Business leaders across all industries are keeping an eye on 2019, wondering whether favorable marketplace conditions might materialize. For executives overseeing enterprises in the U.S. chemicals space or other sector-adjacent organizations, the outlook for 2019 is quite favorable. Production in the states is expected to rise 3.6 percent over the forthcoming 12-month span as manufacturers introduce new higher-capacity workflows and demand in key market increases, according to research from the American Chemistry Council. These developments are likely to lay the foundation for long-term growth, ACC analysts found, vaulting revenue beyond $700 billion by 2023. However, paired with this maturation are a number of significant challenges that American chemical companies will have to address over the course of 2019 and beyond. So as executives and other key stakeholders in the U.S. chemicals space prepare for the coming year, it essential that they weigh every variable in this complicated growth equation.
Dissecting the industry upside
The American chemicals industry has been on the upswing for the past three years, with manufacturers making considerable production headway due, in part, to rising demand within the automotive sector, ICIS reported. Here, the average vehicle rolls out of the factory equipped with $3,500 worth of chemical products. Housing has also been a boon for the sector, along with the oil and gas and mining spaces. However, the strengthening U.S. manufacturing is perhaps the biggest driver behind the ongoing growth within the American chemicals arena. Output and capacity in this sector, whose members consume countless chemical compounds during the production process, have risen steadily for the last decade, according to data from the Bureau of Labor Statistics analyzed by the Federal Reserve. These trends have greatly benefited the stateside chemical space, which now appears to be poised for additional expansion over the next year.
Grappling with future challenges
That said, there are some burgeoning roadblocks that might hold U.S. chemical companies back in 2019, beginning with the declining state of the global marketplace. Chemical manufacturers outside of the U.S. are struggling as a consequence of numerous variables, including the emergence of protectionist trade policy, according to researchers for PricewaterhouseCoopers. Global chemical production decreased in the opening weeks of the fourth quarter, continuing an underwhelming year for sector in general, ACC analysts found. This is likely to continue into 2019, which might drag on the U.S. industry even as it grows. Unfortunately, the industry is expected to face additional challenges stemming from another corner of the global marketplace: the manufacturing sector. Manufacturing firms worldwide are grappling with several serious issues – most notably severe labor shortages and rising raw material prices, Reuters reported. Consequently, economists foresee the arrival of strong financial headwinds that threaten not only manufacturers operating abroad but also those based in the U.S. Should adverse developments materialize in this arena, American chemical companies could certainly feel the effects.
In addition to these relatively recent roadblocks, chemical manufacturers in the states continue to deal with several long-standing issues. Enterprise digitization, for instance, continues to pose problems for businesses in the industry, according to consultants for PwC. While most recognize that they must rejigger their internal processes and workflows to meet the needs of technology-savvy customers and keep pace with forward-thinking competitors, pinpointing and implementing the right digital tools continues to be a challenge for chemical companies everywhere.
Making the most out of the market
The businesses that populate the American chemicals sector have solid footing in the marketplace and appear to be in a strong position entering 2019, according to the ACC. However, it is essential that these firms continue to pursue operational improvement, as there are a variety of pitfalls in play here at home and abroad.