Chemical Companies

Chemical companies worldwide are expected to grow at a slower rate in 2005 after expanding rapidly in 2004. While reliance on natural gas feedstock helped US chemical companies withstand the surge in oil prices in 2004, European chemical companies were affected by the appreciation of the Euro against US dollar. Asian chemical industry, meanwhile, recorded robust growth owing to high economic growth in most Asian countries.

The origin of the organized chemical business can be traced back to the 19th century. Organic chemistry drove the development of chemical industry in the early years. The industry started off with the production of synthetic dyes from coal tar and progressed to the manufacture of caustic soda and chlorine through the electrolytic method. The chemical industry regularly came up with breakthroughs that revolutionized other sectors. The introduction of man-made fibres, especially rayon, transformed the textile industry. American Cyanamid introduced synthetic fertilizers in 1909, which dramatically improved crop yields.

Now the global chemical industry figures among the large industries in the world. It consists of the following sub-segments:

• pharmaceuticals;
• petrochemicals;
• plastics and synthetic rubber;
• consumer chemicals;
• specialty and fine chemicals;
• agricultural chemicals;
• paints coatings & adhesives; and
• basic inorganic chemicals.

The tentacles of the chemical industry reach deep into other industries. Not surprisingly, global chemical companies such as BASF have become behemoths with operations across the globe.

In the last few decades, the chemical industry has gone through far-reaching changes. Most chemical companies have moved up the value chain from commodity chemicals to specialty chemicals. Concurrently, the globalization of chemical companies has increased. Chemical companies have also started paying more attention to marketing issues.

The globalization has also increased the competition in the chemical industry. Now customers are demanding better quality at lower prices. Chemical companies resorted to cost-cutting and greater investments in new technology to meet these demands. Chemical companies are now strengthening relationships with customers through the adoption of customer relationship management (CRM) software.

Chemical Companies and the environment

By far, the biggest change in the chemical industry is growing environmental pressures. In the past few years, concerns about the environmental impact of the chemicals have increased. Countries and environmental activists are putting pressure on chemical companies to pay more attention to the environment. The number of environmental protection regulations, for example, has increased in recent times. Now global chemical companies spend considerable time and resources in complying with environmental regulations.

At a global level, 141 countries with the exception of the USA and Australia have ratified the Kyoto Protocol. This treaty on global warming forces countries to cut their emissions of greenhouse gases in a time-bound manner. The European Union, for example, has proposed REACH (registration, evaluation and authorization of chemicals) legislation for regulating chemicals in Europe.

The risks in the chemical business are also increasing. Now chemical companies are exposed to explosions, fires, leakage of volatile chemicals and security risks related to terrorism and sabotage. Chemical companies are more than familiar with the costs associated with accidents. Now chemical companies have the expertise to handle hazardous chemicals safely. Though the public image of chemical companies has suffered in recent times, there is no escaping the fact that chemicals have become an important part of society.