The industry experienced very strong export performance last year, extending into this year, notes Kevin Swift, chief economist for the Washington, D.C.-based American Chemistry Council (ACC, www.americanchemistry.com). “There was roughly a $4.6 billion [trade] surplus last year. Exports have surged so much that they’ve offset the deficit in pharmaceutical chemicals.”
That trade balance for pharmaceutical chemicals persists in its multi-year drop, the ACC notes in its December 2010 “Year-End 2010 Situation & Outlook Report.” The ACC projects that the pharmaceutical chemicals deficit will continue its decline in 2011, down 5 percent from 2010 to an estimated negative $42.8 billion. However, the Council also foresees all other segments, except agricultural chemicals, increasing in 2011 by approximately 10 percent. “We expect the surge to continue into this year, maybe longer,” Swift remarks.
The ACC also predicts that during 2011, as the global economy advances, trade in chemicals will continue to expand. “With a lower dollar, continued robust growth in emerging markets, and a more favorable oil-to natural-gas price ratio, the outlook for chemical exports is good,” the ACC notes in the “Year-End 2010 Situation & Outlook Report.”
How good is the outlook? “Exports will grow 9.7 percent to $186.4 billion in 2011 before growing 8.6 percent to $202.5 billion in 2012. Imports are expected to grow by 7.8 percent to $179.2 billion before growing by 10 percent to $197.1 billion in 2012, held back by relatively modest growth in the U.S,” the report says. As a result, the trade surplus in chemicals will continue to expand in 2011 to $7.2 billion before slipping back to $5.4 billion in 2012 on higher import growth, the ACC predicts.
Drill, drill, drill
Natural gas from the Marcellus Shale in the Appalachian Basin helped the current surge, Swift suggests. But restrictions on, and the shortage of, crude-oil feedstock didn’t help. “Gulf [of Mexico] permits are trickling out, but exploration and production is nowhere near what it used to be. Energy-intensive manufacturers need access to a reliable and affordable energy supply,” declares Owen Kean, ACC senior director for energy policy. “We need normal production to resume in the Gulf, and we need policies to open access to other areas of the Outer Continental Shelf, which [President Barack] Obama plans to keep off-limits through 2017.”
The U.S. federal government policies and implementation of its regulatory process also frustrates the industry. In March 9, 2011, Congressional testimony, Michael P. Walls, ACC vice president for regulatory and technical affairs, said, “The process of Federal regulatory impact analysis can be improved significantly by regularly and comprehensively assessing cumulative regulatory impacts and employment impacts. Unfortunately, current practice relegates both of these elements to minor roles in impact analyses, if they are even acknowledged.” Further, he noted, “the type and quality of the jobs created or affected by a proposed regulatory action need to be identified.”
Workforce attrition remains an issue. To tackle this, last year, the International Society of Automation (ISA), Research Triangle Park, N.C., launched a new committee—ISA106: Procedural Automation for Continuous Process Automation. “It’s happening because of the brain-drain from people with 20 to 30 years experience leaving,” comments Larry O’Brien, former research director with ARC Advisory Group Inc. (www.arcweb.com), Dedham, Mass. O’Brien, who recently left ARC to accept another position, believes a draft technical report may be coming in June.
“Everybody is facing an aging workforce,” echoes Tobias Scheele, Lake Forest, Calif.-based vice president for advanced applications for automation supplier Invensys Operations Management (iom.invensys.com). This issue spans the entire plant, he emphasizes. “Operators today should be empowered to make decisions having a business impact—all within a reliable safety envelope.” Modeling will provide capabilities to facilitate informed decision-making, he suggests. “We have a couple of prototypes. One is the look-ahead model. One is the decision-support model, which can be part of the workflow.”
Companies also face aging infrastructures. In its 2010 year-end report, the ACC forecasts that industry global capital spending will increase in 2011 by 13.5 percent to $280 billion. And domestic capital spending will grow by about 10 percent from 2010 levels to approximately $27 billion.
In of all this, the process automation market is improving, O’Brien remarks. “It looks like the market grew by more than 2.5 percent from 2009 to 2010. That’s better than I’d expected; I thought it would be fairly flat or about 1 percent.”
O’Brien is optimistic about 2011. “Many modernization projects were put off during the recession. I believe we’ll see an uptick in modernization later in 2011 and then in 2012,” he says. That will make production more efficient—and boost the growing upsurge that’s ahead.”
C. Kenna Amos, firstname.lastname@example.org, is an Automation World Contributing Editor.
American Chemistry Council
ARC Advisory Group Inc.
September 2009, Related Primer – Chemical Industry Must Adopt Higher Automation Levels
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