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.
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.
A major integrated chlorovinyls manufacturer.
- 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
- 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
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
- A checklist for making the move to Total Value Optimization™
- From cost containment to strategic value creation
- Six practical initiatives US chemicals executives can implement right now