Tell us about your role as Chief Economist of the American Chemistry Council.
No two days are the same. There’s the public side of our weekly economic report, various outlooks and speeches all dealing with monitoring business conditions and identifying emerging trends—but that is actually a very small part of what we do. I primarily provide advocacy support for a wide range of important industry issues including energy, trade, tax and innovation, as well as assessing the economic and societal contributions of chemistry. I have the honor of working with an outstanding team; they are an inspiration and we have done some very interesting, cutting edge research.
What in your background prepared you for this role?
I started my career with Dow Chemical, and that is where I picked up my understanding of chemistry and the economics of the business. With this experience plus graduate studies in industrial economics, I landed in industrial market research, working my way up to head the research division at a business information company and co-founding another market research consultancy. I was able to leverage all of that for my current position, and doctoral studies in business administration was the final capstone. I guess I’ve always been curious on how and why things work.
How have you seen the chemical industry change in the past few years?
When I started my career there were a number of companies with broad portfolios of business—providing something for everyone. This has changed with companies spinning off businesses and becoming more focused. Certainly globalization has affected the industry with supply-demand relationships on a worldwide scale.
In your December 2015 blog, you wrote, “There’s no doubt that this is a transformative time for the US chemical industry.” How do you think chemical companies can survive and thrive during the transformation?
Shale gas has been the most important development for this industry since the 1930s, when the first of a plethora of new materials were commercialized. It will continue to transform the industry. Remember, 10 years ago the talk was all about moving production to China and the Middle East. Now we have a wave of investment (about 266 projects valued at approximately US$164 billion1) in the chemical industry in the US. In addition, our downstream customers in plastic products, tires and other manufacturing are all making investments that will lead to higher domestic demand for chemistry. And, innovation (e.g., new materials, new bio-based processes) will continue to push the industry forward.
The chemical industry faces an aging workforce and the influx of millennials. How is this affecting chemicals companies’ ability to grow?
When I hear CEOs speak, this issue of workforce development always comes up, if not second or third it arises shortly thereafter. As I recall, the average age of a chemical employee is about 452 and I suspect it will only increase over time. The baby boomers are retiring and there are challenges in attracting the talent that will lead the industry through the period to 2050. This issue is not just specific to the chemical industry but rather cuts across all industries. Demography is the engine that pulls the socioeconomic train along.
You are a leader in your analysis of the shale gas phenomena. What do North American chemical producers need to get right in exploiting this advantage?
The United States continues to enjoy an advantage and lead in shale gas; and the learning curve effects in the oil and gas industry along with other factors ensure a very promising long-term future. This is a real gift, a blessing for our nation and for our industry. I’m excited that foreign multinationals see the United States as an attractive venue for production.
How have low oil prices affected the industry? Is it a net positive for the total US chemical industry?
Volatile oil prices create uncertainty, something that no one likes. There are means to deal with risk but uncertainty is the cold water on any party. Lower oil prices (and naphtha-based feedstocks) elsewhere have mitigated some of the competitive advantage that the United States enjoys, but we are still in a very favorable position.
Will China’s new normal of low growth affect global chemical prospects?
China is undergoing fundamental change—moving from external to domestic demand as the driver; from rural to urban; a shift from low wage to higher value-added manufacturing; from industry to services; and from fixed investment to consumer spending. Coupled with demographic factors, China’s economic growth will sharply downshift. Industrial output (especially in heavy industry) has decelerated and declined in some areas, with excess capacity in manufacturing and in some property sectors. This has to be worked through. The last decade or so has largely been financed by debt; and with significant excess industrial capacity, this is the biggest threat to China’s growth prospects and of global deflation.
Accenture would like to thank Dr. Kevin Swift for generously taking the time to answer our questions and agreeing to be featured on accenture.com.1 “Energy outlook to 2040: Chemicals and plastics growth — in the U.S. and globally,” February 24, 2016, American Chemistry Council,
2 The Bureau of Labor Statistics (BLS), http://www.bls.gov/cps/cpsaat18b.htm.
Disclaimer: Accenture assumes no responsibility for any inaccuracy or error or any action taken or not taken in reliance on the contents of this interview. Accenture has relied on information provided by Dr. Kevin Swift of the American Chemistry Council.