Paul Hodges' Chemical Industry Outlook

My colleague, Paul Hodges has correctly predicted the key economic events that have shaped the chemical industry in recent years. Here is a short video from ICIS, featuring Paul, sharing his views on the 2010 outlook for the industry

Chemical Industry Strategies For The Coming Decade

The start of a new year is a good time to think about Chemical industry strategies for the new decade. Just a very quick look back at the 'noughties' will tell us that we are set for a decade of significant upheaval for the industry.

The last decade saw huge changes in the chemical industry. Several years of strong growth followed by a very painful recession. The emergence of new players in the industry and a steady shift of the manufacturing base from Europe and North America to the Middle East and Asia.

In thinking about what is to come, I'd like to highlight two excellent articles published in ICIS Chemical  Business

In his article 'Prepare for the Great Petchem Marathon', Paul Hodges focuses on the key issues that need to be tackled. Restructuring, Supply Chain, Technology, Commercial Strategies and Size and Scale are flagged as key issues for chemical companies. Paul suggests that the motto for the new decade could be 'Think About Tomorrow and Act Today'

In another excellent article 'Recession Prompts Shift in Chemical Strategies', Anna Jagger focuses on the societal 'Megatrends' that will provide major opportunities for flexible and innovative chemical companies. The article lists Renewables, Food, Energy Efficiency and Water as being key issues for the coming decade.

The new decade will bring significant change. There will be significant problems to deal with, there will be threats to the industry but there will also be major new opportunities. Excellent strategic planning, in-built flexibility and the ability and desire to innovate will be the key attributes of successful companies.

Friday News Round Up

Friday once again, so a time to update on various past stories and news items

• ICIS has analysed the various chemical companies job loss related annoucements reported to them since the start of the financial crisis in September 2008. The figures show that chemical companies have cut over 77,000 jobs since the crisis began.

• In the UK, NEPIC, the North East Chemical Industry Cluster, will investigate the commercial feasibility of chemical production from biomass. The 30-month project is being carried out on behalf of the UK Government department DEFRA

•  BASF has announced that it will close its maleic anhydride plant at Feluy, Belgium by the end of this year, with the loss of 133 jobs

• As Copenhagen approaches, UK Prime Minister, Gordon Brown expressed his views on climate change. He warned delegates at the Major Economies Forum in London (representing 17 of the world's biggest greenhouse gas-emitting countries) there was "no plan B" regarding climate change and that negotiators had "50 days to save the world from global warming".
  
  
• Paul Hodges sets out his views on what's to come for 2010 in his analysis 'Budgeting for a New Normal'. In his summary, he states "2010 to be a transition year. Full economic recovery is unlikely to take place much before the 2011/13 timeframe. But the return of economic growth will offer companies the opportunity to identify likely future market needs. Those that focus on this new reality, rather than simply hoping for a quick return to the Boom years, will position themselves for future success."

Friday News Round Up

Friday again, so a good time to update on various past stories and share some news snippets.

• Problems persist at Lavéra, with Arkema forced to prolong its force majeure on PVC. This was due to on-going problems on the Vinyl Chloride Monomer plant at Lavéra. According to the La Provence newspaper, issues included a minor chlorine leak which led to site emergency procedures being initiated. Arkema report that there was no adverse environmental impact.

• The UK chemical cluster at Wilton was again in the news. It was announced that a study will  be conducted with businesses on the Wilton site to understand their immediate and future needs, and the outcome will dictate what extra action is needed to support them.

• The American Chemical Society (ACS) are holding a small & medium business Webinar to give participants an opportunity to learn about trends in the chemical industry that can impact jobs and businesses. Scheduled for Thursday, Oct. 22, 2-3 p.m. Eastern Time, the free webinar will feature my colleague Paul Hodges, author of the  ICIS "Chemicals and the Economy'" blog. The webinar's topic is "What you need to know about Chemistry and the Economy! Secrets to finding hidden opportunities."

          Registration details are available by following this link.

• The debate about climate change rages on ahead of the Copenhagen Summit. Paul Hudson's BBC blog has led to many exchanges of views, with another senior BBC reporter, Peter Sissons also joining the debate. Cap and Trade is very much the hot topic right now (please pardon the pun), so we can expect this debate to intensify in coming weeks.

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.