This Issue ...
- Chemical Industry News
- Chemical Power Players: Last month, ICIS Chemical Business magazine revealed its annual list of the top 40 power players in the chemical industry. This year, Global Editor Joseph Chang says the list contains "some big surprises." Read more.
- New Strategies Needed: A new report by the Deloitte Touche Tohmatsu Chemical Group and Deloitte Research details the range of competitive dynamics — that differ from today in nature and intensity — which the chemical industry faces between 2010 and 2020. Read more.
- Renewable Chemicals Outlook: A recent report, Renewable Chemicals Market (2009-2014), predicts the global renewable chemicals market will be worth US$59.1 billion by 2014. Read more.
- Sharp Decline in Oil and Gas Orders: According to ODS-Petrodata, new orders for 16 surveyed key contractors to the oil and gas industry declined 52 percent in the first half of 2009 relative to the same period in 2008. Read more.
- Feature Article
- Go Green Without Going in the Red: These simple energy solutions can help all types of plant engineers solve a complex energy-efficiency problem. Read more.
- Market Report
- The Plastics Scorecard: This new tool seeks to replace harmful plastics with less toxic, more recyclable alternatives. Read more.
- Announcements: Mark your calendars now for the ISM Chemical Group Conference, March 4-5, 2010 at the Westin Riverwalk in San Antonio. Read more.
- Additional Resources: Check out these links to additional resources from the ISM Web site. Read more.
- Contact Us about ISM eDigest: Chemicals
|Chemical Industry News
Chemical Power Players
Top 40 Chemical Industry Power Players, Revealed
In December, ICIS Chemical Business magazine revealed its 2009 list of the top 40 power players in the chemical industry. And, according to Global Editor Joseph Chang, the ICIS Top 40 Power Players for 2009 list contains "big surprises."
"Power changes hands quickly, and the shift accelerates, especially during turbulent times," Chang says. "The rankings reflect reversals in fortune, as well as the emergence of dynamic new leaders who will have a huge impact on the global chemistry industry for years to come."
Khadem Al-Qubaisi, the 38-year-old managing director of Abu Dhabi's International Petroleum Investment Co. (IPIC) tops this year's list. ICIS Chemical Business Deputy Editor and London bureau chief Will Beacham credits Al-Qubaisi with pushing IPIC forward through the acquisition of NOVA Chemicals — a US$2.3 billion deal — in July. Additionally, Al-Qubaisi's ambitious growth plans for IBIC include adding 4 million tons per year of petrochemical capacity at its Borouge facility within three years, possibly as few as two years. "This is at a time when most in the industry have been hanging on for dear life in the fight for survival," Beacham points out.
For his part, Al-Qubaisi says he wants IPIC to be a multinational hub for the petrochemical industry. "There will be more plants in Abu Dhabi, plus expansions to existing plants," he tells the magazine. "I'm interested in buying more petrochemical plants worldwide."
Second on the list is IPIC Chairman Jurgen Hambrecht, who is integrating the company's acquisition of Switzerland's Ciba Specialty Chemicals.
Ranking third is Dow Chemical Chairman and CEO Andrew Liveris, who is working on the acquisition of Rohm and Haas, a U.S. specialty chemicals company.
Chang lauds Hambrecht and Liveris for stabilizing their companies and positioning them for growth through one of the most difficult downturns the industry has seen.
The complete list is available online.
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New Strategies Needed
Chemical Industry: New Strategies Needed to Regain Profitable Growth in the Coming Decade
A new report by the Deloitte Touche Tohmatsu (DTT) Chemical Group and Deloitte Research, The decade ahead: Preparing for an unpredictable future in the global chemical industry, details the range of competitive dynamics — that differ from today in nature and intensity — which the chemical industry faces between 2010 and 2020.
The report reviews the financial and operational performance of 231 global public chemical companies between 1998 and 2008, including specialty, commodity and integrated players. It shows that profitability has failed to improve in both the commodity and specialty chemicals sectors during that period. Whereas the commodity sector experienced the industry's sharpest decline in falling margins, the specialty chemicals sector also fell.
"Maintaining and improving value could be rather challenging unless chemical companies take meaningful actions to reverse the trend," explains Deloitte Vice Chairman and Process & Industrial Products Sector Leader Tim Hanley. "The research found that a business-as-usual approach was not adequate in the last 10-year period for sustaining value."
Hanley predicts the decade ahead carries even more uncertainty and will require companies to focus more on new approaches and responses to tackle unprecedented challenges. "By analyzing the interplay between three macro trends — economy, regulation and technology — companies can use scenario thinking to strategically plan for unpredictable times ahead and test new innovative approaches to achieve sustainable and profitable growth," he advises.
The Global Perspective
As the report points out, Western commodity chemical companies are taking advantage of growing opportunities in the Asia-Pacific region and other areas within the developing world. In fact, according to Hanley, it is forecast that China and the Middle East will contribute 78 percent of new capacity by 2013. Meanwhile, the United States and European Union economies continue to rely on the key role the chemical industry plays.
Duane Dickson, a principal at Deloitte Consulting LLP, says a key differentiator for global chemical companies will be developing and implementing customized growth strategies that have the flexibility to be altered if unplanned obstacles or openings arise. "The success of the business model framework will depend upon more sophisticated methods for predicting market behavior and increasing the discipline of the business, product, and customer portfolio," he explains. "Given the uncertainty looking ahead, keeping a range of alternative possibilities in sight is crucial."
To this end, the report defines three scenarios depicting how the global business environment could unfold between now and 2020, along with strategic implications for chemical companies:
- Transition. Western economies suffer inflationary spells followed by hard landings, while the developing world focuses on domestic consumption and enjoys steadier growth. Economic and energy supply issues are higher priorities than emissions control.
- Resilience. In both developed and developing nations, growth rebounds as governments play an active role in managing their economies, directing investment, and promoting national competitiveness. Renewable energy and nanotechnology are among the top areas targeted for support.
- Dislocation. Difficult challenges and heavy-handed government policies keep growth subdued in the West. In Asia and the Middle East, the falloff in foreign export demand causes an economic slowdown that leads to social and political unrest.
"Becoming more disciplined and focused through scenario planning allows chemical companies to perform effectively in a global industry that is increasingly commoditized, cyclical and competitive," says Dwight Allen, director, Deloitte Research. "By paying closer attention to future trends, executives can better anticipate and establish strategic options for what may lie over the horizon — and alter course as required."
The complete list is available online.
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Renewable Chemicals Outlook
Global Renewable Chemicals Market Worth US$59.1 Billion By 2014
A recent report by is a research and consulting firm MarketsandMarkets, Renewable Chemicals Market (2009-2014), expects the global renewable chemicals market to be worth US$ 59.1 billion by 2014. The United States and Europe are expected to account for nearly 30 percent and 35 percent of the total revenues, respectively.
The renewable chemicals market includes all the chemicals obtained from renewable feedstock — agricultural raw materials, agricultural waste products or biomass, microorganisms and so on. The development of this market is driven by the fact that renewable chemicals decouple economic growth from finite, nonrenewable resource consumption, and also help diversify the feedstock portfolio, the report states.
For more information on the report, visit the MarketsandMarkets Web site.
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Sharp Decline in Oil and Gas Orders
50% Drop in New Orders Heralds Trouble for Oil and Gas Contractors
According to ODS-Petrodata, a market intelligence firm for the upstream oil and gas industry, a window of opportunity has emerged for oil and gas operators in 2009 and 2010.
New orders for 16 surveyed key contractors to the oil and gas industry declined 52 percent in the first half of 2009 relative to the same period in 2008. Whereas some contractors have landed major orders over the last few months, securing work in the near term, an increasing share have seen their backlogs deteriorate rapidly. "The situation could become critical for some if they do not see new orders starting to come through towards late 2009/early 2010," the firm reports.
According to the latest MSS Industry Trends outlook, covering field development and pipeline construction, overall activity levels (excluding the effects of cost inflation) are expected to see a 7 percent drop in 2009 compared to 2008. Although the global economy is starting to recover and oil prices have risen from the lows of February 2009, the sharp reduction in new orders is expected to lead to further reductions in activity levels in 2010.
The cost of a new field development project (not including drilling) is now expected to decline by an average of 18 percent year-on-year in 2009, a downward revision from -12 percent to -13 percent forecast in April this year. This is led by falling raw material costs, as well as a decline in contractor margins, as oil and gas companies are taking advantage of their strengthening position to push for lower prices.
Falling costs are a strong contributor to the drop in spending levels in 2009, according to Senior Market Analyst Dag Kristiansen. When the decline in costs is taken into account, spending is expected to fall by nearly 25 percent compared to 2008. ODS-Petrodata does not expect a return to the 2008 activity and spending levels until 2012-2013.
For more information, visit the ODS-Petrodata Web site.
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Go Green Without Going in the Red
A few simple energy solutions can help plant engineers solve a complex problem.
By Karl Stevens, J.D., CPSM
In today's struggling economy, production plant engineers — whether they are involved in the chemical production process or not — are frequently faced with the unenviable and almost magical task of "finding" money to fund their own projects to generate savings. Maintenance, repair and operating (MRO) budgets are set for the fiscal year and typically are inflexible.
To further complicate matters, there is also the declared (and perhaps wishful) desire on the part of many companies to become good corporate citizens by providing environmentally friendly plant solutions for MRO and energy-related issues. Yet, these green initiatives can often put a company in the red.
How does a harried plant engineer find the money to fund energy projects that are both money-saving and environmentally responsible? The answer lies in changing the corporate mind-set and engaging in a bit of detective work.
The Biggest Culprits
When left to their own devices, most people will take the easy way out. That statement is not meant to be a social indictment, but a simple fact of human nature when you are dealing with energy-related issues. For example:
- When a break room, conference room or copy room is vacated, how many people remember to turn off the lights behind them?
- At night, before leaving their offices or work stations, how many people turn off not only their computers, but also their computer monitors?
- In your plant, how many times have you seen hissing high-pressure air hoses left unattended? Or, does your air-compressor load not follow your plant's work load?
- Are your loading dock doors left open when there is no activity?
- Are lights illuminating unoccupied warehouse space? If your production facility shuts down over the weekend, are lights still left on?
All these missteps waste a lot of energy, which equates to money lost to the corporate bottom line. Small though they might seem, they rapidly add up in lost dollars.
Fortunately, there are simple, yet effective ways that plant engineers can find hidden money in simple demand-side energy-saving projects, while becoming corporate heroes for bringing social and environmental responsibility to the company. These practices enable a company go green without spending a lot of green.
The energy-wasting issues mentioned here are easily remedied — turning off lights when not in use, duct-taping or replacing a leaking air hose, sealing exterior doors, replacing cracked or broken windows, reducing higher-than-required pressure on air hoses, closing open doors, and turning off both computers and monitors when not in use. Yet, the least expensive (and most energy-efficient) measure is also the most difficult: re-educating corporate employees to think green, thereby returning lost dollars to the corporate bottom line. They must keep in mind that every dollar matters.
Practical Action Steps
Here are some other simple, yet cost-effective, means by which chemical and other plant engineers may go green without going in the red:
- Let's take the example of a meeting that has lasted all day. Because everyone is tired, they're thinking of nothing but leaving the conference room. Certainly they're not thinking about turning off the lights as they leave, nor is it part of their job description (although maybe it should be). Typically, people aren't conditioned to turn off the lights upon leaving a room. A simple, tasteful and inexpensive placard that reads, "Please turn off the lights," positioned next to the light switch, is the type of out-of-the-ordinary stimulus that will remind people to do just that. If you have the budget, installing motion sensors in meeting rooms or offices is an even more effective measure which quickly pays for itself.
- Heat recovery from boiler exhausts may be used to preheat water used to clean production equipment.
- Install isolation valves in production rooms.
- Install smart controllers on compressors. Compressors, in general, cycle between ON and OFF. Inspect compressed air valves, regulators and gauges. Performing an audit of your compressed air use to determine optimum cycle times will generate great savings. You also might consider installing air moisture separation kits; dryer air is cooler and results in reduced energy consumption.
- Replace air dryers with zero-purge dryers.
- Consider weekend or off-hours compressor shutdowns.
- A corporate edict that all computers or monitors must be turned off prior to leaving the office is not only a zero-cost method of saving electricity, but also an enunciated policy that the company is starting to think green. For example, a sophisticated computer left on around-the-clock can use as much as US$405 per year in electricity. However, using the same computer — but only using it during a typical nine-hour work day and turning it off at night — can lower that cost to as little as US$152 per year. Multiply those savings times the number of computers in your office or plant, and major savings can be realized.
- Lighting is always a large portion of a plant's energy spend, but changing to high-efficiency lighting throughout your plant, and then illuminating only occupied work spaces, is a significant energy and cost savings.
- HVAC typically is the glutton that consumes about 50 percent of your plant's electricity. However, if you adjust your plant's ambient temperature down in the winter, or turn it up in the summer — one degree at a time, every few days until your employees notice the climate change — you'll save quite a bit on your HVAC bill.
- Some energy-saving product manufacturers will literally put their money where their mouths are and let you try their products or devices for free in your plant until you are satisfied. Others offer a savings-sharing plan, or even defer payment for the product until the return on investment has been achieved. But, buyer beware! If the offer seems too good to be true, it probably is. Check references from actual product users, ask for independent test results, perform a financial analysis of the supplier and then demo these energy-saving products under your company's actual plant conditions.
- Finally, and perhaps most important, you must train your staff on these important energy-saving best practices.
To get the ball rolling on energy savings at your plant, an energy audit by your local natural gas or electric utility company is an excellent first step in the greening process and is typically free or very low-cost. You will be amazed at the number of "energy hogs" you can eliminate with little expense to your company.
Become an energy detective and you will be able to save your company both energy and money.
Karl Stevens, J.D., CPSM, is a senior global category manager at Catalent Pharma Solutions, Inc. in St. Petersburg, Florida. To reach this author, send an e-mail to email@example.com.
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The Plastics Scorecard
A new tool seeks to replace harmful plastics with less toxic, more recyclable alternatives.
By RaeAnn Slaybaugh
In September 2009, Spring Brook, New York-based Green Production Action (GPA) released its Plastics Scorecard, a new tool which, according to the group, charts a course for plastics — from feedstock production, to manufacturing, to use and, eventually, to disposal.
Research Director Mark Rossi and other GPA officials explain that because plastics' primary source of raw materials is nonrenewable fossil fuels, they pose numerous human and health problems across their life cycle. "During use and upon disposal, toxic chemicals common in plastics manufacturing are often released," their report states. "Coupled with low recycling rates, this contributes to 'plastic pollution' across the globe, in the oceans and on land."
Three Core Principles
When designing the scorecard, GPA officials focused on three main principles for designing more sustainable plastic products and diminishing their carbon footprint: sustainable resources, green chemistry in manufacturing and closed-loop material flows/systems.
Sustainable resources are grown, harvested and/or collected in a sustainable manner. While no widely accepted principles of sustainable agriculture exist yet for commodity crops, the Institute for Agriculture and Trade Policy and Friends of the Earth specify that crop-growing practices should be sustainable for local communities (in other words, promote local ownership and not jeopardize food security) and be sustainable for the climate, environment and public health.
Green chemistry in manufacturing strives to manufacture plastics based on a set of 12 principles defined in 1999 by Paul T. Anastas and John C. Warner in their book, Green Chemistry: Theory and Practice. For example, one principle promotes the design of less hazardous chemical syntheses, while another encourages using safer solvents and reaction conditions. Another sanctions the design of chemicals and products that degrade to innocuous substances after use, and so on.
What all 12 principles have in common is an alternative path to manufacturing plastics based on processes that reduce (and sometimes eliminate) the use or generation of hazardous substances in the design, manufacture and application of chemical products.
Closed-loop systems manufacture and use plastics that either contain a very high percentage of post-consumer recycled content or are biodegradable into safe, usable organic matter. According to GPA officials, the ideal scenario is to either create plastics that are easily recycled back into the same product (referred to as "technical nutrients") or can be composted into nutrients healthy for the soil ("biological nutrients").
How the Grades Add Up
The scorecard's grades (which range from F to A+ depending on the chemical's life-cycle performance) are defined for 11 attributes within four stages:
1) Pesticide use in agriculture
2) Genetically modified organisms (GMOs)
3) Sustainable agriculture practices
4) Post-consumer recycled (PCR) content
5) Primary and intermediate chemicals
Use/end-of-life (combined criteria):
10) Chemical releases
The lowest grade assigned to any of these attributes determines the overall grade for a plastic. For example, if a plastic receives a Grade F for monomers, the overall grade for the plastic material is an F.
Among all 11 attributes, however, there are only six for which a Grade F is possible: pesticide use, GMO use, sustainable agriculture practices, monomers, additives and chemicals releases. The lowest grade for the other five attributes begins at Grade C-.
To this end, GPA concedes the scorecard is a challenging system to fare well in — for now, at least. "Any plastic product that can attain Grade B- is close to the highest level attainable by plastics today," the report explains. "A fossil-fuel-based plastic cannot achieve Grade A+ because fossil fuels are nonrenewable, and therefore not sustainable, feedstocks. The highest grade a fossil-fuel-based plastic can achieve is a Grade A-."
A Fly in the Ointment?
When the scorecard was released in October 2009, it faced criticism by the American Chemistry Council's (ACC) Plastics Department. ACC criticized GPA for not factoring into the scorecard impact data on product manufacturing, transportation, service life (or use), and end-of-life options including recycling, disposal and energy recovery.
Also missing, according to ACC officials, was a thorough evaluation of the benefits of a plastic product, as well as comparisons with alternatives. "In contrast to the narrow approach espoused by GPA, a complete life-cycle assessment provides environmental impact data not only on materials, but also on [these factors]," they argued. "When such critical factors are included in an examination, plastic products generally rate very favorably compared to alternatives."
To support their point, ACC cited the results of a 2009 European study which showed that using plastics instead of alternative materials helped reduce energy use by 26 percent and curbed greenhouse gas emissions by 56 percent across a multitude of market sectors.
"America's plastics makers have a history of bringing to life innovations that help to reduce the use of raw materials and energy, lessen greenhouse gas emissions and waste, and increase product recycling," ACC officials pointed out. "Since plastics are a valuable resource — too valuable to waste — we're at the forefront of efforts to reduce litter through increased access to recycling, advancements in recycling technology and public education."
Meanwhile, GPA maintains that its Plastics Scorecard is transparent, with clear rationale and replicable results.
To view scorecard assessments of four generic plastic materials — polyethylene terephthalate (PET), polylactic acid (PLA), polypropylene (PP) and polyvinyl chloride (PVC) — visit the CPA Web site.
To learn more about which plastics are most recyclable (and where), Waste Management, the largest recycler of municipal solid waste in North America, offers plastic resin identification codes and information on plastic recycling on its Web site.
RaeAnn Slaybaugh is a senior writer for the Institute for Supply Management™. To reach this author, please send an e-mail to firstname.lastname@example.org.
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ISM Chemical Group Conference Scheduled for March 4-5, 2010 in San Antonio
Mark your calendars today for the ISM Chemical Group Conference March 4-5, 2010 at the Westin Riverwalk in San Antonio. The ISM member and nonmember cost for attending is $399. Although this event is still in the planning stages, promotional e-mails are scheduled to be distributed soon. For the latest information, check the ISM Chemical Group Resources page or contact Patrick Hurd by e-mail or by calling 404/652-6208.
No-Cost Webinar January 21: "Building Competitive Advantage"
Be sure to join ISM on January 21, 2010 for a free Webinar, "Building Competitive Advantage." This event begins at 1 p.m. EST/10 a.m. PST and will last for 60 minutes. Attendance at the live session of this Web seminar qualifies for one Continuing Education Hour (CEH) credit at ISM.
With the global economy emerging from a deep recession, procurement professionals grapple with higher performance expectations more than ever. Supplier collaboration is increasingly more important to help organizations regain the profitability they enjoyed just a few years ago.
Leading procurement organizations have the right processes and technologies in place to regain their competitive advantage. They have raised the profile of procurement within their enterprises to better manage total costs and negotiate optimal contracts. They are also masters at engaging suppliers in relationships that drive profitability.
If your organization is not quite there, now is the time to take action. Join us for a live, interactive panel discussion where you'll learn:
- Practical supplier partnering approaches that encourage innovation
- How technology can give you a competitive advantage, both internally and externally
- Strategies to strengthen your supplier relationships to increase profitability
- Techniques to source high profile services that can reduce costs
Featured speakers include DHL's Wayne Evans, senior vice president of procurement, and Manager of Procurement Sven Blawatt; and Sean Correll, global director of consulting services at Emptoris. The event will be moderated by Donavon Favre, a professor of supply chain management at North Carolina State University.
Registration is available online.
Cisco Exec to Deliver Opening Keynote at ISM 2010 Annual Conference
Institute for Supply Management™ (ISM) announces supply chain performance leader Angel L. Mendez, senior vice president, customer value chain management for Cisco, will deliver the opening general session address at ISM's 95th Annual International Supply Management Conference and Educational Exhibit in San Diego, April 25-28, 2010 at the San Diego Convention Center.
Mendez will share wisdom gained from more than 24 years of experience in manufacturing and supply chain management assignments, on Sunday, April 25. He currently leads a global organization responsible for accelerating innovation and value for Cisco customers. His business background includes extensive international business experience in Canada, Europe, Latin America and Asia. Mendez was named by Business 2.0 Magazine to the "Business 2.0 Dream Team — All Star Executives any Company Would Kill For." In 2005, Hispanic Business Magazine placed him on its list of the "20 Most Influential Hispanic Executives in Corporate America."
Premiere Supply Management Event
For 94 years, ISM has consistently delivered practical essentials for a strong supply management career. ISM's 95th Conference year is no exception, and includes a schedule with learning tracks that focus on risk management, best practices in supply management, logistics, leadership management and talent, and services procurement.
ISM's annual Conference attracts supply management professionals from multiple countries and industries. The four-day event offers numerous opportunities to:
- Gain practical applications.
- Identify best practices you can use.
- Find colleagues with similar challenges.
- Dive into your job with renewed energy.
- Connect with colleagues.
For Conference registration and hotel accommodations details, visit the ISM Web site.
January 31 Deadline approaches for 2010 J. Shipman Award Nominations
Institute for Supply Management™ (ISM) is currently accepting nominations for the J. Shipman Gold Medal Award and will continue taking nominations until January 31, 2010. The J. Shipman Gold Medal Award is presented annually to an individual whose persistent efforts have aided the advancement of supply management.
Johnson Shipman, a pioneer member of the New York affiliate of the National Association of Purchasing Agents, was well-known for giving liberally of his time and counsel. The award was established in 1931 to commemorate the contributions of Shipman, a man known for his vision, intellect and influence on important issues. The award is presented to those individuals whose modest, unselfish, sincere and persistent efforts have aided the advancement of the supply management field. Those chosen for the award have also assisted and guided members of the supply management profession in their endeavors.
The 2010 J. Shipman Gold Medal Award Winner will be honored at an awards luncheon on Tuesday, April 27, 2010 at ISM's 95th Annual International Supply Management Conference and Educational Exhibit in San Diego.
If you wish to nominate someone who has performed distinguished service for the cause and advancement of supply management as an innovator, community leader, mentor and teacher, please contact Janis Kellerman at 800/888-6276, extension 3023 (or, for callers outside the United States, +1 480/752-6276, extension 3023). Nominees do not have to be ISM members.
For more information on previous Shipman medalists, visit the ISM Web site.
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A Wealth of Information at www.ism.ws
Visit ISM's Web site, www.ism.ws, for more supply management resources. The site provides published articles, conference presentations and reference materials that pertain to supply managers in all industries. Here are some items that might be of interest:
- The November 2009 Inside Supply Management® article, The Global Reality of Geopolitics, focuses on your supply chain's readiness in the face of terrorism, war, disease and political unrest — just some of the geopolitical pressures that supply management executives face today.
- A recent eSide Supply Management article, The Top 5 Supply Management Programs in America, spotlights the U.S.-based supply management university programs that are doing the best job preparing students for increasingly global, integrated real-world supply management roles. David Aquino and Bob Kraus, authors of Leading U.S. Supply Chain Programs, 2009, surveyed 126 companies and 19 universities to determine how well U.S. universities are teaching 11 key components, or "talent attribute stations," necessary for supply management graduates today.
- Recovering From Economic and Financial Crisis, another recent Inside Supply Management® article, predicts the 2010 will bring with it positive economic changes (with sustained, if moderate, expansion). Financial headwinds may inhibit the pace of recovery, and growth may be bumpy, but a double-dip recession is not in the cards.
- Published in the November/December 2009 edition of eSide, Who Won? details how to assess negotiation outcomes using the Subjective Value Inventory. Author Jim Mullen, an associate professor of management at Elmira College in Elmira, New York, uses debriefing of negotiations as a primary teaching methodology.
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