Levels of Investment in Manufacturing Software Improving

There are many ways in which we can assess the health of the chemical industry. Thanks to Houston Neal of Manufacturing ERP Software Advice, for providing another perspective on the health of the chemical industry.

The 2010 Manufacturing Software State of the Industry Roundtable has focused on the state of manufacturing ERP Software.

The report shows that 2010 is healthier than 2009. Purchase activty is up, with the increase in activity attributed to two primary reasons - firstly that we have reached the 10-year anniversary of purchases made as a result of the Year 2000 (Y2K) date problem secondly and most importantly, many companies are restarting buying processes that were deferred in 2009. The report also notes that the chemical sector is one of the most active in terms of new purchases.

This last point is highly encouraging. I've seen many companies in the chemicals sector deferring spend in many areas as a result of the recession. Clearly for items such as control systems and manufacturing software, such expenditure can only be deferred for so long but to see a clear shift at this point in time is very welcome news.


UK Health and Safety Executive Publishes Buncefield Evidence

photo : Hertfordshire Constabulary

The UK Health and Safety Executive (HSE) has published some of the evidence being presented in the current trial of three companies over the explosion at the Buncefield depot in 2005.

As a reminder, several explosions occurred at the Buncefield Depot in the early hours of Sunday 11th December 2005. At least one of the initial explosions was of massive proportions and there was a large fire, which engulfed a high proportion of the site. Over 40 people were injured but thankfully there were no fatalities.

There was, however, substantial damage to  properties in the area and the fire burned for several days, destroying most of the site and emitting large clouds of black smoke into the atmosphere.

A number of videos and photos have been published. The videos are stunning, showing the speed at which the vapour cloud advanced. The photos show the damage to the control room and the spread of debris following the explosions.

I'd recommend all those with an involvement in chemical manufacturing to take a look and challenge your own operations.This type of incident is totally preventable if we take the time and effort to assess the risks and then take the right actions to systematically eliminate them.


Deepwater Horizon - Update

According to latest reports, concerns are growing for the 11 workers still missing following the explosion on the rig on Tuesday evening, which caused the rig to collapse and sink yesterday.

A team of engineers is also working to control a major oil spill, caused by very subtantial amounts of oil and gas pumping out from the oil reservoir

According to Transocean, the Swiss company that owned the rig, engineers are trying to cut off the uncontrolled flow of oil using a subsea robot. Apparently the the robot, equipped with cameras and remote-controlled arms, is being used to try to activate an automatic shut off device on the seafloor, designed automatically to clamp shut over the base of a pipe that connects the rig with the seabed.

First priority is to locate the missing persons and deal with the spillage. The investigation, when it takes place, will certainly have to look at the design of similar shut-off devices to ensure that in future, activation occurs even in extreme circumstances such as this.


Transocean Oil Rig Explosion - Echoes of Piper Alpha?

photo : Upstream Today

An explosion on Transocean's 'Deepwater Horizon' oil rig at approximately 10 pm on Tuesday has left 11 people  missing and 17 in hospital, of which 4 are critically ill.

Ther rig is owned and operated by the Swiss company Transocean and was carrying out exploratory drilling on behalf of BP.

At presnet, authorities are unable to say when the flames might die out on the rig. A large column of black smoke was seen over the Gulf of Mexico as firefighters tackled the blaze.

Adrian Rose, vice president of Transocean, said the explosion appeared to be a blowout, in which natural gas or oil forces its way up a well pipe and smashes the equipment. But precisely what went wrong is still under investigation.

According to reports, a total of 126 workers were aboard. 79 were Transocean workers, 6 were BP employees and 41 were contractors.

Still far too early to draw any conclusions but the fact that so many are missing and that many more are injured means that a full and thorough investigation must be carried out as quickly as is possible.


Icelandic Volcano - Are the Authorities Being Overcautious Regarding Air Travel?

photo : Virtualtourist.com

Over the last couple of days, I've heard from many friends and colleagues stuck in various desitnations, either on business or vacation.

We've all read about the issues for travellers and for the airlines. There are also a great many other businesses, mine included, which are totally dependent on overseas travel.

So clearly, the human and economic costs are very high. Against this backdrop, I keep asking myself two questions - Firstly, Are the authorities being too cautious in deciding to ground air traffic? Secondly, would I be willing to fly in European Airspace right now?

The Financial Times has a very interesting article, with some major questions regarding the validity of the computer models used in Europe and the comparisons between the European and US approach to aviation safety.

In the chemical industry, we tend to start with the precautionary principle but then use a combination of theory and data to give a quantified analysis of the risk. Risk can never be eliminated but we can make decisions on whether or not it is acceptable.

If the models are flawed, we need to systematically collect data, such as that generated from the various test flights over the last few days and any other data which we deem necessary. We should then use this to validate or challenge the models (whilst checking whether the jet engines have suffered any damage).

What we can't afford to do is sit around, rely solely on the existing models and hope the problem will go away, particularly when there are other potentially active volcanoes in the same area.

As for whether I would be willing to fly - well I wouldn't want to fly around the volcano but would be willing to accept the assurances given to me by the airline companies and fly if they believe that it is safe to do so.


UK Chemicals Exodus Underway?

I've just spotted a very interesting article from the Royal Society of Chemistry outlining concerns over the potential exodus of chemical and pharmaceutical companies from the UK.

As many will know, Ineos has recently announced its decision to relocate its corporate headquarters from the UK to Switzerland.

A number of other chemical and pharmaceutical companies may be poised to follow suit, given concerns over the perceived high levels of taxation in the UK for businesses and individuals.

Already the vast majority of UK chemical plants are owned by companies with headquarters outside of the UK. If the UK is no longer considered to be a 'strategic' location for an organisation, there may well be a drift of corporate, commercial and technical positions from the UK. Ultimately plant closures could follow, particularly if the total cost of employment is deemed to be too high.

This is a major concern. We have seen significant numbers of closures in recent years. My sense is that the UK needs a strong chemical sector, particularly if we wish to have a leading role in the development of green technologies. Although relocations of corporate HQs do not change the asset base, they do affect sentiment and can impact future investment decisions.


Lotte Chemical UK - Update 2

photo : Middlesbrough Evening Gazette

The Lotte Chemical UK PTA plant has now successfully restarted, following the recent acquisition from Artenius UK.

The plant had been mothballed for 13 months following the closure by Artenius but was restarted successfully and ahead of schedule by its new owners.

This is quite remarkable, given that the new production team was only recruited during March of this year. Fortunately, the Teesside area of North East England has excellent process industry skills, so finding people with the right skills and experience was reportedly much easier than it might have been.

Even so, a plant restart after such a period is a complex activity. To successfully achieve it ahead of time  is a remarkable achievement. Many congratulations to all involved!


LyondellBasell Agrees US Environmental Settlement

photo : soils.co.uk

The Chemical Engineer has reported that LyondellBasell has agreed a settlement with the US Government for clean up of contaminated US sites. Under the settlement, LyondellBasell will pay $170m to clean up 15 contaminated sites across the US.

The contamination relates to sites which were never operated by Lyondell or Basell but which had been acquired in historical transactions.

This blog has no knowledge of the transactions involved and does not know what was or was not done in terms of detailed technical due diligence and/or protection against historical environmental liabilities by Lyondell, Basell or any of its predecessors.

The settlement does remind us, however, that costs associated with environmental clean-up can be very high. As chemical industry M&A activity starts to increase, potential buyers should be mindful of the need to carry out comprehensive technical and environmental due diligence, to ensure that all potential value adjusting issues are identified and managed accordingly during any deal


Better News For Manufacturing Sector

Back in November, I reported on the optimism expressed by purchasing managers in the Institute of Supply Management (ISM) October report.

The latest report, for March 2010, shows that the US manufacturing sector expanded for an 8th consecutive month, showing that the optimism was justified.

As noted previously, The Institute uses its Purchasing Managers' Index (PMI) as an indicator of performance. A PMI score of below 50 indicates that the sector is contracting, whilst a score above 50 indicates that the sector is expanding. The data for the index is collected using a survey of 400 purchasing managers in the manufacturing sector on five elements; production level, new orders from customers, speed of supplier deliveries, inventories and employment level. Studies have shown that the PMI gives reasonably good correlation with the state of the economy and GDP growth.

The index has rebounded from a low point of 32.9% in December 2008 and now stands at a figure of 59.6%, a very positive score, reflecting the growing optimism throughout US manufacturing.

For chemicals, the news is mixed. Automobile sales have improved significantly and with each new car containing almost $3000 worth of chemicals, this is very welcome news. Meanwhile, another major consumer of chemicals, the construction sector, remains relatively flat.

More positive signs. Still a long way to go to reach 2008 levels but a major improvement on 2009.