In response to the dynamic development of the industry and growing customer demands, the experts in our laboratories are constantly developing new solutions for various industries and market sectors. New products are often introduced to our offer in cooperation with our customers, based both on the analysis of needs and application tests carried out in their production plants.
That is in part because the competitive landscape is changing. These changes can present new opportunities for chemical manufacturing companies but, at the same time, expose the industry to new vulnerabilities. Over the last three years, stakeholder pressure and government policies have incentivized investment in the energy transition. As a result, there appears to be an acceleration in the convergence of sectors related to the energy transition. For instance, some oil and gas companies are moving into critical minerals mining and processing,6 agriculture,7 and chemicals8 to secure clean energy supply chains. Meanwhile, some chemical manufacturing companies are moving into lithium processing, battery manufacturing,9 and clean ammonia10 for similar reasons. Therefore, while there are new opportunities for chemical manufacturing companies, the industry is also competing with other industries that often have stronger cash flows, such as large oil and gas companies.
The regional competitive landscape has changed significantly over the last three years, leading many in the chemical manufacturing companies to rethink their long-term strategies. Energy market volatility, evolving regional policy, and supply chain disruptions have sparked concerns about the deindustrialization of Europe and led some chemical manufacturing companies to re-examine their assets and supply chains. And additional shifts in talent requirements and clean electricity availability are expected to arise as technology evolves and decarbonization efforts increase (figure 2). Chemical manufacturing companies are expected to continue shifting their portfolios in 2024 as they make strategic decisions about the future of their business in this new landscape.
Onshoring, nearshoring, and friendshoring are gaining momentum. Supply chain disruptions became pervasive during the COVID-19 pandemic and were exacerbated by the Russia-Ukraine war.22 In addition, pressure to decarbonize is incentivizing the localization of supply chains. Not only does localization improve the economics of bio-based and recycled feedstocks, but the reduction in long-haul transport also reduces supply chain emissions. Meanwhile, friendshoring aims to help mitigate geopolitical risks and was visible in a recent deal between Australian and US companies, where the companies merged to secure a lithium supply chain.
The chemical manufacturing companies has been digitalizing its operations for decades, but it is only recently that digitalization has accelerated to a point where companies should be digital to help retain a competitive advantage. Companies seem to be moving past the stage of addressing specific use cases in silos and moving toward a broad approach to digitalization that integrates systems across operations and businesses. With digital integration, companies are benefitting from increased productivity, accelerated innovation, improved decision-making, and stronger customer relations.