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Challenges Facing Chemical Industry

About 50% of CEOs in the chemicals industry claim that their firms are facing more hardship today than they were three years ago. This is according to a study done by PWC in 2016. While factors such as decreased natural gas prices and rapid technological advancements have been beneficial to some industries, the chemical industry has to contend with serious challenges at least for the next ten years.

Fortunately, if handled in the right manner, most of these challenges would present opportunities for the industry’s growth and realignment. Here are the major challenges that both small and large chemical companies have to deal with:


Volatility of Products Pricing

The instability of products pricing significantly affects the bottom line of many chemical businesses. Natural gas is especially an integral component in both the manufacturing and distribution of chemical products and hence lends so much uncertainty to the larger market. While the more affordable forms of energy are quite stimulating, manufacturers are still wondering how they can strategize for the future considering that their prices are bound to keep on changing.


Technological Advancements

The global chemical industry is generally resistant to changes. In fact, industry experts claim that a large number of chemical companies are yet to embrace technological developments on critical issues like cyber security. Any forward-looking chemical-related business should really emphasize on the ways high-tech solutions can streamline every aspect of business operations, including production, distribution, as well as customer service.


Rapid Regulatory Changes

The chemical industry is required to meet a complex web of overlapping requirements, which govern everything, including manufacturing, labelling, transportation, and storage of chemical products. In fact, every country, and even most local authorities, spells out their own regulations. Consequently, chemical companies spend billions of dollars every year on compliance alone. Unfortunately, these regulations keep on changing and chemical companies have to respond immediately to avoid being penalized.

It is also worth noting that some chemical companies have discovered that operating their business systems in the cloud is highly beneficial for managing the cost of compliance. While complex in-house systems are usually expensive and disruptive when it comes to upgrading, cloud systems are normally updated frequently. For instance, as a report format changes or new requirement is introduced, cloud-based reporting system means companies have quicker access to solutions that meet the new requirements.


Political Factors

The state of politics in the leading industrialized nations in the world affects the global chemical industry in numerous ways. In June, 2016, for instance, Brexit came close to killing the chemicals industry in Britain. Likewise, studies showed that both American presidential candidates were equally detested in the United States chemicals industry. As this industry becomes increasingly entangled in complex logistical requirements and interminable loops of legislations, politics is playing a critical role that industry leaders need to keep watch.


Conclusion

Dealing with challenges in the chemical industry can be quite challenging in itself. However, you don’t need to address every issue on your own. Besides having the right systems in place, you can also join organizations like CDMA, which advice their members on how to handle various challenges in the world of business. .

Starting a Chemical Manufacturing Business

Naturally, chemically manufacturing is not only a capital-intensive business, but also a large scale one. Setting up a chemical plant encompasses the construction of an entire facility, which will house both the processing equipment and the company’s administrative offices. For the plant’s operations, you will have to acquire expensive equipment and vehicles, as well as recruit workers for the various units of the company. Moreover, you will need to coordinate functions to ensure a streamlined flow of the process and remain within the set environmental standards.

However, before you get to the actual setting up of a chemical manufacturing plant, there are several factors that you need to consider. Namely, comprehensive studies have to be carried out to draw cost and profit projections, determine the viability of the plant design, evaluate marketability, as well as determine the feasibility of the projects.

In that light, we present you some of the most significant factors that you need to consider before setting up a chemical manufacturing plant:


Market

If you’re considering manufacturing intermediate products, are there any other industries that will require such raw materials to produce their products. Likewise, if you’re planning to manufacture consumer products like cosmetics and soaps, is the market sufficient to sustain such business?

Location

How is the location of the prospective plant site in relation to source of raw materials as well as the planned market?  How convenient and cost-effective will it be when it comes to transporting raw materials to the manufacturing plant and dispatching finished products for distribution? Does the intended location meet all regulatory requirements?


Resources

Where will you get the raw materials – locally or abroad? Can locally-sourced raw materials adequately provide for the plant’s operation capacity? Where will you get the workforce? Will you find the necessary skills among the locals or you will be forced to source for workers from other regions?


Waste disposal

How will you dispose manufacturing waste? Is the prospective location well-matched with the manufacturing plant’s waste disposal design?


Feasibility

Considering all the factors in question, can the plant be run profitably

Final Thoughts

Chemically manufacturing plants are normally located close to the source of raw materials as well as near the market of the finished products. This is why you will mostly find such plants near ports and near other industries, which often turn out to be the end users of the products they manufacture.

It is also worth noting that chemical manufacturing has some detrimental effects to the water, soil, and air. These effects could subsequently harm plants, people, and animals. This is why this industry faces strict government regulations. The location of a chemical plant needs to meet zoning requirements. Likewise, the plant’s operations must be on top of strict environment safety standards.

With all these factors, it suffices to say that chemical manufacturing business is one of the biggest investments in the world of business, involving massive and capital-intensive constructions, plus the buying of expensive plant equipment. As such, you need to diligently consider these factors in order to get things right from the start. You can also join CDMA to learn more from like-minded entrepreneurs.

Running a Successful Chemical Business

According to a 2015 report released by Roland Berger, the global market volume for chemicals is expected to more than double by the year 2035. In that light, it’s a good time to make a successful business in the chemical industry.

Moreover, the modern life largely depends on chemicals – cleaning, cooking, food preservation, agriculture etc. However, despite the fact that chemicals are something that everyone desperately needs, it is normally quite challenging to make a success in the chemical business.

This is attributed to various factors, including low margins, strict industry regulations, unstable prices, global competition, as well as multifaceted logistics. Here, we present you 5 valuable tips to help you overcome these challenges and make your chemical business a success.


Fully Utilize the Available Assets

In the world of chemical business, assets are highly capital-intensive. As such, it could be an imprudent business practice if you don’t utilize those assets to their maximum capacity. For instance, larger and more established companies are re-evaluating their plant equipment, creating long-term strategies for their improvement and development.

These companies are also beginning to place more value on their databases, regarding them as assets in their own right. Proper utilization of the information in the databases may result in new co-operations in various markets or help source affordable suppliers from new areas.


Capitalize on Sustainability

One of the most effective ways to maximize profits in a market with low margins is to utilize sustainably. As chemical usage increases, you need to find raw materials from sustainable sources in a bid to lower costs. This will also play a great role in sales in light of the fact that consumers always prefer environmental-friendly products. Likewise, recycling waste chemicals will not only minimize the cost of production but also provide additional revenue streams.


Set Yourself Up for Growth

To make success out of your chemical business you should embrace the significance of exploring new markets across the globe. In fact, established chemical businesses are always figuring out how they can expand, by either broadening their product base or by going up/down the supply ladder. You can also think of alternative uses for your products, which could bring in customers from otherwise unexpected areas.


Uphold Knowledge and Aptitude

In many industries and businesses, the people who make up the workforce are an integral asset. The chemical industry is typically technical and often specialized. The knowledge acquired by your workforce should be jealously guarded, even if it means paying a fortune for to retain. This is because understanding your products, your market, as well as the contact details of your prospective customers can be of great significance in taking your business to the next level.


Supply Chain Flexibility

The chemical market is quite unstable, with frequent and intermittent price fluctuations. In light of this, it is imperative that you have the capacity to quickly respond to any changes in the market. This is especially important because the chemical industry is a global one, with customers and suppliers normally continents apart. Circumstances can change overnight owing to socio-political and natural factors, such as natural disasters, enactment of new legislations, trade restrictions, etc.

Having the ability to quickly find new suppliers, change to alternative raw materials, and use alternative systems of delivery, will help you keep up with competition.


Final Thoughts

These tips are obviously a simplified guide to a business with lots of complexities. Therefore, in addition to these tips, it is advisable to observe how the more established chemical companies conduct their business, and then consider structuring your business model according to their practises. Being a member of CDMA could also be beneficial in this regard.

Uphold Safety In Chemical Logistics

With the ever-growing growing chemical market and the ever-changing changing regulations, chemical shippers should keep on refining their strategies to uphold safe handling of chemical products. In that light, here are some valuable tips to help you uphold chemical logistics safety:


Abide by the Rules Always

In light of the fact that some chemicals can lead to grave situations when mishandled, governments are usually involved in laying out chemical-handling rules. The rules often outstrip the ones spelled by main regulators, like OSHA in the United States. This creates an intricate web of regulations for logistics firms.

Be that as it may, you must remain on top of regulations. Fortunately, OSHA has a website dedicated to helping companies stay on top of new regulations and also provides links to specific rules.


Take Part in Industry Associations

It can be quite difficult to stay up-to-date with new changes, thanks to the complications created by the overlapping agency regulations and government legislations. Attending industry seminars or taking part in industry associations can be very helpful by sieving the clutter and keeping you up-to-date with new regulations.

It is always advisable to have several association members or seminar attendees too ensure that no important news eludes you. Likewise, it is imperative that you have a designated individual   tasked with ensuring compliance.


Provide Appropriate Equipment

When it comes to handling, most chemicals have specific requirements. For instance, some chemicals require:

Non-reactive containers

Defined temperature ranges

Therefore, you should never transport chemicals in unsuitable containers. In fact, a reputable chemical logistics company should be able to advise you on the suitable containers as well as any necessary labelling.

Likewise, regulatory agencies such as OSHA require that chemical companies provide their staff with the appropriate protective gear. These normally encompass face masks, fireproof or acid-resistant clothing, goggles, gloves, etc. depending on the chemicals in question.


Train Your Staff

For any protective gear to be effective, it has to be used in the right manner. Therefore, it is imperative that you  ensure anyone handling chemicals is comprehensively trained on proper chemical handling techniques and the necessary protective equipment Even individuals who don’t handle chemicals on a regular basis should have some basic knowledge on safe handling of chemicals. It is also advisable to conduct regular drills as they help people to understand how to go about an actual chemical-related accident.


Work With the Right People

Not every firm understands the significance of proper handling and transportation of chemicals. As such, you need to ensure that you’re working with people that are serious as you are when it comes to safety chemical logistics. Irrespective of your chemical logistics needs, you need to work with a company that has relevant expertise and experience.


Final Thoughts

Chemicals help us in a wide variety of ways. However, they are so powerful that they can lead to grave situations if not handled in the right manner. These tips are helpful when it comes to safe handling of chemicals. If you’re not yet a member of CDMA, consider joining for there is so much to learn in the world of chemical business.