As Chemistry Goes, So Goes America's Recovery

Sept. 1, 2010
Chemistry touches virtually everything manufactured.
Thus, “when [major] industries feel economic pressure, so do we,” says Kevin Swift, chief economist with the Washington, D.C.-based American Chemistry Council (ACC,  Through the past several months, global chemical output has risen, he adds. “Moderate year-over-year gains suggest a softening global recovery. In the U.S., chemical output has slipped in all regions.”That’s dismaying. “For every chemical-industry job in the United States, an additional 5.5 jobs are created within the economy. Also, chemical-industry jobs are high-paying, averaging 43 percent higher wages than the typical manufacturing job,” Swift notes. And since this latest recession began, 75,000 of the industry’s workers have lost their jobs, he adds.Besides this shrinkage, the chemical process industry (CPI) faces an aging workforce and simultaneous lack of replacements. “There’s a huge ‘brain drain.’ The biggest thing we see now? The shortage of people from layoffs and early retirements,” observes Larry O’Brien, research director for process automation at ARC Advisory Group Inc. (, Dedham, Mass. “The industry can’t find knowledgeable people to fill vacancies.”If all this isn’t sufficiently challenging, the CPI also confronts a lopsided trade balance. From a 1977 surplus of $19.1 billion, it fell to a deficit in 2002 and has remained negative, Swift says. “These deficits were the first that the industry had posted since 1924.”Rising output?So is there good news anywhere? “Absent a return to recession, we expect chemistry output to rise 6 percent in 2010, before moderating to 4 percent growth in 2011, and 3.6 percent in 2012,” Swift forecasts. He also predicts domestic demand will continue to improve as the American economy does, but “exports to Europe will be under pressure in the wake of a stronger dollar and a weaker European economy.”China and other Asian markets, as well as Latin America and neighboring nations, will drive external demand, the ACC believes. “Excluding pharmaceuticals, output is expected to rise 6.8 percent in 2010. Basic chemicals and some specialty segments are expected to experience the strongest gains,” Swift suggests. He predicts that chemical production “will rise solidly in all regions in 2010, with the strongest gains in the Gulf Coast and Ohio Valley regions.”But always present regulatory pressures potentially curb predicted growth and current operations. Even so, “one major legislative effort we support is the meaningful reform of the Toxic Substances Control Act of 1976,” Swift comments. However, the ACC rejects the Congressional initiative regarding proposed cap-and-trade regulations for so-called greenhouse gases. The organization fears potential far-reaching costly consequences, such as dramatically higher prices for energy sources, including natural gas.Looking within to reduce costs, the CPI now also reevaluates how it does business, suggests Louis Meyer, director, CPI, in the Global Industry Solutions Group with Plano, Texas-headquartered automation supplier Invensys Operations Management ( “I see more and more [CPI] players needing and looking to make changes that may prove to be radical.”Two sets of needs steer this activity. “First, producers seek a better understanding of what’s happening in their business. They require reliable, trustworthy data,” Meyer says. Second, there’s a need for better collaboration among all parts of the business, he states. They can achieve this by sharing a common data pool with information transformed for specific jobs or roles; by working, using a common “language” that’s best for the business; and by getting immediate feedback on the impact of their decisions on business performance.“You’ve got an industry where you’re going to have less personnel; older control systems in desperate need of modernization; and new systems with a ton of information—and using them and their data intelligently,” remarks O’Brien. As he says, this will all challenge the CPI—and, thus, America’s economy.C. Kenna Amos, [email protected], is an Automation World Contributing Editor.American Chemistry Council, ACCwww.americanchemistry.comARC Advisory Group Inc.www.arcweb.comInvensys Operations

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