Chemicals Industry Update: Part 1 – Chemicals Market Expansion and Differentiation

The chemicals market is expanding. With demand holding steady, competition to acquire and retain customers is forcing manufacturers to differentiate.

September 21, 2022

While many aspects of life slowed during the COVID-19 pandemic, digital transformation initiatives in critical manufacturing industries overcame inertia, and chemical producers invested heavily in all areas of digital transformation. Cloud-based software applications were necessary to facilitate remote work, and data analytics and machine learning emerged as differentiating capabilities in the market.

Fast forward two years, most in the industry have returned to the office, and cloud-based advanced analytics software is here to stay, elevated from an engineering tool to a platform for corporate IT innovation.

Continually Expanding Market Requires Increased Differentiation

According to industry analysts, the chemicals market is expected to grow at a CAGR between 4-10% in 2022. With demand holding steady, competition to acquire and retain customers is forcing manufacturers to differentiate. Key areas of differentiation include:

  • Product offerings – Developing innovative chemical products tailored to the needs of consumers farther down the value chain.

  • Brand image – Reducing emissions, waste, water, and energy consumption, and eliminating process safety incidents to meet corporate sustainability pledges and create a positive brand association.

  • Workforce and culture – Leveraging innovative digital technologies and remote monitoring centers to attract and retain talent.

Specialty Commodities, Sustainable Emissions, and Glam Plant Jobs

If you read this section’s title as a list of contradictions, you’re not wrong. Creating differentiation in the areas of product, brand, and workplace culture are tough tasks for any company, but particularly those in the chemicals industry.

  • Specialty Commodities: Smaller-scale specialty chemical manufacturers have differentiation on their side. Their equipment is versatile enough to produce product variations tailored to unique customer needs to increase stickiness. Ethylene, however, made the same way, using the same equipment, by dozens of companies in hundreds of plants around the world, is unlikely to undergo a renaissance of product differentiation. In the case of commodities, what they cannot offer in product differentiation, they must make up for in other areas.

  • Sustainable Emissions: When the average person driving on the interstate passes a chemical plant, they see fire (flare) and smoke (usually water vapor), which is often perceived as pollution. While those in the industry know these vents, flares, and cooling are designed to limit emissions, it is no secret that the industry bears a large carbon footprint. Reductions in emissions, waste, energy, and utilities consumption are all viable, but require the right data be measured, stored, made available for analysis, and insights be transparent and trusted by operations to transform them into action.

  • Glam Plant Jobs: Until recently, chemical manufacturers created talent pools of engineers recruited from university, who would work their way up the organizational ladder into staff engineer or management ranks, retaining organizational knowledge from career inception through retirement. Not only is this no longer the norm, but no longer within the realm of possibility. Companies are now lucky to keep an employee for five years, meaning 1) they need to create a workplace that millennials and Gen Z find innovative, engaging, and ethical, and 2) knowledge transfer and retention capabilities will make or break their market performance.

Three Birds, One Stone

Advanced analytics solutions play an integral role in addressing these industry differentiation challenges. Live data connectivity to all relevant manufacturing, business, and contextual data sources paired with self-service analytics tools help specialty producers tighten quality control and scale up from R&D for new products. SaaS architectures inherit the robust cybersecurity investments of the cloud hyperscalers and enable connectivity to data sources around the globe and across value chains.

  • Commodity producers can leverage data transparency between upstream and downstream consumers to better understand how feed properties impact their production process.

  • Advanced event definition and detection capabilities can identify opportunities to reduce energy consumption based on past operating data.

  • All of this can be done from anywhere with an internet connection, offering remote or hybrid work conditions, inspiring remote monitoring centers, and building collaborative, data-based culture that attracts and retains company talent and knowledge.

Stay tuned for our Chemicals Industry Update: Part 2 to learn how industry leaders are addressing this need for differentiation, improving profitability, and sustainability along the way.

If you are ready to discuss how Seeq can improve your operations, please contact us to speak with one of our industry experts and schedule a demo today.