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    Commodity Chemicals 

An opportunity to increase market share

The American Chemistry Council (ACC) projects that production of commodity chemicals will grow by 4.9% in 2017. Growth is forecast to increase YoY by 6.3% in 2018. Exports will play a large role in expanding production, led by bulk petrochemicals and organics as well as plastic resins. There will be strength in the production of inorganic chemicals, synthetic rubbers and manufactured fibers as well. In Europe, where the industry has been under pressure from increased globalization and the high cost of doing business, the European Chemical Industry Council (Cefic) is predicting a small uptick in overall chemical production in 2017.

Undoubtedly, the US and Europe face some strong headwinds in the shape of competition from Asia Pacific (which accounts for more than 50% of the market). Yet, as chemical production continues to rise, there is a real opportunity for executives to maintain and increase their global market share.

M&A activity

The landscape for M&A in the chemicals industry is also shifting as the industry’s debt situation reaches an important stretch. With executives and shareholders across the industry actively looking at M&A opportunities to drive top and bottom-line expansion, it pays to be prepared. Preparation involves conducting pre-acquisition due diligence, helping break down the functional and cultural silos that hamper successful post-acquisition integration and assisting with centralization, synergy and cost reduction and strategic asset disposals.

Maine Pointe has found that strategizing with senior management pre-merger has helped them to accelerate synergies. We can uncover supply chain and operations-oriented value creation opportunities that enable you to quantify EBITDA improvements, together with working capital risks and opportunities.

Areas of innovation 

Competitive edge is often based on know-how or production techniques that provide small but significant advantage for efficiency, yield and cost. While many commodity chemical companies are taking steps to lower input costs to grow margins, they are tending toward a siloed cost-center-by-cost-center reduction. The most successful companies in the sector are those that have best-in-class performance across all functions, aligning supply chain strategies with operational strategies to embed a total value chain perspective.

What Maine Pointe achieves 

Client overview

A multibillion-dollar integrated producer of fertilizer, industrial and animal feed.

What we did
  • Redesigned rail service across the client’s network
  • Led the effort to gain carrier buy-in for the new network
  • Coordinated and facilitated network modeling efforts 
Outcome
  • A network-wide redesign of rail service
  • Reduced average cycle time by around 50%
  • Annualized savings in excess of $15M
  • Increased rail fleet utilization, enhanced the client's ability to profitably serve the  North American market
  • Increased velocity throughout the North American network
We have deep experience in this sector and having worked with 3 of the top 5 crop nutrient providers in the world and 3 of the top 5 crop nutrient resellers. Consequently, we are very aware that this is an especially competitive and innovative market sector.

Client overview

A major integrated chlorovinyls manufacturer.

What we did
  • Installed a Management Operating System that reduced internal and external car days and measured performance of internal resources
  • Negotiated a service level agreement with a rail car repair supplier that included lower hourly and material rates and guaranteed turn time incentives
Outcome
  • Increased capacity that enabled the client to reduce its rail car fleet by 40 cars with potential for a 100-car reduction
  • The client's supply chain organization met its savings targets for the year

Clients speak

Maine Pointe has been instrumental in helping guide PotashCorp with our long-term transportation and distribution strategy. With a tremendous team possessing expertise in many disciplines, they were able to communicate knowledge, and effectively transfer it, to our people. We have been extremely pleased with their performance.”

G David Delaney, EVP and COO, PotashCorp


Don't just take our word for it

 

Industry perspectives and practical insights