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Diversified Industrials: Horizons

Digitalization. Complex supply chains. Growing regulation and compliance. Conglomerates and industrials operate in an increasingly dynamic environment – one which requires creative solutions and forward thinking.

Chemicals: Horizons

When we first conceived this series earlier in the year, the chemicals industry was already contending with numerous economic headwinds, among them a burgeoning automotive recession, escalating trade wars, mounting pressure to recycle carbon products, and a looming oversupply issue.

That COVID-19 would exacerbate these problems should, by now, come as no surprise. And yet the highly regulated, cross-border, capital-intensive nature of the chemicals industry has perhaps made it particularly vulnerable to disruption in a global pandemic.

That once-burgeoning auto recession is now full-blown, with aerospace not far behind. Trade tensions with China and others have reached new heights amid a renewed turn towards economic protectionism, particularly in life sciences and healthcare. Global supply chain disruptions – especially those emanating from Asia during the virus’s opening salvo – have hindered organizations’ abilities to gather raw materials and deliver finished products. Overall demand has dropped by at least 30 percent, and manufacturing by leading chemical companies has taken a momentary nosedive, with scale-downs of up to 40 or even 60 percent.

And all this doesn’t begin to touch on new challenges; chiefly, the safety of a workforce largely required to be on-site.

That said, the chemicals industry has largely proved resilient. Several multinationals rose to the occasion by quickly ramping up production of hand sanitizers, cleaning supplies, and personal protective equipment. Some have begun to reorganize supply chains to get closer to their end-users. And still others have seen COVID-19 catalyze an advantageous turn towards manufacturing 4.0: more automation, more data-driven capabilities, more remote-controlled production – and less need for in-person workers.

There may be even more opportunities on the horizon, whether it’s satisfying the growing demand for products like protective packaging, adopting more efficient digital processes, or increasing investment in green technologies.

In the articles that follow, we’ll address critical questions surrounding these emerging risks and opportunities. For instance, as many seek to reduce debt and shed non-core assets, how will they manage myriad liabilities in the process? Where does the Chinese chemical industry stand now, and how (and where) can chemical executives successfully pursue investment in the country? In what ways can organizations effectively – and safely – adopt AI and predictive maintenance technologies?

This is just a taste of what’s ahead in this year’s edition of Chemicals: Horizons, which also covers environmental insurance for M&A transactions, global trade uncertainties, recent IP developments, the auto recession, and more.

No one can predict how COVID-19 will ultimately reshape our world. We hope, however, that this collection will offer a touch of clarity as industry leaders seek progress in 2020 and beyond.

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