Global chemicals sector outlook
The global chemicals sector is projected to see a modest uptick in growth during 2010 according to a new report by the Deloitte Touche Tohmatsu (DTT) Global Manufacturing Industry, Compass 2010: Global chemicals sector outlook. In 2010, global chemical companies will recalibrate their business objectives and make tougher strategic choices as critical end markets begin to recover — a gradual rebound in the automotive, construction, electronics, and pharmaceutical markets are potential bright spots for the chemicals sector. By using the lessons learned from the downturn, executives will create short-term plans that reflect existing business realities, yet incorporate the ability to meet future economic turbulence.
Many chemical companies are expected to extend cost-saving initiatives throughout 2010; however, such efforts are reaching diminishing returns. To better align with market realities, strategies will emphasize reducing complexity, streamlining processes, and closely managing input costs. Furthermore, companies are beginning to scrutinize and adjust their supply chains and deploy flexible human capital approaches to address gradual demand recovery.
Deloitte member firm chemical leaders foresee growth opportunities in 2010 as a result of innovation efforts in key technology areas such as energy, health care, and climate change. Over the next few decades, innovation initiatives will address global megatrends which could pave the way for the future and be a major source of revenue.
Mergers and acquisitions (M&A) are also expected to rise as a strategic priority this year in the chemicals sector. Many companies are actively evaluating targets to complement their current mix of businesses, and will look to capitalize on the opportunities over the course of 2010 as credit markets improve and valuations become more attractive. It is expected that private equity will become active again as funding availability improves.
The global chemicals sector in 2010 will likely be the year of looking ahead — companies will breathe a sigh of relief as they emerge from the downturn to prepare for the decades ahead.