Chemical Companies Looking to Flexible Planning Strategies to Cope with Decreased Demand

Deloitte study reveals companies looking toward Asia Pacific region

According to the global chemistry industry production index, chemical production declined more than 10% in the first half of 2009. And, while demand is expected to regain momentum, it is unlikely to return to pre-recession levels in the near term. As a result, chemical companies are using flexible planning strategies to forecast supply and demand, according to a new report issued from Deloitte Touche Tohmatsus (DTT) Global Manufacturing Industry Group.

"Chemical companies are struggling with how to effectively plan for the future given the markets uncertainty," said Tim Hanley, vice chairman and U.S. Process and Industrial Products industry leader, Deloitte LLP. "Experimenting with new business models that account for new customers and suppliers may be the way to navigate through these challenging times."

The report mentions the possibility of increased merger and acquisition activity, resulting in fewer facilities and a broader geographic footprint, will provide a more global balance. Additionally Asia's importance to the industry will continue to increase both from a demand and supply standpoint.

However, deciphering signs of a true recovery from the effects of governmental assistance may present even more unique challenges. "Part of the challenge is going to be separating real economic growth from the effects of economic stimulus packages, said Tom Marriott, principal, Deloitte Consulting LLP. "Government stimulus money is going to be a key factor helping companies to regain their momentum. And, because of the large injection of stimulus in China and its indirect impact on demand in the chemical industry, companies are also asking themselves if they should be placing even bigger bets on China and the Asia Pacific region."

To view the report, "Adapting To A Changing Landscape: Midyear Outlook For The Global Chemical Industry," please visit http://www.deloitte.com/dtt/article/0,1002,cid%253D268538,00.html

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