Outsourcing to help SME's ride the economic storm?
manufacturing industry could be called 'the perfect storm',"
said Andrew N. Liveris, president of Dow Chemical company's
Performance Chemicals group, as he addressed the phenomenon of
outsourcing in the chemical and pharmaceutical industries during a
presentation at this year's Informex exhibition, held last week in
New Orleans.
"The current confluence of negative factors facing the chemical manufacturing industry could be called 'the perfect storm'," said Andrew N. Liveris, president of Dow Chemical company's Performance Chemicals group, as he addressed the phenomenon of outsourcing in the chemical and pharmaceutical industries during a presentation at this year's Informex exhibition, held last week in New Orleans.
"The chemical sector has not been making money, and this boat cannot be allowed to sink," continued Liveris who pointed to low industrial production, high operating rates and high natural gas prices as contributing factors to the current state of the chemical and pharmaceutical manufacturing industry.
Liveris described how outsourcing emerged as a major trend in the chemical and pharmaceutical industries more than a decade ago. "Many companies shifted their strategies to take advantage of the outsourcing trend and the value proposition it would offer to custom processors," Liveris explained.
However, Liveris asserted that several barriers have prevented the fulfillment of the outsourcing promise, and industry leadership is needed to restore investor confidence. To survive today's economic storm, Liveris said that chemical manufacturers need to maintain spending discipline, even in good times, continue to reshape portfolios and consolidate, and learn from customers how to meet their needs and how to rebuild their confidence.
Still optimistic, Liveris said that winners in the chemical industry will need to be agile and maintain a distinctive competitive advantage. Without strategic alliances and collaboration with the larger companies, Liveris predicted that most small niche players will have a disadvantage.
"Some say there's no growth left in the chemical industry, but I disagree with that," he said. "Opportunities lie ahead, and what will distinguish successful, value-creating companies in the future include more efficient use of capacity and focused resources on innovation rather than maintenance."
