Consumables
Global Chemical Industry Redefines Strategies for New Market Realities, According to Deloitte Report
Wednesday 08. July 2009 - According to the global chemistry industry production index, chemical production declined more than 10 percent in the first half of 2009.
And, while demand is expected to regain momentum, it is unlikely to return to pre-recession levels in the near term. As a result, chemical companies are using flexible planning strategies to forecast supply and demand. These strategies, along with the forces moving the industry, are analyzed in a new report issued today by Deloitte Touche Tohmatsu’s (DTT) Global Manufacturing Industry Group titled, Adapting To A Changing Landscape: Midyear Outlook For The Global Chemical Industry.
“Chemical companies are struggling with how to effectively plan for the future given the market’s uncertainty,” said Tim Hanley, vice chairman and U.S. Process and Industrial Products industry leader, Deloitte LLP. “Experimenting with new business models that account for new customers and suppliers may be the way to navigate through these challenging times.”
With strong ties to the performance of the automotive and construction industries, it is unavoidable that the chemical industry will face major restructuring in the years ahead. According to the report, by looking at multiple scenarios for the future, chemical companies may be able to evaluate a variety of possible outcomes, consider the variables and prepare a flexible and profitable response. The possibility of increased merger and acquisition activity, resulting in fewer facilities and a broader geographic footprint, will provide a more global balance, and Asia’s importance to the industry will continue to increase both from a demand and supply standpoint. However, deciphering signs of a true recovery from the effects of governmental assistance may present even more unique challenges.
“Part of the challenge is going to be separating real economic growth from the effects of economic stimulus packages,” said Tom Marriott, principal, Deloitte Consulting LLP. “Government stimulus money is going to be a key factor helping companies to regain their momentum. And, because of the large injection of stimulus in China and its indirect impact on demand in the chemical industry, companies are also asking themselves if they should be placing even bigger bets on China and the Asia Pacific region.”
Global chemical companies are making tough decisions now that will determine the future fate of their businesses. Those that have adapted their business models will be better situated to innovate, create new products, develop new value propositions, and tap into new markets, ultimately creating future growth opportunities.