3 Major Trends That Impact the Chemical Industry
The global chemical industry has grown strongly in recent years. This has led to changed framework conditions and new challenges. In order to remain successful in the changed environment, chemical companies must rethink their business models, redefine innovations and exploit the potential of new technologies. Learn in this article about three major trends that impact the chemical industry and the resulting challenges.
The chemical industry relies on natural resources and raw materials such as water, oil, natural gas, minerals or metals, converting them into chemical products. Nowadays the chemical industry is confronted with a scarcity of resources, which forces the industry to look for alternative materials and production processes. Water is without doubt one of the most scarce resources. The chemical industry must use water resources more efficiently and, on the other hand, re-design its production methods to be less dependent on water.
While the chemical industry cannot afford to be wasteful with resources, it is exactly what many consumers do. Our so-called "throwaway mentality" not only produces billions tons of waste, but also leads to the loss of valuable materials such as plastics, biomass or scarce metals. The management consulting firm McKinsey states in an article that "by 2030 up to almost one-third of plastics demand could be covered by production based on previously used plastics rather than from virgin oil and gas feedstocks." This would not only conserve resources, but also ensure that valuable resources are not getting lost through disposal. As resources are becoming increasingly scarce, it is now time for chemical companies to consider how they can make their production processes more resource-efficient.
Globalization: Blessing or curse?
Globalization is a driver of economic growth in the chemical industry. Many companies that used to operate nationally now trade on the global market. However, to be able to act innovatively and competitively in the long term, companies depend on the right framework conditions in their home country. Advances in transportation and communication, liberalizing the economic activities of the exchange of goods by removing cross-border trade barriers and technical innovations lead to the right framework conditions from which more and more chemical companies worldwide benefit. This opens up the market to a large number of companies that would not have been able to operate globally just a few years ago. As a result, established global players are losing their dominance. Those companies must now find ways to react to the changed conditions in order to continue to operate successfully on the world market.
Digital transformation of chemical processes
Simplified data processing, improved networks and intelligent sensors: while there are many chemical companies where "digitalization" is already an established term, there are still companies that are not yet fully exploiting the potential of digital transformation. The question is: How much digitalization does a chemical company need? It goes without saying that digitalization holds considerable potential for increasing efficiency and productivity in the chemical industry. However, to realize the full potential of digital transformation, companies must first analyze their own current state, check for which processes digital transformation is best suited for, and determine what resources are needed to achieve the desired future state. To come back to the question, how much digitalization does a chemical company need? It needs as much as digitalization as it needs to survive in global competition. This is easier said than done. Companies must be willing to rethink their business models, invest personnel and monetary resources and co-operate with trustful partners to find efficient ways to face those challenges.