New Reality For Petchems

In the Chemicals and the Economy blog and an article for ICIS Chemical Business, my colleague Paul Hodges shares his view that the landscape for Petrochemicals has changed during the current downturn. As Paul states 'We came into the downturn on the back of a major boom in consumption, supported by reckless lending and borrowing and now this mind-set seems unlikely to return quickly'. If this view is correct, we are in for a sustained period of lower volumes and reduced margins but punctuated by periods of high volatility caused by oil and currency markets. This will certainly mean that the pressure that has been experienced by the manufacturing sites during the downturn will continue. As consumers in the market place shift from "wants" to "needs", exactly the same shift will apply to chemical manufacturing site managers. To make things even harder, however, managers will need to be able to cope with the consequences of market volatility. There must be a clear focus on what needs to be done to survive but this absolutely must not affect the ability to be flexible . A focus on cost effectiveness and value for money is essential. Wastes of all types must be identified and systematically eliminated using approaches such as Lean Manufacturing. Value chains within the manufacturing plant and supply chain must be shortened wherever possible using value stream mapping techniques. Organisational effectiveness is a must. Staffing levels must be reviewed critically to ensure that organisations are as effective as possible and staff should be trained and ready to play their part by being able to safely and effectively start-up, shut-down, change grade and increase production rates at very short notice. This means that simply cutting numbers is not smart enough - skills must be retained.

In short, highest quality manufacturing management will be absolutely essential if sites are to survive and thrive in the new landscape.