I agree that this is a simple paint failure.
Why does it look red underneath? Perhaps a lacquer-based automotive primer-surfacer was used. I knew some guys that did this for a while. I don't know if any still do. This type of primer is not considered suitable for high quality work, even by the body shop people I know. It's for 'down and dirty, get it out the door' work. It dries incredibly fast since it's lacquer based, but it tends to absorb moisture, and it shrinks, so it may have contributed to the topcoat failure.
High density urethane is usually very forgiving. It doesn't rot or absorb moisture. It is sensitive to sunlight when left exposed, but even then it doesn't deteriorate all the way through. Only the surface appears to degrade. I left samples outside for a couple years once to test them. I've never seen it degrade more than a sixteenth inch or so into the surface when left unfinished. Most paints can be used on it as long as they stick well and hold up
Everybody has their favorite method for finishing. Many swear by water based paints. FSC-88WB by Coastal Enterprises is what Coastal recommends for Precision Board (
HDU Primer/ Filler - Coastal Enterprises - Precision Board Plus HDU). It's a high build acrylic latex primer that seems to work fine. I preferred their FSC-88, which was oil based, but I don't think they have made it for some time. You could wet sand it with a mix of paint thinner and water and the holes would fill beautifully, making a glass-like finish possible.
Sign Arts Products, the makers of Sign Foam, recommends an automotive product: polyester primer/surfacer (
Dimensional sign making). I use a version of this that is made by Matthews. It's called 6001 Polyester Primer Surfacer (
Polyester Primer Surfacer 6001SP). It smells just like Bondo and was developed by Matthews for HDU. It has a very high build, you can roll it or spray it, it sets up quickly and sands easily. You can get a glass finish without too much problem if that's what to are going for. Put a little in a cup and let it set up and you can use a knife to fill holes and dents.
If I were going to refinish lebowitz's sign pictured above (without actually seeing it up close), I would remove all the loose stuff and sand thoroughly. I would fill any imperfections with a paste of 6001 Primer, then prime everything with Matthews Epoxy primer. This primer sticks like crazy.
To cover myself, I usually tell customers that the repaint will probably not last as long as the original finish and that a new piece will last the longest.
Brad in Kansas City