AT A GLANCEAs the world braces itself for a potential global recession, decision-makers at significant chemical companies are looking for ways to realign their operational and manufacturing strategies to be able to sustain and grow.Liquidity and capital resources impact the business, causing financial pain areas for the chemical industry.The industry is also facing problems due to disrupted global supply chains, labor shortage, dwindling demands for one industry and growing demands for others, and many more such issues.With the strategic overhaul, reinvention of smart factories, investment in automation, and other robust enterprise software, the chemical industry can turn the tide during this pandemic.Like almost every other industry, the chemical industry encountered unplanned hassles in 2020 due to the Coronavirus global pandemic.
Practically every department in chemical companies has experienced the ripple effects of a market slowdown.
Things are still uncertain in terms of the supply chain’s stability, workforce capacity, changes in global trade regulations, etc.Approximately 41% in the chemical industry are concerned about the effects of Covid-19 on the workforce and reduction on prod.Approximately 23% are looking at disrupted supplies are a red flag.– PER A SURVEY BY PRICEWATERHOUSECOOPERSWhile an imminent global recession and massive disruption in the way businesses operate seem inevitable, the chemical industry can take advantage of certain factors like:Increased demand for raw material required for hygiene products and sanitizers across the globe.The drop in oil prices offering a chance to acquire oil-based raw material at a lower cost.Dependence of many major and minor sectors on the raw material provided by the chemical industry.There are also various strategic and operational changes that the decision-makers at chemical companies will need to help their companies sail through this crisis with minimal damage.
However, before we get into plausible solutions, it is imperative to understand the chemical industry problems.
Let us look at six major challenges that the chemical industry is dealing with due to the coronavirus crisis.1.Liquidity and Investor IssuesDue to governments’ various measures across the globe to contain an outbreak of coronavirus, there was a sudden and steep decline in financial outcome in the first quarter of 2020.
The market slowdown led to investors abandoning, slower credit timescales by banks (leading to delay in funding), lack of sufficient security packages, covenant limits, etc.