According to a 2016 study by PWC, almost half of all chemicals CEOs say their companies are facing more adversity now than they were three years ago. Although factors like low natural gas prices and exciting technological advancements have been a boon for certain segments of the market, the global chemicals industry is facing unprecedented challenges in the coming decade.
The good news is, many of the challenges – if met head on – present opportunities for growth and realignment. As the industry becomes increasingly segmented, small- and medium-sized chemicals manufacturers stand to gain the most ground. Here’s what they’re up against.
Commodities Pricing Uncertainty
As discussed previously, the volatility of commodities pricing drastically affects the bottom line of most chemical manufacturing facilities. Natural gas, in particular, is a critical element in both the production and distribution of chemicals and thus lends a lot of uncertainty to the greater market. Cheaper forms of energy, though exciting, are throwing a new question mark into the equation as manufacturers ask themselves how to plan for the future knowing their costs will be ever-changing.
IT Developments and Implementations
The US chemicals industry is, as a whole, relatively resistant to change. Experts warn that too many chemicals manufacturers are already lagging behind on issues such as cyber security and enterprise solutions. Forward-thinking chemical suppliers are putting a lot of emphasis on the ways IT solutions can streamline everything from customer service to the ordering process; they’re also paying attention to the ways chemicals and computers are beginning to overlap.
Politics as Usual
In so many ways, the global chemicals industry is tied to the political state of the world’s top industrialized nations. As recently as June, Brexit threatened to all but grind Britain’s chemicals manufacturing industry to a halt, and surveys show that both American candidates for president are equally unpopular in the chemicals sector. As chemical manufacturing and exporting becomes increasingly mired in logistical red tape and endless loops of regulations, politics is playing a more important role than ever. Industry leaders will be watching.
Noah Chemicals takes great pride in being a consistent, adaptable force in the American chemicals marketplace. Our team not only understands but actively plans for the challenges looming in the chemicals industry; it’s our goal to manage them so well you won’t have to think about them at all.
Contact Noah Chemicals today to find out more about why doing business with an experienced chemical manufacturer is the best way to move forward.