Reaction is published three times per year and focuses on key issues impacting the chemical and performance technology industry.
In this edition, there is a focus on what chemical companies are doing to drive excellence in working capital performance. It also takes a look at the chemical industry in Korea as well as the increasingly important area of cyber security and what chemical companies can do to protect themselves from external threats.
Once designed to operate in isolation, chemical manufacturing control systems are now being connected to the virtual world. Production data from control systems are integrated with IT analytic tools and online resources to help reduce production costs, enhance operational efficiencies and improve maintenance. However, control systems that are open to data exchange are also open to the possibility of cyber-attacks ranging from espionage to physical damage in the plant. An inclusive approach to cyber security that brings together engineers, IT professionals and corporate leadership can help chemical manufacturers benefit from the latest technology while maintaining a strong security posture.
During the global downturn working capital management was top of mind for the chemical industry. Companies were able to unlock cash and improve their balance sheets through rigorous working capital management. With today’s increased revenues, falling raw material prices and ready access to cheap debt, companies might feel that they have fewer incentives to change their processes. However, opportunities are often available to improve capital performance, and the benefits can range well beyond increased liquidity. Whether in good times or bad, working capital management should be based on holistic, sustainable solutions and should be an intrinsic part of a chemical company’s business strategy.
During the global recession, Korean chemical companies maintained impressive performance levels, based in large part on exports to China. However, this focus on Chinese markets also means that Korean chemical companies are now feeling the effects of China’s slowing economic growth, the devaluation of the yuan, and new government policies favoring chemical products made in China over imports. Further uncertainties arise from a high dependency on petrochemical production and downward price pressures due to low oil prices. Future growth will depend on a restructuring and consolidation of the industry, a shift away from basic petrochemicals, and the pursuit of new opportunities in the specialty chemical sector.