Taking Projects from Concept to Reality Since 1998

Business Challenges in Specialty Chemicals

Top Business Challenges Facing Specialty Chemicals Manufacturers

The global specialty chemicals market continues to expand. By some estimates, it will exceed $1 trillion before 2020. However, that expected growth isn’t making things easier on specialty chemicals manufacturers. In fact, it is drawing more producers into the market, which means the industry is actually more competitive than ever. Consequently, it is crucial to understand the most pressing business challenges and to leverage insightful strategic planning to overcome them.


Obstacles Specialty Chemicals Companies Must Navigate


The specialty chemicals business has gotten far more complex in recent years. In order to be competitive, companies must have a plan for navigating the many obstacles that stand between them and their financial objectives. These include:


  • Rapidly changing product portfolios. From consumer demand driving product line diversification to mergers and acquisitions, product portfolios that used to remain stable for years or even decades are now changing on a regular basis. It’s rare these days to find a specialty chemicals producer that hasn’t recently integrated or divested a division. This presents a challenge for everyone from product development teams to marketing.
  • Push for globalization. While foreign markets represent significant opportunities for expansion, they also come with a wide range of challenges, from logistics to regulatory compliance. So, deciding how to enter and support emerging markets is an important element of strategic planning.
  • Lack of visibility into demand patterns. No industry can forecast demand with complete accuracy. However, anticipating how the market will rise and fall can be especially difficult in specialty chemicals, which poses challenges in everything from raw materials acquisition to staffing.
  • Growing demand for multi-stage manufacturing. Customers are increasingly seeking specialty chemicals that can only be produced through complex, multi-stage, multi-product processes that require more time to complete and a long list of components, both of which can cut into profit margin.
  • Fast-evolving regulatory requirements. While regulations have eased in some areas in recent years, in other areas new requirements have been added and/or existing rules have been modified. Keeping up with the changes and ensuring adherence to both processing requirements and product quality standards can be very challenging.
  • Increasing expectations for tailored products and services. Many specialty chemicals producers have gained market share through their willingness to work closely with customers on customizing both products and the services associated with their production and delivery. Those producers that haven’t developed more collaborative relationships with their customers are feeling compelled to do so.  
  • Sustainability goals. The raw materials needed to produce specialty chemicals are a finite resource. Ensuring that there is no waste in production processes is very important. Environmentally friendly and sustainable practices related to energy consumption, waste disposal, and water use are also critical. While all organizations would agree these are worthwhile initiatives, having to address them while also trying to remain competitive can stretch a company’s resources.
  • Technology upgrade projects. The long list of digital technology available today can be both a blessing and a curse to specialty chemicals companies. While tools like the Internet of Things, artificial intelligence and blockchain provide many advantages, implementing and integrating them into existing processes can be time- and labor-intensive.
  • Pressure to increase prices. As Forbes notes, chemical companies aren’t especially confident when it comes to product pricing decisions. However, to maintain their margins and market share in the face of rapidly rising material costs, shipping rates, tariffs, and other factors, specialty chemicals producers must engage in strategic planning around their pricing structures.

Strategies for Success in the Specialty Chemicals Industry

Fortunately, there are steps specialty chemicals producers can take to support success. First, they have to develop and promote differentiated products to set themselves apart. Next, they need to work in highly efficient facilities designed and built with agility and flexibility in mind. In addition, they have to develop proven processes for effective inventory management and timely delivery of finished products. And, in all phases of the business, they must provide attentive customer service.

APECS achieves outstanding results for specialty chemicals manufacturers because of our 30+ years of experience helping our clients meet their engineering, design, project and portfolio management, capital planning, and environmental health & safety needs. Contact APECS, Inc. today to learn more about how we can help with everything from strategic planning to execution.