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The decade ahead

Preparing for an unpredictable future in the global chemical industry


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The decade ahead

 

Background

The US$3 trillion global chemical industry plays a crucial role in today’s economy. By one estimate, 96 percent of all manufactured products require the use of chemicals. But as the chemical industry approaches the second decade of the century, it faces serious challenges.

As the economy emerges from the recession, improving profitability in the next decade will require many companies to modify their strategies. Defining new directions will be a difficult task because the competitive landscape will be characterized by uncertainty.

This is the conclusion of research developed by Deloitte Touche Tohmatsu (DTT) that describes how chemical companies can move away from profit-limiting legacy strategies and towards more innovative responses to changing customer demands. Using three scenarios for the decade ending in 2020, this report illustrates why companies need new options to deal with evolving market conditions.

Key findings

Outlook at a glance

  • The root cause of the issue - Over the past five years, average margins fell to 15 percent in the commodities business. In specialty chemicals, gross margins shrank in 2008 and 2009
  • After the recession a different approach - The Deloitte research reveals that chemical companies can no longer assume that growth and profitability are mutually reinforcing. Future competitiveness requires a much more disciplined and selective approach
  • Managing in uncertain times - To manage the risks in the global chemical industry, a range of future market conditions need to be taken into account
  • Scenarios for the coming decade - Transition, Resilience and Dislocation

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