bus in China as well as Marco Polo in Brazil. So I think very good progress and good growth there.
It's important to note, too, that while we saw some of the downturns in North America in HDT, Axalta took very strong actions with regard to our structure, our strategy, our cost position. I think taking advantage of some of that downturn as the markets return. You see that in CV in both North America. We've seen that in Brazil as well. I mean we've really come out of those, I think, downturns in a much, much stronger position.
Finally, we've won over $90,000,000 in new business at full volumes, about $40,000,000 in addition to that in replacement business. A couple of notable wins, again, that we're very proud of. We won a significant plant with Nissan in North America because, in part, the Japanese OEMs, we've talked about in the past, are key targets of ours. They tend to be in that the underserved market, the developing market, so big win there. Additional some OEM business with the North America OEM, but in China, which we're very proud of, additional significant growth in our EPC markets as well.
So I think a good year in 2027, a productive year. And I think we certainly look forward to more of the same in 2018. So let's talk about growth. We call it the strategic market opportunity. It's kind of the art of the possible.
We created a framework around this, basically taking apart those nine segments where we identified what we call what good looks like. And we've got, I think, a number of different examples in that area, certainly light vehicle, commercial vehicle in North America and South America, HDT globally. So we looked at the fundamentals there, the customers, the product, the footprint, the approvals, the relationships that we need to have in place. And this was not top down, this is really bottom up. So I was thinking about what do we need to do in each of those segments to drive some of that 20% plus market share.
We certainly enjoy those market shares in several key markets, regions and segments around the world. So we certainly felt that was within the art of the possible. So that was a bottoms up approach. We identified a number of key strategic initiatives, and again, we'll talk about those. But just to highlight them, in LV, we will continue to grow with our core customers.
We'll focus on many of our underserved customers, J OEMs, K OEMs, domestic OEMs in China. New regions and emerging regions like India, You've heard a bit about new laboratories and factories in Saudi in India. Commercial vehicle and also increasing content per vehicle. Very important discussion in the space. I don't know how much you hear about how within 95,000,000, 97,000,000 vehicles in LV, 3,000,000 in commercial vehicle, how many of our peers talk about increasing content, but that is clearly part of our strategic growth initiative.
As we walk the vehicle, take that vehicle apart, clearly, we've had a very keen focus on Class A surfaces historically. But again, as we move into the plastic business and the interior, but many other opportunities in the components and the wheels. And again, we'll touch on that. But within CV, LV, significant content increases as well. Focused growth in the product areas.
We're very strong with all layers. You've seen some examples out in the lobby with our core customers. But we've historically been extremely strong in the base coat, clear coat areas. You've heard a lot about our consolidated systems, our harmonized systems, where we've got our estimate about 30 plus percent of the market. And we've got opportunities, I think, certainly in e coat areas, primer technology areas, the monocoat areas to continue to take content with new products and technologies.
And lastly, we'll spend a few minutes rethinking our value proposition. We've got some interesting thoughts on that. We work very hard to partner with our customers, to have relationships with those customers, to drive improvement with those customers. We feel we create tremendous value, and we'll give you some examples. I think part of our opportunity and challenge is to continue to retain more of that value in these markets.
Let's start with light vehicle, the body business. Again, out of the $13,000,000,000 or so, this is $7,000,000,000 of it. We think there's $500,000,000 upside here. And we think that in part because in this space, we know what good looks like in the OEM body business, and that is our core customer segments that you see in the center left there. We've got a number of customers that we serve in this $3,000,000,000 market.
We've got north of 25% of their annual buy. We have excellent product capability. We've got a good regional focus and capability in those areas. Again, when we have most of the layers between eCoats, Primer, Basic and Clear Coat, we have significant content in those areas. So we know what good looks like.
We've got the products. We have the approvals, we have the footprint, we have the relationships. But as I like to remind my team, we still have upside in this space as well. The upside in the core markets tends to be more regional, whether it's country or region, where we may be extremely strong in some of the home countries, maybe strong in select countries. But from a geographic standpoint, there tends to be additional opportunity.
The core customer segment also creates a very strong foundation for the developing and opportunity segments, which represent another $4,000,000,000 in 600 paint shops around the world. And I think it's important to note that within the developing customer markets, we're not starting with a standstill here. I mean, we've won over $60,000,000 on an annualized basis over the last two years alone in the developing customer segment, and we continue to build that opportunity funnel. And as Axalta, we now have detailed strategic growth plans for each of these developing customers, several of the opportunity customers, where we've identified key decision makers in this space from the paint engineering, the purchasing as well as paint shop management for targeted facilities that we have. We have discrete product plans for these customers.
For many of them, we have products on test. We're building the relationships into these organizations. As you've heard from Charlie and you'll hear more from Dan, we're putting the hard assets in place to serve these customers, certainly the manufacturing facilities, the laboratories, the supply chains that we need to serve the developing and opportunity customers in a much more intimate fashion. If that's not enough, on the right side, Charlie touched on this. I mean there's a lot of discussion about where we are in the cycle.
I think you can take that a step further. When you think about global light vehicle growth, in particular, the reference points as far as the number of vehicles per, in this case, per 10 residents. Certainly, The U. S. Is the high mark.
EMEA is close. But even with GDP growth and increased GDP per capita, it's pretty easy to envision between India and China through key emerging markets that we're focused on. So just moving that from a vehicle and a half to two vehicles creates another $700,000,000 in the space. So I think we've got significant opportunity. I think in summary, given the progress that we're making in the core markets, the opportunities in developing, we've got, I think, a line of sight here with regard to product, region, approvals and content.
We'll talk a little bit more about some other, I think, strategies we have in this, but it's a very exciting space for this. I mean, as Joe said, I mean, there's tremendous energy, tremendous focus and passion on the body business. Yes, it's competitive. Yes, it's challenging. But I think it's an excellent business for us as well.
Thinking more about content per vehicle. This is a $2,500,000,000 market for us for interior and exterior component coatings. We think this is another $250,000,000 opportunity. I think it's important to note again, I mean, we're not just getting started in the space. I mean, today, our APC business, our components business is one of the top as a group, as a customer group, one of our top five customers in transportation coatings.
So we know this space. Strategically, and I think importantly here for you is there's very close adjacencies between the body business and APC, particularly with our customers in paint engineering. Those are the folks who are responsible for the approvals of our products, for the approvals of our colors as well as for color harmony between the body and the plastic components, which is very important because from our body business, we know these folks extremely well. Purchasing may be a little bit different because with some of the components business, you're dealing with the Tier 1s and 2s, not just the OEMs. I think historically, again, APC, the Plate and Components business, has been more focused on the exterior.
With our recent acquisition of United Paint, it's gotten us into the interior of the vehicle. And although I think Michael has done an excellent job with acquisitions in interior, We have very specific target M and A targets in this space that we've identified and that we're working on. So between interior and exterior, both organic and acquisitive growth, we see between $30 and $50 a vehicle in additional content in this space. So I think we've got good line of sight on how we can pursue an additional $250,000,000 in components. Commercial vehicle and HDT, you've heard a lot about it.
Again, the $700,000,000 market today, very proud to say, I mean, we've got north of 40% market share in the developed markets, certainly in Americas North America, South America and Europe. We've got a very strong position there. We have some of the greatest products in this space, some of greatest brands, customers, relationships in the industry. Our growth strategy in this area is three pronged. One is to continue to grow into the mature markets, particularly into EMEA.
Like LV, we'll continue to expand our tier business, not only for exterior and interior, but also into frames, fuel tanks and other key systems that require coatings on the vehicle. And lastly, certainly, Asia Pacific and China, a lot of discussion, I think, in our presentation, and certainly a big focus for me, with transportation and China responsibilities. But the third prong is to grow with the international brands and the local brands in Greater China. As many of the leading HCT, MDT brands and OEMs continue to build new paint shops in China, our brands, our global approvals, our relationships will be instrumental to gaining share in this market. In addition, we focused on and grown with the domestic brands in China, including Photon and Xeno Truck, which is also China heavy, as you may know it.
And the net net of this is while starting from a relatively modest base, we have grown on a double digit basis for each of the last three years despite a market that's grown less than 3%. So we feel our growth strategy is well underway. Commercial vehicle beyond MDTHDT, then we call this our trans spray business, another $2,500,000,000 in market. It's a good market for us today. We think as we take this one apart, and there's a lot of segments and subsegments, but we feel there's another $200,000,000 in growth potential in this space.
This area, again, is part of the bus, rail, private aircraft, personal watercraft and RV market. It's got a very attractive, I think, market and margin potentials given, I think, some of the extremely demanding appearance and durability specifications that you see in this space. And I think, again, M and A will be a critical component of this, particularly growing into aerospace, further into business jet, into personal watercraft and expand into key regions and country. Last slide on growth. Rethinking and reengineering the value proposition.
You've heard a lot about partnerships, relationships. You've heard about a lot about productive systems and the work that we do to ensure Axalta products are some of the most productive capable systems in the world. I think it's very important, again, in the transcoding space that service is not only a key requirement but a key differentiator. And we've taken Conquest's business as Axalta in part through service and process capability. And I think based upon our analysis, our evaluation, the future service model in this area could be adapted, perhaps should be adapted in time in part to produce new revenue streams.
So at the highest level, like to think about service. On the one hand, as you see in the lobby again, we could send in a liquid paint and kind of hand that off and good luck. On the other extreme, we could run a paint shop. And we've had customers make inquiries as to whether that would be something that we would be interested in. So obviously, from a service standpoint, we kind of land in the middle or to the right of middle.
But certainly, our strategy in the service area is to be clearly integrated into that paint shop, to be literally an extension of that paint shop where our metrics, our measurements are clearly aligned with theirs. I think it's important to note in this space that paint shop is upwards of $500,000,000 asset. A lot of focus on taking cost out, energy, labor, capital, utilities that we play often play a vital role in making that happen. In addition to support on the process side, from a product standpoint, specifications sometimes change, application systems change. Some of these changes require reformulation of our products.
Some not just small tweaks, but substantial mods which require substantial resources. So the question is, how much of this support is in the can of paint? And oftentimes, that's we feel that's an opportunity for us. And, I think when you think about the the automotive industry, 30,000 or so components and and parts going to a vehicle, how the automotive industry works in general, would a change to a part or a system is required, an engineering order is often generated, cost and time is provided, and then negotiation results. This sometimes is absent in the coding space.
And as we contemplate future service models, we believe there's an opportunity to unlock more of the value, to create, and monetize that value and and create new revenue streams beyond the can of things. So on the one hand, I can assure you that the current model is not broken. We enjoy industry leading margins and relationships, but we work to create tremendous value. And part of our challenge, our mission is to continue to retain more of that value and return that to you as owners. I'm going go through the next few slides here quickly.
A number, again, of technology changes. Again, many of them consumer driven and customer driven and legislative oriented. Many, many new players in this space. I think for the existing OEMs that you think of, many, many new entrants here, some of them coming out of Silicon Valley, the Teslas, Googles, the Ubers, a lot of new entrants and rising stars. Again, it's our opportunity to align with many of these customers early, ensure our product technology, product capability is well aligned with their strategy and direction.
There's many, many design and consumer preferences in this space. As the world gets wealthier, larger families, larger cars, SUVs, more CUVs, more pickup trucks, that's great for us because that's more paint. Within that, looking at the winners and the OEMs and the segments, it's very, very important. We often ask ourselves, is the paint shop created equal? The answer, I think, clearly is no.
Looking at the specific models and vehicles, ones that are gonna excel in the marketplace are very important. It's something that we keep a very close eye on. And I think through crash protection, pedestrian impact, you see I think some of the vehicle designs become a bit more similar. We see many, many customers starting to use coatings and paint to help distinguish their vehicles in very competitive markets. Sustainability, I think you're going to hear a lot about and continue to hear about, whether it's CO2 in Europe or CAFE in North America, driving significant change with regard to the powertrain of the vehicle.
In our space, what's affected is the light weighting of the vehicle to obtain those CO2 and CAFE requirements. So you see a lot of discussion on light weighting. Again, I think you've heard from Matt and some of the folks, you walk up to certain cars. It used to be high strength steel. Today, it's high strength steel.
It's aluminum. It's nylon. It's carbon fiber. It's now magnesium. Many of these multi metal, multi material environment creates significant challenges for the OEM, create significant opportunities for us, particularly in the area of corrosion and the area of substrate uniformity, trying to cure multiple substrates at the same temperature, continues to drive, I think, technology into our paint and how we actually deliver the appearance and the corrosion performance that's expected by our customers.
Advanced manufacturing, again, this fits into the value proposition. These are $05,000,000,000 assets, very expensive, more technology going into this area. We're continuing to invest significantly into technology, into the paint shop again. People know how to program robots, who know how to run and optimize some of the curing processes. Toyota recently did a big data case study at a conference.
The example for that case study was the paint shop. So again, I think there's opportunities in part as we align with our customers, we invest into their process engineering to optimize in the space, to take cost out, to align with our customers and continue to build our value proposition. Last slide on technology, autonomous and ride sharing. Again, Joe touched on autonomous. Very proud of our Starlight, which you saw the video on.
I think the pearlescent paints and coatings continue to grow. They fit well within the whole discussion on autonomous. LiDAR, radar cameras can see these colors. They're more reflective. They are cooler colors in the sense that they reflect infrared heat.
So they see upwards of 2% fuel economy improvement in those types of colors. Ride sharing, again, I think it's here and now certainly in the urban areas. More utilization of the vehicles, maybe shorter life, more wear and tear. But also opportunities, I think, certainly on the interior, particularly with the antimicrobial and keeping the interior of the vehicles clean. So in summary, a lot happening, I think, in this space.
It's a growing market. It's a big market for us. I think we're very well positioned with, again, customers, products, approvals, our footprint, very important. We've got very specific plans for underserved customers in the developing and the opportunity areas. We continue to look at very hard at acquisitions for M and A.
And a key point on the M and A as we look at opportunities in the interior, exterior, it also allows the opportunity for us to move into different regions that we may not have, but certainly also allows us to obtain products and product approvals for customers that are on our developing an opportunity list. So content and acquisition around that, very, very important. We'll continue to leverage our very strong positions in HDT and light vehicle around the world. Services, again, we will continue to invest in. It's a complicated process.
There's value that's being created, value to be captured. And again, I think in the end, there's multiple, multiple technology trends that Axalta will participate in, we are participating in and will be advantaged by in the end. So thank you very much. I appreciate your time and attention. And then next, I'll introduce Dan Key.
Thank you. Good morning, everyone. I'm very excited to be here this morning and appreciate the opportunity to speak a little bit about our journey on operations, procurement, and supply chain for the coming years here at Axalta. Just a quick background. I've been with Axalta for two years, and I was really excited when I got the opportunity to join Axalta because my background is in operational transformation and improvement.
And when talking with the leadership team, was clear that it was time for Axalta to take that next step. So this is actually the last function that has started on the change management process in Axalta. And you'll see in several of slides that we've got a really bright future and a lot of opportunity to continue our improvement. So let's start a little bit by just level setting where we are today. Exalta has 50 plant sites around the world, including two new ones, one that we just acquired this week in Sacramento, California that supports our North American wood business, and the second, which we're building and will be commissioning in a couple months in near Minneapolis, Minnesota, which will also support our North American wood business as well as to help support our mainstream economy refinish businesses.
When you look at the 50 sites, they collectively spend about $2,800,000,000 in cost of goods sold. We have over 6,000 plus employees in the manufacturing sites as well as in the procurement and supply chain teams. Our top 10 sites are approximately 70% of our total spend. And we still maintain a very flexible workforce, where 15% to 20% of our workforce is flexible for going up and down with volumes as they come into our plant sites. Of our 50 manufacturing sites, 32 of them are liquid sites and 18 of them are powder sites, and they're geographically dispersed to support both our largest global customers as well as our smallest regional customers.
So let's talk a little bit about the journey we're on. So as I said, I started two years ago. And when I started, the first thing I like to do in a new in a new role is actually to interview both internal customers and external customers and my team to find out what are the opportunities, what are the things that we can do differently to improve ourselves. What I found was a very strong heritage from DuPont days of safety, environmental, quality, and really focusing on the high end refinish markets. But what I also found is I talked to the business leaders and as I talked to my team was that we were very inwardly focused, functionally driven, siloed thinking and decision making, and really focused on incrementalism.
When I talked to the business leaders like Steve and Mike and Joe, it became apparent that we needed a different future state because we weren't going to stay just in the high end refinish market. We were gonna grow and double in the industrial market, as Mike mentioned earlier. And to do that, we had to become more customer focused, more results driven, really focusing on major step changes. And I like to tell my team one I I like quotations, and one of my favorite quotes from my team is the light bulb wasn't invented by continuously improving the candle. So we had to step out and really look and think differently about how we were going to service our customers as all three business leaders mentioned, how did we how do we get closer, how do we service them faster.
So we set out two years ago on seven major priorities, both for operations, supply chain, and procurement. And I'm gonna go through each one of these, but the seven opportunities are we needed to restructure our leadership team. We needed to focus harder and better on quality and delivery. We had to develop a fit for purpose cost structure. We have to adjust our footprint, reduce our costs.
We also had to install and exalt the operating excellence system, something that gave us structure and decision making, which I will explain and give you a couple examples. And we had to continue, as Robert and Charlie both said this morning, on investing in high return capital projects and using our money wisely. So let's talk about each one of these opportunities. So we restructuring our leadership, why do we have to make that change? We had some really great people that came from DuPont, really great people, but they were very supply chain focused.
They were really big batch focused with the again, with the high end refinish. And they were used to unconstrained capacity with buffered inventory. Unfortunately, as we grow our business in industrial and as we look at our as we grow our businesses transportation and the mainstream economy market, that's not going to help us. We've got to be faster, more flexible and we have to be able to make quicker decisions. So in the last eighteen months, I've changed over 70% of our operational procurement supply chain leadership team.
It's been a long journey and quite frankly, in all the transformation I've done at Honeywell, at Sigma Aldridge, at Hexion, this is the biggest leadership change I've ever had to make in a transformation process. So what did we go out and look for? We went out and looked for people who are operationally excellent, who could get results, who could drive decisions, who are critical thinkers, who are leaders that could take us on this journey for improvement and transformation. But most importantly, we needed people who are servant leaders and were customer focused. I'm really excited about all the new people on the team.
They have a great background, not all of them from the chemical background, not all of them from the paints and coating industry, but all of them great leaders who are to take us on this journey. As we are making this change with our leadership, we couldn't forget the day to day operations. For the next few slides, we're going to talk about how we have transforming for the last two years and where we're going in our transformation in the day to day operations. The first thing that we needed to focus on was how did we improve our quality and our delivery to our customers. One of the biggest things we needed to focus on was right first time batches, basically making the product the way the customer wanted right the first time.
And this is the very strictest of definitions, the right raw materials, the right quantities, the right process, as well as meeting the customer specifications without any adjustments. It's the hardest definition to make, but at the same time, if we can meet this, we'll meet our customers' expectations every single day. I'm proud to say that in the last two years, we've improved our right first time 67%. And we've done that by focusing on our physical properties like viscosity, solids, particulates. And with that, we've reduced our serious customer complaints in the bottom left hand corner by 25%.
And a serious customer complaint is a line shutdown, is a major claim, or is a major product recall. Now we're not done. We're not anywhere where I wanna be, and our goal is to be 95% or better and write first time with zero serious customer complaints. So in the next two years, the technology team and the operations team are working on our next big opportunity, which management. We're great at color, but we have a lot of variability when we make that color, and we have to take that out.
And so we have a dedicated team of six engineers working on this right now to take the variability of how we make color, and that will help our customers and it will help our operations make right first time production. While we were working on quality, we couldn't forget about cost. And one of the great things about all the acquisitions that we've done is we've had a chance to learn from all of these sites that we've acquired about their cost structure. And how does that apply to us? So in the chart here on the left, we're we're showing a representative sample of six or seven sites plus our delta average on our plant fixed costs, so the total cost in a plant divided by the number of liters that they make.
The first six bars are very low cost, world class competitive in their individual markets. Five of the six are acquisitions. One of them, the second line from the top, is actually an existing site. The bottom two lines are our delta average and one of our top 10 sites. And you can see that the one of these sites, the top 10 sites, is actually twice what our goal is.
And our goal is, as you've heard from the business leaders, is to have a fit for purpose competitive cost structure. So what do we gotta learn from these acquisitions? We have to learn about emerging market cost strategy. Basically, spend a dollar when you need to spend a dollar, but don't spend any more than a dollar. And really look at the value of every dollar we spend at at each one of our sites.
We also have to be local for local. We have to be closer to the our customers. And one of the biggest things, which I'll talk about in a couple of slides, is our ratio of employees who make paint to employees who don't make paint. And we really got to get a much better ratio and more people involved in the paint making process. But the last thing I want to leave you with on our cost structure is we have to reconfigure how we look at our footprint.
And we're gonna be going to a hub and spoke model that I'd like to describe to you here. What is a hub and spoke model? A hub and spoke model is really taking advantage of a few large factories to make our large semi continuous batches for our light vehicle customers, for making resins as a key raw material for making the final paint, or even our dispersions for our color dispersions for making our final products. The spoke sites are smaller, more flexible sites that are agile, have more paint making employees and are in lower cost regions. We're talking about sites that are 50 or fewer people at each site.
As an example, the two sites I just mentioned earlier, Sacramento and Minneapolis, each one of those sites will actually have less than 20 operations people, but each site will make more than 1,000,000 gallons per year on a single shift each and every day. So how do we take what we've learned from our acquisitions and apply that to our existing network? Well, we started in 2017 with this hub and spoke concept by actually closing one of our small resin manufacturing sites, moving the resin into a large hub site in North America. Save us over $2,000,000 a year in fixed costs. So as we start this transition and we move into this hub and spoke model, it'll give us much more flexibility closer to the customer at the spoke sites, but maintain our integrity, our quality, and our process control for our large global sites.
As we look at moving into the into this hub and spoke, we also have to think about our staffing. And again, one of the great things we learned from our acquisitions is what's the ratio of basically the non paint making employees to the paint making employees. This graph is exactly the same graph as before, except now it shows you basically our indirect population to our direct population. The smaller the number, the better. And you'll see that the six sites on top, five acquisitions in one of our existing sites have very low ratio of people who don't make paint to people who make paint.
Or to say it differently, more people on the shop floor, value to the customer, making, filling paint, and shipping it every day. You can see our results average second from the bottom, and then our new site or one of our existing top 10 sites being almost three times some of the recent recent acquisitions. We've got a lot of work to do here, which is exciting to me because we have an opportunity to really focus on reducing our staffing. One of the things I did not mention on the slide before is we have 50 sites today. In our hub and spoke model and with our new staffing model, I actually expect us to be 70 or more sites by 2020.
Now having more sites immediately invokes more costs. I actually feel we'll be below our current plant fixed cost today because we'll be in lower cost parts of the regions, we'll have smaller, more flexible sites, and we'll have less overhead to deal with at the bigger sites. So we'll have a bigger footprint but a smaller total fixed cost. So while we were doing all of this, we also embarked on installing our Exelta operating excellence system. So why do we need this system?
Many of you have been around, in the chemical world know about the Honeywell operating system, the Toyota production system, the Caterpillar production system, maybe the Danaher business system. But we need an ecosystem to be able to structure how we solve problems. And that's really what these systems are about. How do you structure a process to find problems when when they occur and fix them when they occur? Solve the problems today for today.
So this is a structured approach that we are installing at four of our sites today. We've deployed at our Wuppertal, Germany site, our Mount Clemens, Michigan site, our Gunkhensdorf, Austria site, and our Saba, India site. We're leveraging the knowledge of our employees to learn from them each and every day and having them solve the problems for themselves. I'm gonna give you a couple of examples of quick wins that we've had just in the last few months. But if we do this right, we will capture a lot of value in right first time, reducing cycle time, and shipping more on time and full to our customers.
So let me give you two examples. The first, this is from our Wuppertal example. And in the bottom left, the pyramid really shows how decisions should be made in a plant manufacturing environment. They should be made at the floor level. So the the gray box on the bottom is our level one meeting where the shifts are talking to each other, and they're deciding what are the issues today and how do we solve them.
If they can't solve them, it should go to the second level that day, that morning to the supervisors. And if they can't solve it, then it should go to the plant manager. But the objective is fix the issue today. So on the right hand side of the slide, I wanna give you one specific example at our Wuppertal, Germany site. Our employees found that they were working a lot of overtime.
They were complaining in one of our filling areas, and we said, okay. Let's find the problem and let's solve it. So they took it upon themselves and got the data. They found the problem, and they fixed the issue. And in less than thirty days, they improved their daily daily fill rate by over 11%.
And the back orders came down by 70%. And now they're working basically no overtime, which in Germany, that's what they wanna do. So this one small success in a thousand person site at at Wuppertal, Germany has spread like wildfire and not everybody is trying to solve problems so they don't have to work anymore overtime, which is great for them, but more importantly, it's great for our customers and it's great for the shareholders. A second example, which I'm really proud of is in Jiadin, China. And the reason I'm proud of it is because in Jiadin, we haven't even deployed yet.
So we have a brand new water based facility that we built just three years ago, and they were struggling with right first time. You can see a common theme. I love right first time. And, they were struggling with Right First Time. In fact, they were the worst plant two years ago as Right First Time.
So I really challenged them last at my first visit in Jadin to have really focused on trying to fix this. The plant manager learned about AOE. He took back some of the basic principles. And needless to say, the team has improved their right first time by six fold in the last two years with the bulk of the improvements in the last six to eight months. While doing that, they've been able to reduce their cycle time in the bottom right hand corner by over 50%.
So they're making it faster, they're making it better, and we're able to capture that additional capacity with new sales to both our light vehicle and our refinish customers. So AOE has a lot of advantages, and we'll be deploying throughout our entire fifty site network over the next three years. So Robert and Charlie both talked about deploying capital, and I want to give you four examples of where we deployed capital effectively in the last twelve months. The first is resin capacity. As we look at resin capacity, I mentioned earlier, we were able to shut down a small site and move it to much larger hub site.
Well, that's this is the example. We spent $1,000,000 to basically get greater than $2,000,000 of savings per year. It is an easy project. It took about three months to spend the $1,000,000 to decouple and and give ourselves more capacity at the hub site, and we realized the savings almost immediately. In fact, three months ahead of when we thought we would.
The second is one of my favorite sets of projects that I tell my team to bring to bring to me all the time, and that's the installation of a bulk tank or the retrofit of a bulk storage tank and a pump and a few controls. So for less than $300,000, we can gain over $350,000 in raw material spend just by changing from receiving materials and drums to bulk. Simple process. I tell them to bring these to me all the time because less than a year payback, we get the savings right away. The third is example is insourcing.
So for modest investments, we can bring complex small volume resins that we need that are critical to our products and technology. We can bring them in and save as much money as we would spend on just small debottlenecking, usually piping a few controls and maybe a pump. So, again, great payback on this project, and it really helps us secure our supply for our customers. And then the last is automation, and we call it a manifold. It's in house design, in house manufactured.
We design the control systems, the valving, the piping, and everything. And for, again, a modest investment of $600,000, we can improve how fast we measure our liquid raw materials, how we dispense them, and how they go into our making our paint. All of that improves our right first time. And when you think about right first time, it's not only making a perfect product for the customer, it's make it's also not making bad quality. It has to be reworked later.
So all of these have great paybacks and all of them are where we're investing our money when we're not investing in the larger projects that Charlie had mentioned, like our Global Innovation Center, our Nanjing site in China. So let me switch a little bit to procurement and give you a couple of examples of, complexity reduction. The first just kind of grounding ourselves on our procurement team. We have 130 procurement professionals that manage over $2,000,000,000 in spend, most of it going into cost of goods sold, some of it into SG and A and of course our IT functions. Over the past two years, one of the key figures on here is at the bottom.
We've reduced our reliance on single source suppliers from thirty five percent two years ago to 25%. We still have a ways to go, and we're gonna continue to fight and go after this. This is such an important topic from my perspective that we hired last year four individuals, and their sole responsibility is to find new suppliers and to help develop them with technology and operations. We have one person in North America, one in Europe, and two in China. And I'm happy to say that they have already brought over 10 suppliers to us that were qualified today, mostly in China, but they were qualifying today to help us to diversify our single source and provide opportunities for more suppliers for our raw materials.
One of the biggest questions I got this morning and I'm sure we'll continue to get is raw materials in in 02/2018. And I just wanna touch briefly on this, but any can of paint, and sorry, Joe, this is your can of paint. When you look at the solvent borne refinished paint, there are five primary components that go into the paint as you can see on the left hand side of the screen. All of them are experiencing inflationary pressure this year. And the two primary reasons that we're seeing inflationary pressure are oil prices.
So the the cost of Brent crude oil right now is in the mid sixties. It actually touched 70, late last year, through very briefly and then and then dropped back down to about 64 this morning. And the second is really, has to do with supply. We're seeing a shortage of supply and an increasing number of force majeure letters. In fact, we're averaging about one letter a week this year where companies are claiming force majeure for a variety of reasons.
The majority of them have to do with just plant turnarounds, plant maintenance, coming back up online and not being effective in that. But some of them, as as many of you have heard in the past, are shutdowns and governmental regulations are primarily in China. There's over 20 titanium dioxide suppliers, small suppliers in China that were shut down in the last six months, and none of them have yet to come back online. Although we expect some to come back online, have not yet been able to cross the governmental regulation threshold. So we're gonna continue to see governmental pressures in China or governmental pressures around tariffs and and trade wars to continue to put inflationary pressure on our key raw materials.
So what is our procurement team doing? Well, I'm gonna look through all these, but a couple I wanna specifically point out. One is we continue to focus on modeling our raw materials, trying to get ahead of when there's going to be a force majeure. So while we have had all these force majeure letters, not one of them have stopped us from being able to to get product and to make product for our customers. None of them have shut us down to where we had, to claim force majeure, and that is all because our procurement team is modeling this, checking the markets, talking to our suppliers, and making sure we're ahead of the curve.
So a key component for us this year and next year is security supply. It's equally as important as the raw material pricing, but for those who have raw material supply, you'll be able to make and sell product. And that's our one of our major goals for the next two years. The other things are on the right hand side, which is business collaboration and working with our technology team and what we call our match payers, really finding new solutions. How do we use different raw materials?
How do we qualify new suppliers? And how do we reduce the complexity of what we buy and how we buy it? And I really want to share with you three success stories that we've had in complexity reduction. So working with our business teams and working with technology, operations and procurement, we've been able to save quite a bit of money in just reducing the general complexity of what we do every day. The first example on the left hand side is we were buying dilute isocyanic timers.
I'm not gonna explain isocyanic timers, but suffice it to say, we were buying specialty diluted products where we were asking our suppliers to basically take a a pure law form of raw material and dilute it on our behalf to make it easier for us, what we thought was easier. What we did though is we basically said, okay. Go ahead and charge us more for doing our work for us. So working together with the teams, we said, look. We can modify our formulas, and we can do the dilution while we make the paint.
And that's what we did. So now when we went back and we're not asking for a specialty product, we're asking for something off the shelf, we invited more suppliers, and we were able to get a better price, resulting in a $2,500,000 savings per year just on that one particular raw material. The second, one of my favorite and one we're continually working on, Barry and I both Barry Snyder and I both work on this quite frequently is our specification ranges for raw materials were different by region for the same raw material. So we had a solvent that we bought in every region of the world, but when you looked at the specifications, only about half of the specifications lined up by region. So, again, we were asking for a specialty solvent when in fact that particular specification, that particular solvent, we could open it up a lot more, get more overlap between the regions, and really make it more of a commodity buy.
So now you invite more people, it's not as hard to meet our specifications, and we're not going pay a premium for them to self select a smaller range of specification. That one saved over 1,000,000 point dollars a year. And then the last one was we were buying a UV light stabilizer from a company. We thought we needed that particular product because of specific patent they had and the specific quality they had. We found out the patent expired, the generic, like in the drug world, the generics were as good or better.
We focused on opening up the specification range, not sacrificing the quality. And again, at the end of the day, we were able to save over $4,000,000 a year just by looking at it and saying, look, what's on the shelf? How can we buy on the shelf and make it work for us? There's lots of these opportunities out there that we gotta continually focus on between technology, business, our procurement team, and our operations team. So all of them are in the room, and we're all working together to to make those savings happen.
So summary of key messages. First and foremost, again, we're on a journey. This has been absolutely the biggest changeover in leadership I've ever had to do. So I'm a little behind where I'd like to do, but I see great opportunity as we move forward, and I know that we can get to where we need to go. We're leveraging a legacy of high quality, high safety, and we're adding new focus to really around productivity, cost structure, competitiveness.
We're gonna continue refining our processes and our footprint. No one should be nervous or scared because I'm certainly not as far as going to 70 plants around the world because, again, we're gonna fix our our cost structure. And as Mike Cash always tells me, we gotta be close to the customer and fast and flexible to the customer and deliver in a short amount of time, and that's what we're going to do. We're going continue to focus on higher capital projects that I the examples I gave you, develop our suppliers, continue to bring in new suppliers, and most importantly, to reduce the complexity of our raw materials, our formulas, how we make products, make it a lot simpler for us to satisfy our customers. So as the team in the picture, which is a brand new wind force and light vehicle in, China at FAW, DW, and Jingdao, As they have thumbs up, the future is bright for us.
I'm excited to be here and to help the team transform and get us to the next stage of Axelta's future. With that, I think I'll turn back over to Chris. Thank you. Thank you, everybody. I really appreciate your patience, and we're going to now have a Q and A session for a little while with the team.
Everybody could come up, Charlie and Robert are going to come up on the stage here and our other four speakers will be on either side. All right, great. And we have a couple of mics out of the back. We have one question from the back. Let's get going.
This is Chris Evans, Goldman Sachs. I just wondered, Robert, if you could give us a little more specifics on the pricing trend that you cited in the first two months of the year and how does this compare to how raw materials have been moving over that time period? Thanks for the question, Chris. I think as highlighted, so far in the first two months of the year, we have seen price capture, in particular, in the Performance Coatings side of the business. We put through a number of price increases, both in refinish as well as industrial in all four regions of the world in response to the increase in raw materials that Dan highlighted and that we've been highlighting since about the second quarter of last year.
So that is going well. And I think also, as we explained before, I think for the on a full year basis, we'll need a combination not only of those price increases, but we'll also need additional cost savings. And so we've put our foot on the gas even more with our Axalta Way Phase II project as well as other initiatives inside the company. From the number one Chris in the room. Thank you.
All right. Can you just give a little more color around the $200,000,000 in Axalta Way cost savings? So just how we should think about the various projects you've identified or Dan's team has identified? When we should start seeing the benefits and results? I think we probably already know already.
Is it evenly distributed per annum? And then just any other color on your base assumptions around just core inflation? As we talked about, we tried to show in the one slide in the presentation today kind of the nature or some of the components of it. And Phase two is really a number of things. It's the ramp of the complexity reduction project that we've started.
I think Dan tried to give you a feel a little bit of feel for that. But essentially, we had the base chemistry from the Herbert's acquisitions, plus we had the Herbert's acquisition back in 'ninety nine that DuPont made, then we had DuPont's base chemistries multiplied by four given that R and D was done on a regional basis. So in some cases, we're managed by different base chemistries that underline our entire portfolio of products. And the plan is to move, and Barry and Dan are leading this effort together with the commercial teams, moving to one, at most, base chemistries that underline our entire product portfolio. That process takes a significant period of time.
And but once it starts to ramp up, it's really some important savings. And Dan gave a few examples of that. So that complexity reduction in dealing with that differences in underlying base chemistries, that would be the first bucket of opportunity. The second bucket has to do with the manufacturing footprint and the manufacturing strategy. And given some of the opportunities that we have there, both in terms of being more efficient at our larger plants and locating some of our smaller plants in lower cost geographies within each one of the regions and being closer to the customer, when you optimize across that, that also creates opportunities.
But it's not just the plants that we're talking about. It's the physical asset footprint of the company because it's plants, it's warehousing, it's distribution, it's our sales offices. And we now that we have an operations as Dan said, significant changes made in the operations team, and we had to wait for many of those people to be in place before we could really move on making some of these adjustments that we wanted to make. And they've started to do that. So that's another area.
The third area I'd highlight is SG and A and overall administrative costs. We currently run at about 31% of sales in SG and A. If you look at our closest large competitor, they run at about 28%. If you look at one of our competitors who was recently acquired, we estimate that they were running at about 28% as well. So it's about a 300 basis point opportunity that we see in SG and A that comes from delayering the organization but also comes back just from a value chain perspective, how we manage the business, in particular, in operations and how that affects all areas of the company.
So that would be kind of the third major area within Axalta Way Phase II. In terms of the timing, we expect it to ramp up during the four year period. We're not going to provide kind of a year by year number at this point. And then regarding inflation, we continue to expect, on a fixed cost basis, 3% to 3.5% fixed cost inflation each year. This year, we're projecting about 10% raw material inflation.
That number, depending on what happens with the market, may end up being a little bit too conservative and too high a number, and it may be a little bit less, but we went the conservative route this year. And I think over time, we'll need the Axalpha Way II to help offset some of that inflation, but also it will generate some important net sales. Mike, over there? Dan Jester from Citi. Maybe just a bigger picture question that came up a couple of times in the presentation today about the switch from solvent borne technology to waterborne technology.
I think that's come up for a couple of years now. Can you just talk about maybe what inning we're in, in China and maybe some of the other emerging markets? And are there end markets in which you're seeing the transition faster? And are there some end markets which are maybe lagging that could pick up over the next couple of years? Yes.
I'll make a couple of comments on that. Water, as you correctly pointed out, the whole waterborne conversion across all these different segments has been going on for some time, started twenty five years ago, actually, some segments. What we see right now though is that we've certainly seen an acceleration of waterborne in China and in Asia Pacific overall. And I think China started several years ago when you look at some of the industrial segments, the newer OEMs, the light vehicle OEMs, now it's moving into commercial. And in the past couple of years now, because of direct pressure from the Chinese government in the bigger cities like Beijing, Shanghai, almost a rapid conversion now of people to waterborne.
So we've definitely seen acceleration in China. But now, I would say in the past twenty four months, Japan, Korea, Thailand, Southeast Asia and even India, we're starting to see a lot of renewed interest in moving to waterborne. So I think we'll continue to see it go quicker. And again, sometimes driven environmental and sometimes just productivity. As people see what they can do with waterborne, they learn they learn how to handle it.
And, you know, once a painter kind of moves over to waterborne, whether it's in refinish or whether it's in some of these industrial markets, they very rarely ever go back to solidborne because they learn how to do the color match. They go faster again, and they can go a lot faster. I think the whole waterborne conversion will continue. It will continue to accelerate in China because the pressures that they're all under. In Europe and in North America, in the automotive markets, it's fairly well balanced.
North America still has a big solid born market in refinish, and I think that that will stay that way. Where we see shops in the OEM market excuse me, in the refinish market in North America convert is when an MSO buys them, they immediately want that shop to be as productive as it can. So they'll move off of a solid born product or maybe a lower end water born, and they'll go to the most because, again, price is not the issue. As Joe pointed out, it's really more about productivity, get the car in, get it out, get it done right the first time. As shops get bigger, they move.
And in The U. S, as they move to product as they get productivity demands, they'll move. Europe is pretty well done in the Western Europe world. Eastern Europe, Southern Europe, we think will stay solid more for some time now just because of relatively low productivity disruptions. In the industrial markets, as Mike Cash mentioned, I think you'll see people, where they can, they'll move to powder because it's more environmentally friendly, field applications.
But clearly, in industrial liquids markets, people are looking for waterborne solutions, whether that's coil, which we're in. Wood has already got waterborne products. And I guess everywhere people can, they'll continue to move that way. Now whether that means the waterborne market continues to grow double digit like it has or does it accelerate faster than that? I think that remains to be seen, and it will just really be segmental.
Jeff? Jeff Zekauskas at JPMorgan. Two part question. The first part is, I think you said that your free cash flow target was something like 45% to 55% of your EBITDA. Your EBITDA is about $1,000,000,000 So what you're saying is that there's $100,000,000 variance in what your free cash flow might be in any one year.
Why is that number so large? And second part of the question is you're a 4,000,000,000 to $5,000,000,000 company. You're onethree of the size of Sherwin Williams or PPG. How do you reflect on that? In other words, so many of our companies say that scale really matters, that raw material purchasing synergies are tremendously important, that financial returns rise as you're much larger.
Do you find yourself having very, very large longer term targets in terms of profitability improvement? Do you find yourself at competitive disadvantages because of your size? Can you just reflect on the size issue? So on the first one, Jeff, I think the numbers that we put up, the 45,000,000 to 55,000,000 it's meant to be directional. It's not meant to be an exact it's not meant to be an exact number.
And that is cash flow from operations less CapEx. So you can see variability in the amount of CapEx. You can see variability in the amount of working capital and also other related working capital items. So I wouldn't necessarily bring it down to that final point. It was more a directional trying to provide a directional sense of more or less how much of the EBITDA is actually converted converted to cash flow.
And in the case of this past year, for example, we had the $30,000,000 charge. The magnitude of anything you may be doing in a way of special restructuring and that sort of thing can drive some differences. We weren't meant to be or attempting to be overly precise. Second issue, I think it's always a fascinating point because if you're in specialty chems or in commodity chems, absolutely size matters, depending on what you're in. I think coatings is a very different space.
I do think you need to be a market leader to be competitive. So whether that's in a region or whether it's globally in a segment, being number three, four, five, or six, that can absolutely be at a disadvantage because you've got to have the critical mass, you've to have the scale. In many segments, you've to have the distribution network. So if you look at Refinish, for example, in North America, there's two of us that dominate that space. And why is that?
A lot of that is because of products, absolutely, the R and D behind it, our relationships, but it's also our distribution networks and the ability to serve that marketplace. So I think whether you're $15,000,000,000 in coatings or $1,000,000,000 doesn't actually really matter because we actually see relatively small companies in coatings that do really, really well, but they stick to their knitting. They're in a particular niche, in a particular segment, or a particular region of the world. So I think you've got to pick your battles very carefully. And in fact, there's some we get asked a lot about Africa.
And when you look at a company like us, we have no business being in Africa except around certain key OEM customers and certain key industrial customers. Other than that, it could be a for us. So I think you have to pick your battles real careful. I also think that there's no parallel between being on the paint side or the coating side. So in other words, GECO affords you no competitive advantage over in the coding side and vice versa.
I think it's all, Jeff, of it. It's a good question. It's probably the number one question we always get. And I think it's all about being a leader in your market, technology size, picking your battles and picking them carefully. Because again, we go up against, in some regions, really small competitors who are really, really good, but they're very, very focused on what they're doing.
I think on the raw material side, and especially as we move to waterborne coatings where there's more differentiation, there's less solvent, there's less bulk buying of any compounds, I think the raw material competitive because none of us are back integrated really, we all make our to a large extent our own resins, and no one's back into TiO2, no one's back into epoxy resins, for example, in any large scale. I think all of us prefer to use our capital downstream. As long as that stays relatively balanced among the big players, I don't think anybody has a competitive advantage in raws. You know? And, again, even on the TI two side today, you know, guys like Mark aren't they're not playing favorites with anybody.
So I think that over time, you have to you you maybe in one particular raw, you could get a competitive advantage somewhere, but I don't think that being bigger doesn't give you much leverage with most of these raw material providers at this point. Kevin? Kevin McCarthy, Vertical Research Partners. As you know, electric vehicles continue to penetrate the market fairly rapidly, and some people believe they could represent a double digit percentage by, say, 2025. And so in that context, I'm curious, how does your content per vehicle compare in electric vehicles versus combustion engine vehicles?
Is there any appreciable difference there? And related to that, is there any difference in the margin opportunity as that market trend continues? I don't know, Steve, you might want to comment on overall content. I think from a content standpoint, mean, I think it's important to note that you say electric, and I think when you think about electric versus a hybrid, there's a big difference, right? There's many, many permutations of hybridization, which are relatively more prevalent.
I mean EVs, think in North America, sold 174,000 of them last year, 1% of the market. So even if it's a big growth hacker, if you will, starting from a really small base. I think when you think about the hybridization, I think certainly on the exterior, probably not a lot of change. Again, you're gonna see probably smaller vehicles on the Class A surfaces. Again, lightweighting will be very important.
So they'll be pursuing some of the more exotic materials. I mean, again, maybe the carbon fibers, maybe more plastic and and SMC and things like that. So there'll be a continued push, I think, to develop advanced coatings that cure at the relatively low temperatures. Interior, probably some changes. I mean, I think you see more of the the iPad type dashboard.
I mean, certainly see that on the Tesla. So a lot of the components that you would normally see on the instrument panel, there'll be less of that. I think certainly in Mike Cash's area, he spoke briefly to Tesla. Know, again, they're just you know, the electrification, the motors, whether it's to to power certain components, the seats and the windows and and all that stuff. I mean, there's been tremendous growth in electric motors in the car.
And I think as you use electrification to power the car, there'll be significant upside in that area for us. Yes. I think it's more about, as Steve said, I think it's more about lightweighting right now than it is content change on these vehicles. Vehicles will get smaller because of electrification. If I was painting radiators, I'd probably be worried.
So we don't we don't do under the hood and some of that. But I think that I also think, Steve, over the next couple years, we'll do a couple small acquisitions on interior to make sure we stay in front of all this. But right now, the big change is on just going to lightweighting. And where's all that gonna lead and how you do the prep and the color match? That pulls the APC players in more.
So it's less about dipping a car body anymore and all that goes on there. It's more about all these parts where they're coming from, who's painting them, and these shops being right there. So when they put that car all together, all the color matches. Even more importantly, that all the finish looks the same. And, you that was a big issue we had with the Corvettes over the last couple of years.
We just did a brand new paint shop with them in Bowling Green because they had all the different angles. The car, even though we do all the paint on them, just didn't look good. For the paint shop, we spent a lot of time on those surfaces and redesigned that paint shop with GM on how do you make this car look consistent and also as the light refracts off all these different plastic pieces, making you get a lot better finish. And I think that'll be the trick on lightweighting is getting these cars to look with to have that consumer feel as you go to more plastics. Not just plastics, but you saw the breakdown of all the different parts, high strength steel.
It's Matt Kreger from Baird. So given the substantial raw material cost inflation that you've seen across your industry over the last two years and then the pricing initiatives that both you and the industry have undergone to offset some of that. Have you seen any conversion of your customers from premium products over to maybe mid tier or lower tier economy products? Or do you foresee any risk of that happening as the absolute price of these products goes higher along with your price increases and the raw material costs underlying them? Let me I'll comment on a couple of segments, and maybe Mike Cash can comment on industrial.
When you look at the OEM side, we've certainly seen a couple of competitors try to substitute with lower quality resins and lower quality pigments. In some cases, we've gained business because of that. So people are experimenting, trying to figure out, okay, if people want lower price or if these particular additives are going to go up, how can I compensate for that and not necessarily have to push that through? But I think that's been relatively limited. It hasn't been driven by the consumer so much as it has been from the paint manufacturer themselves.
In the refinish business, none. We don't see people switch back and forth. They're either in one bucket or the other. And I don't think they would switch off the price of a paint goes up 4% or 8%. That's not going to cause a body shop or a distributor to go switch.
The switching costs are too extreme and the retraining and everything else. Now you might want to comment in the industrial sector on liquid and powder. And as these guys get these pressures, what you're seeing? Yes. I mean, we do see some.
I think maybe the approach we always take is that we're consciously doing that with our customers. So if together we make a decision, we need to look at how we can take some cost out of the product, how we can come up with more economical product for them or move them to a more economical product. It's always done very cooperatively. And certainly, as we both look, us and our customers both look at the inflation that we're facing together, there are other things that we're looking at beyond the content. So are there ways that we can buy in bigger batches?
Is there a supply chain savings? I mean there's a whole myriad of things that we try to work with our customers on to help both of us. When you get a rapid environment like this, my experience is, you have a what you have to watch for is a competitor in a certain region who tries to take advantage of it. They'll try to come in with a lower price, knowing full well that six months from now, they're going to have to raise price. But today they can try to gain share.
And history shows that really doesn't work very well in chemicals and in paints, but you'll still still from time to time will have a competitor try that game. Less and less so buzzing the big multinationals and more and more around small regional player. Certainly, in the past year, we've seen that in powder in China where people were betting on the price of epoxies going back down, so they would reach in and try to grab share at a lower price than you were. And, again, you know, our general view, there is there is a view out there. People certain people believe raws are gonna go back down next year or the year after, and I don't believe it.
And I I have the fortune or misfortune of also being engaged in the oil and gas industry. And I just don't think anything could happen in the oil and gas industry. But I think these raws are going go back down to where they were anytime soon. I think that's a hope and a dream more than a fact right now. There are some people betting on that in their pricing.
I think that could come back to haunt them as we get into 2018, 2019. Matt Dio from Vertical as well. So in Refinish, MSO consolidation has been a tailwind for the business, but it would seem like there has to be a point where these MSOs get big enough to significantly increase their firepower and maybe impact your pricing strategies in the business. So I mean do you see this as a risk? Or do you have any thoughts around when something like this could happen?
Yes, Joe, you might want to Yes, sure. Take your stand up, Joe. I'll take Glenn. Yes. So yes, we're going continue to consolidate.
Yes, they're going to continue to grow. As a couple of us were talking earlier, they are a very sophisticated buying group. They're very sophisticated folks in their organizations. But as Charlie mentioned a few minutes ago, price is not a huge driver for them. It's about productivity.
So as they continue to buy these shops, their main goal as they buy them is to improve the productivity. That's where their payback comes from. Their payback doesn't come from necessarily coming in and lowering the paint cost. And that's where you see that conversion also happening to waterborne. They come in and buy a solvent borne shop, we're in there with them immediately converting it over.
So I'm not sure that we're going to necessarily see an issue in the way that you've laid it out. We'll continue to work with them and bring tools to them to help them on that productivity side as well as Robert Roop and his team continuing to make more and more innovative coatings to help them as well. Yes. I think the risk would be if you ever quit working with them on productivity, then I think you start to look like a commodity to them. But as long as it's a caliber in The U.
S. Or if it's one of our groups in France, for example, every year, if you can continue to show them how they're using less paint per repair, their technicians are going faster, better right the first time, I think that they're fine and they don't focus a lot on the price. They already enjoy pretty big discounts, so I think that they look at it. On an average repair, for example, The U. S, I think paint and sundries is about 4.5% of the repair costs.
They're able to charge that out at about eight to 9% to insurance companies. So paint and materials is an important part of that repair on them being able to generate a profit. So we are an important part of them on always helping get that repair through there faster and make a higher margin. But I think the total cost to them, if you look at 4.5%, that's not just the paint, but that's the sundries. Maybe they could save oneten here or oneten there.
That's not very high on their radar screen. Right now, the MSOs, frankly, their battles are being fought around parts, and paint's not necessarily on that high of a radar screen. Parts cost, the OEM's trying to drive more value there, push out the non OEM. You know, when I if I sit down with a a big, MSO right now, 90% of the conversation is around all their parts issues, getting the right parts, getting the right parts the first time, getting them to fit. And if you paint a part that didn't fit, then not only did they waste the paint materials, but they also wasted the parts.
But I think we have to continue, as Joe said, to be productive and continue to innovate with them and help them grow their business and work faster, better. One more maybe, and I think we're going to head off to lunch. Yes? Alex, you were interested. I just wanted to follow-up on hub and spoke system.
Is there any appreciable CapEx associated with this transition? CapEx associated with hub and spoke manufacturing system transition to a larger number of sites. Yes. So the transition will a gradual transition. None of these transitions are quick.
And terms of the guidance of roughly $150,000,000 a year in CapEx for the next several years, that will cover the needs that we've laid out and discussed in the presentation. I think at this time, we'll cut it off since we're a few minutes over and we have plenty of opportunity for more questions over lunch. So we welcome you to join us for lunch upstairs on the lobby level. We'll take the elevators up. Sorry, Maggie.
Straight through? Thank you. Okay. I thought it was upstairs. We're gonna go straight through.
Please join us, and thank you all for attending. Really appreciate it.