Exploiting big bang disruption in the chemicals industry

Exploiting Big Bang Disruption in the Chemicals Industry.

Overview

In North America, the shale gas revolution is driving a boom in the chemicals industry, as companies invest in new plants in order to take advantage of cheaper feedstock and lower energy costs. But this boom is more than another turn in the traditional business cycle. It represents a rapid and fundamental shift for the industry— a kind of Big Bang event characterized by nearly unconstrained growth.

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Key Findings

Accenture’s research suggests that the Big Bang will be followed by a sudden decline in growth—a Big Crunch. That downshift in growth will require a significant change in operations and strategies.

The Big Crunch environment will require different approaches from those used during the Big Bang. To perform well in this stage, chemical companies will need to adjust their strategies, keeping four key imperatives in mind:

  • Achieving and maintaining first-quartile global production costs.

  • Avoiding the “whipsaw” of oversupply and reduced margins.

  • Increasing asset agility.

  • Establishing effective contingency management.

Recommendation

To successfully and profitably navigate beyond the current Big Bang and into the upcoming Big Crunch, North American chemical companies will need to recognize and contend with rapid change, and be prepared to adjust their business strategies and the way they operate in a relatively short time frame. That shift will evolve over the next few years, but companies should begin preparing for it now. That means recognizing that today’s boom cannot continue indefinitely, and positioning for the next stage of evolution. Taking time now to plan for this shift can help companies position themselves to thrive both today and tomorrow.