Chemicals

Chemicals

James L. Gallogly, Chief Executive Officer, LyondellBasell Industries N.V.

Chemicals CEOs are optimistic about future prospects, despite worries about energy costs, raw materials prices, and skills shortages. They’re looking to technological advances, climate change and resource scarcity to transform their business over the next five year. To adapt, they’re already changing supply chains, production capacity and R&D and innovation capacity.

Chemicals CEOs are more optimistic this year
This year 56% of chemicals CEOs believe the global economy will improve over the next twelve months (compared to 44% of the sample overall), and 42% think it will stay the same. Just 2% expect it to decline. That’s a dramatic turn-around from last year. Sector CEOs are more confident this year too. An impressive 98% expect revenues to grow over the next three years.

but energy costs, skills, and raw materials prices stand out as looming risks
The picture isn’t all rosy. The threat of high and volatile energy costs is looming large, with 75% of chemicals CEOs somewhat or extremely concerned, far more than across the sample. Chemicals CEOs are more concerned than their peers across the sample about the availability of key skills, supply chain disruption and high and volatile raw material prices too. They’re also wondering what governments will do; 79% of chemicals CEOs are worried about government responses to fiscal deficit and debt.

Chemicals companies are looking to the US for growth 
More chemicals CEOs (44% vs. 30% overall) rank the US as one of the most important countries for their overall growth prospects over the next 12 months. And more of those planning an M&A, JV or strategic alliance are looking to North America too (41% vs. 30% overall). That reflects the boom in shale gas production which is lowering energy costs in the US. In Asia, Indonesia stands out as an important growth market for the sector.

Climate change and resource scarcity will transform the chemical industry
More than two-thirds of chemicals CEOs expect technological advances to dramatically change their business environment. But nearly as many chemicals CEOs (61%) believe that resource scarcity and climate change will transform their business over the next five years. 91% of chemicals CEOs agree or agree strongly that it is important for their company to measure and try to reduce their company’s environmental footprint. And in other research we’ve found that many chemicals companies are innovating to help their customers improve too.

And they’re changing supply chains, production capacity, and R&D in response to global trends
More chemicals CEOs see a need to change their supply chain in response to transformative trends than do CEOs in other sectors. That may partly reflect increasing interest in shifting some production from oil to biofuels or natural gas in response to resource scarcity and climate change. Nearly half have already started investing in production capacity, far more than across the overall sample. More have already started or completed a change programme around R&D and innovation capacity too, reflecting the strong focus on innovation we’ve seen over the past several years.

98%of chemicals CEOs are somewhat or very confident of revenue growth over the next three years.

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44%of chemicals CEOs rank the US as a top growth country for the coming 12 months.

 

Chemicals CEOs are changing everything from talent strategies to capacity investments to keep pace with global trends

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CEO interview quotes

"The next big thing has already happened in the United States. It’s the shale gas plays. It really became a significant event about three years ago but, having said that, it has continued to evolve, and more and more production has occurred. Some people say that the United States will become energy independent within the decade."

James L. Gallogly
Chief Executive Officer, LyondellBasell Industries N.V

"The real question is whether there will be the engineering skills and technical skills ready to take over from the baby boomers as they retire.

The shift in demographics causes us to think about a variety of training requirements. There’s succession planning, but beyond that, there’s the need to partner with communities and schools to make sure we have a trained workforce that’s ready and able to take over."

James L. Gallogly
Chief Executive Officer, LyondellBasell Industries N.V

"In petrochemicals, the challenge is the low industrial competitiveness of Brazil, which results from the cost of labour, the cost of raw materials, and the lack of infrastructure. As I mentioned earlier, Brazil’s future growth depends on solving issues that are bottlenecks to competitiveness, such as labour reform, tax reform and investments in infrastructure."

Marcelo Odebrecht
CEO, Odebrecht

"I believe in ‘sustainable’ growth. By this I mean growth that is sustainable in all aspects, not only environmental or financial growth, but above all drawing together the right people who have the right competencies and who identify with the business."

Marcelo Odebrecht
CEO, Odebrecht

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