Challenges faced by the Chemicals Industry

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General Manager, Brand, Technology and OEM, Chevron Lubricants

Fundamental changes in HSE regulations:

Regulations imposed on the chemicals industry are significantly growing in size and in stringency. Managers and their organizations are being held accountable. Fines are levied daily until compliance is achieved. The ecosystem is urged to contribute to a greener economy. In particular, chemical companies and their business customers are expected to improve the recyclability and bio-degradability of the products they offer to market. 

As part of urgency for the ecosystem to contribute to a greener economy, companies are required to reduce their own CO2 emission and waste.


Growing competition for commodity products:

There is increased competition for commodity type products that are simply based on price and volume. Hence, most if not all large chemical companies are spending millions to speed up pace of innovation. Faster innovation leads to faster idea development and inherently more unique products that can move companies away from commodity risk.


Growing demand variability:

Customers of chemical companies are outsourcing to avoid costs and complexity. This leads to a new demand for niche products (specialty chemicals) and services. Due to democratization of technology and expiry of process licenses protection, competition is growing. This represents a threat to avoid/mitigate by multinational corporations and an opportunity to exploit/expand by emerging-market players.


Resource instability

The speed of change in raw materials price and procurement uncertainties is often higher than the speed of innovation in the organizations. Faster innovation is sorely needed to improve overall organization agility. 

Due to the price volatility of raw materials and/or the procurement delays, organizations must be able to use alternative materials to avoid production disruption, but must ensure they will comply with their production practices in order to deliver the same level of quality to their customers.

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