The chemical industry is seeing rapid growth and innovation as key end-use markets witness increasing demand. The US chemical industry alone is “an $801 billion enterprise” accounting for 14% of the country’s exports and 15% of the global chemical market. World chemical production grew by 2.8% in 2015. It is expected to expand by a further 3.3% in 2016 and 3.7% in the following year.
What are the reasons for this steady expansion? Practically all manufactured goods require chemical inputs during the production process. Take the example of light vehicles, which saw a 5% growth in sales in 2015 in the US market. Chemical manufacturers supply products worth an average of $3,500 for each automobile. Housing starts in the US surged by 12% in 2015 boosting the demand for chemical products. Each new home requires chemicals of a value of about $15,000.
The growing demand for chemical products across the world is attracting large amounts of new investment in the industry. But to achieve optimum results, chemical companies need to make certain changes in the way they operate.
Adopting digital solutions can result in a sharp increase in productivity
Chemical companies lag behind firms in other industries where digitalization is concerned. Many firms see themselves merely as suppliers of raw materials and not as the business partners of their customers.
Adopting digital technologies can help them make this shift. With the rapid improvement in cloud technology and the falling price of sensors, chemical companies have the opportunity to offer their clients solutions instead of just raw materials.
A report titled 2016 Chemicals Industry Trends, issued by PwC, describes how a chemical supplier used technology to monitor consumption of raw materials at its client’s site by installing sensors in dispensing equipment. These sensors also allowed the seller to gather a host of related data about consumption patterns. As a result, it was possible to provide the customer with a far greater level of service than was previously possible.
Firms serving the chemical industry can use technology in many different ways to help their customers improve business performance. The PwC report mentioned above also explains how a supplier of vibration monitoring equipment and other measurement devices used cloud technology to offer advanced diagnostic services to companies in the chemical industry.
Chemical industry needs to attract talented workers
The chemical industry finds it difficult to attract talented employees. This is despite the fact that workers are offered high salaries as well as the opportunity for career advancement.
There are several reasons why those who are just starting off on their career are reluctant to opt for employment in a chemical firm. The industry has a reputation for causing environmental damage. Its safety record is also marred by several well-known accidents. Firms within the sector need to make an extra effort to find the right type of workers. Unless they are able to do this, it will be difficult to meet the increasing expectations of their customers.
There is another manpower-related problem confronting chemical companies. Many of them have large numbers of workers approaching retirement. When these employees leave the workforce, they will take along with them years of experience and detailed knowledge about customers. Some firms realize that younger employees can make significant contributions to a company’s performance. In an interview, Andrew Liveris, CEO of Dow Chemicals, said that the average age of the Dow employee has been reduced from 51 to 41 in the last decade. Dow Chemicals is actively hiring “statisticians, roboticists, big data experts, and data scientists.”
New opportunities for chemical companies
The chemical industry presents many opportunities for firms who understand their clients’ requirements and who are willing to consider new approaches to meet their needs. Firms that can reorient their workforce and digitalize their operations will thrive. But those who merely maintain the status quo and restrict themselves to incremental improvements will find it hard to grow.
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