The chemical and materials industry is not a single industry, but a collection of companies of varying size, geographic location, business model and ultimate market focus. These companies are part of a broad ecosystem of raw material inputs for oil, gas, coal, minerals and bio-based materials on the one hand, and raw material inputs for a wide range of applications on the other. Historically, the industry has been segmented into petrochemicals, diversified manufacturers, and specialty chemicals companies.
While the broader trends described in the previous section apply to the industry as a whole, the complexity of the differences between different players shows the importance of examining trends by player breakdown. In the previous multi-universe series, Deloitte divided chemical industry participants into three categories: natural owners, differentiated commodities, and solution providers. 4 These categories often have different strategic priorities. Large, vertically integrated natural owners tend to focus more on continuous improvement and operational excellence than on innovation. Differentiated goods focus on supply chain efficiency, cross-market innovation (often referred to as industrial marketing) and cost optimization in order to thrive in highly complex and fragmented categories. Solution providers do it: they focus on implementing the capabilities of their unique products and the know-how and services of their applications.
Because of this inherent complexity, one would not expect all companies to feel the same effects of a global pandemic and the resulting changes in consumer and corporate behavior. Indeed, the study confirms that the breadth of impact reflects the diversity of chemical and materials business models. That being said, trends can still be broken down into all market segments based on the "difference in rate of change" :
Certain key trends are accelerating as a result of the crisis, changing the supply and demand relationship between chemicals and materials.
Other trends have slowed significantly and may continue to slow or even reverse.
Finally, trends that were important before the pandemic are likely to continue to affect the entire industry for the foreseeable future.
This "second derivative" view of trends provides further insight into the long-term impact of the pandemic and the emergence of new realities.
To accelerate the trend
Some of the chemical CEOs, division presidents, and research and development heads surveyed outlined a clear strategy: Most financially strong companies intend to double down on certain initiatives they believe are accelerating growth, and investments made now will strengthen their competitive position in the future. This strategy may yield a competitive advantage in the future as these initiatives are associated with an underlying trend that is expected to accelerate (Figure 1) :
Focus on health and safety: Consumers demand that both brands and governments take safety and preventive measures.
Preference for remote or digital sales channels: Due to social distance and limitations, more and more B2B and B2C interactions take place through remote or digital channels and experiences.
Emergence of pop-up ecosystems: The disruption of value chains is likely to lead to more innovative partnerships.
Investment in sustainable development and circular economy: Since the beginning of the epidemic, investment in environmental, social and governance has been growing steadily, with above-average returns. 5
Demand for bactericidal and functional materials: Covid-19 is creating new growth opportunities for bactericidal coatings, coatings and surfaces in public places such as hospitals and schools.
Employee virtualization: Organizations have adapted to working remotely and are starting to adopt new business models.
Digitization of core business processes: The adoption of contactless technologies and digital experiences (e.g., advanced analytics, 5G) has increased due to increased social distance.