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During a recent study by the renowned business analysts at Rolandberger, it was found that companies in the chemicals industry represented some of the best investment opportunities. The study concluded that investors in this field received higher than average rates of return and saw capital growth that on average beat all other sectors.

Of course, not all chemical companies are profitable, and not all are worthy of investment. But the study showed that all types of businesses (speciality chemicals, commodity based firms and traders) in the chemical industry outperformed the rest in terms of growth and profits. So what is it that makes some profitable and worthy of investment and others not? How can you make your business attractive to potential fresh money?

There are four main areas of focus:

Leadership

If your business is like most, then 80% of your revenue come from a core of your products or services. Businesses with good leadership have a full understanding of that core. It is their strength and its success or failure will determine the success or failure of your company.

Your business model must be centred on that core business and the company leaders must fully understand that centre of operations.

If you are lucky, then your firm is large and has sufficient market share of your core business to define price-setting mechanisms and influence trends. Examples of this command of the market include Monsanto, 3M and Ecolab.

Future Strategy

A successful business must know what its business model is, where it is today and where it wants to be tomorrow. It must also have a defined strategy of how to get from today’s position to tomorrow’s.

Preferably, the business will include different yet complementing revenue streams. These streams flow from products and services that work together to provide a cognitive whole.

Risk Strategy

Potential investors must clearly be able to see the gains to be made from investing money in your business. Similarly, the risks must also be openly given, so that everyone is aware of the risk-reward proposition.

Execution

To execute your business model, your company must effectively communicate its offers to customers and its strategy to investors.

It must also maintain high standards of processes, and must have systems in place to allow business leaders to focus on the key business functions.

Conclusion

Now that the chemicals industry is seeing growth in many sectors, and has finally returned to a positive position after the shocks of 2008, investors have wised up to the fact that the industry is a good place to put money. Commodity values are rising on Wall Street and the larger firms, such as Dow, are posting bumper profits.

Furthermore, a recent  American Chemistry Council report states that gross exports for chemical products will blossom from $60 billion in 2014 to $123 billion by 2030. So the smart money is looking to invest in companies like yours.

By following investment friendly strategies like those above, you may well be able to expand just as the market for your products is entering the golden years.

Nanoscience is a growing field which is a subset of major scientific fields such as chemistry, physics, engineering, biology, and environmental science with a particular focus on the nanometer length scale. Polymers are typically large molecules—not nano in size. One might hear these two descriptions and immediately jump to the conclusion that there is no place for polymers within nanotechnology, and conversely, that there is no place for nanoparticles within polymer science. That is a false conclusion! These big molecules have already made small scale science more powerful, efficient, and innovative—and are poised to continue to do so as future technology is developed combining polymers and nanomaterials.

In-Use Applications

For many the words “nanoscience” and “nanotechnology” bring associations of technology that is highly futuristic and out of reach. However, there are many applications of nano materials within polymer science that happen each and every day.

Nanomaterials are currently added to polymers for a variety of reasons and within a variety of applications. For example, silver nanoparticles can be added to polymers in order to provide antimicrobial properties, as silver inhibits bacterial growth. Other applications of nanoparticles include reinforcing translucent or transparent polymers to increase the physical strength with minimal loss of clarity.  Nanoparticles are smaller than the wave lengths of light, which is between 400-700nm, this means that they do not contribute to the refraction of light (which would cause opacity) and can still enhance the physical properties of a polymer.

Nanomaterials can also be used as catalysts. The smaller a nanoparticle, the more reactive it is due to a high ratio of high energy to low energy sites on the surface. This increase of high energy sites raises the surface energy of a material which can then act as the driving mechanism in a chemical reaction. This means that the use of nanoparticles reduces or replaces the energy needed to initiate a chemical reaction making it an excellent catalyst.

Polymers & Carbon Nanotubes (Innovations/Excitement on the Horizon)

Although nanomaterials are already being put to amazing uses within polymer science there is still a tremendous amount of untapped potential when it comes to combining nanoscience with polymer science.

One nanomaterial that has been hailed a “miracle material” and is surrounded by quite a buzz within scientific circles is graphene. This mind blowing material is poised to create numerous scientific breakthroughs and better the world as we know it. Graphene has the thickness of one atomic monolayer. When wrapped into a straw like structure it is known as carbon nanotubes. Even alone, carbon nanotubes are a tremendously powerful material structure, but paired with polymers, their beneficial properties are amplified.

Researchers from Kyushu University in Japan have found ways to apply polymers to the outside of carbon nanotubes to keep the tubes from sticking together, which is a significant solution to a prevalent problem. Nanotubes are 50,000 times thinner than a human hair—can you image trying to untangle a mess of nanotubes? Fortunately, thanks to polymers, that problem can be avoided altogether.

Another way in which polymers are partnering with nanotechnology is by increasing the energy retention of solar cells. Nanotechnology is a major player in the development of more efficient solar cells, and researchers discovered that by coating a carbon nanotube in the right colored polymer, sun rays are more drawn to the receptors.

Self-Assembling Polymers & Nanomaterials

Self assembling polymer molecules hold tremendous promise for future developments of semiconductor transistors. In order for the semiconductor industry to continue advancing, it is necessary for transistors to get smaller and smaller while either maintaining or increasing their power. A radical approach that just may work is through directed self-assembly. This process works by using block copolymers that assemble themselves into regular structures and guiding them into a pattern by utilizing chemical guides applied using conventional lithography. The final pattern of block copolymers has greater detail than the pre-pattern and can serve as a template for the future chemical processes that etch features into a silicon wafer. The smallest transistors in commercial production today have features as small as 14 nanometers. With self assembly, it is thought that features can shrink to as small as 7 nanometers. This approach to creating transistors is not yet compatible with large scale production, but does give hope that future developments are simply on the horizon and soon-to-be realized.

Present day chemistry and materials engineering is utilizing the powerful partnership of nanomaterials and polymers. This partnership is positioned such that it will further innovation in incredible ways in the very near future.

This article was written by our business partners at Polymer Solutions.

Polymer Solutions is an independent testing lab that provides chemical analysis and physical testing for the medical device, pharmaceutical, defense, packaging, and consumer products industries.

Recent analysis by Cefic (the European Chemical Industry Council) has shown that despite the continuing confidence of manufacturers, the European chemical industry continues to stagnate.

Whilst the EU economy as a whole has begun to gradually recover from the shocks of 2008, there is still little movement in chemicals. Q1 production growth for 2015 has been measured at 0.1%, whilst sales dropped by 5.5%, despite a price free fall of up to 7.3%. The analysis also showed that utilization of production capacity is unmoved from the levels of 2014, and stock levels also remain static.

Notably, the speciality chemicals sector is doing well, and this is helping to offset the declines elsewhere, but overall the outlook is gloomy.

Given that the EU has such an historical advantage of excellence in both production and research levels over the rest of the world, it is worth considering how this happened.

Fuel is one major problem for the EU. Whilst the Middle East and Russia enjoy an abundance of cheap oil, and the US begins to tap into its shale gas resources, the EU is beginning to wonder how it will survive once its own oil resources dry up.

Whilst it is trying to use technology to develop renewable energy sources, at present the cost of these technologies act as a burden to price competitiveness for the chemicals industry. A recent Cefic study noted the average price of industrial energy per MWh for Italy was €121, Germany €99, the Netherland €90, Spain €70, the UK €64. Whilst in the USA  it cost only €47, China €30, Russia €19 and Saudi Arabia €15.

Whilst the value of the Euro has fallen drastically over the past 12 months (currently close to parity with the US dollar), it is difficult to compete if energy is expensive. This is especially true when considering how large a part of chemical production energy is. As Jeremy J. Patt, senior strategy leader for global research and development at Dow Chemical Company, notes, “In 2008, Dow’s total energy bill was $27 billion, by far the largest component of production costs and equal to about half of total revenues.”

Another problem facing the EU is that it also appears increasingly politically divided and undecided on how to tackle its ageing infrastructure, whilst other regions benefit from a united political will and greater investment.

As a recent KPMG report states, “Whilst Middle Eastern chemical producers continue to seek expansion along the value chain into higher value added solutions. Their Chinese counterparts are attempting to fulfill a government directive to make the country self-sufficient in chemicals. These Middle Eastern and Chinese entities are often cash-rich and backed by government support. A rapid path to achieving these goals appears to be offered by acquisition of technology and intellectual property from a European chemical industry seemingly beset by structural problems.”

Thus it appears that whilst the EU is troubled by increased competition overseas, from heavy investment and dynamic government support, the EUs response at present, is to sell off the family silver. An approach that will never support the industry’s recovery. As Chris Stirling, Head of Chemicals for KPMG in Europe notes, “The European chemical industry must capitalise on its historic advantage in innovation to stay ahead of the competition.”

The EU chemical industry currently represents almost 20% of global production, and is still an important player in the global market, but the chance of further development is not optimistic, with competitiveness now seen as the main obstacle to growth and development.

But perhaps the most worring aspect from this latest Cefic report is its tone. As the analysis is so intertwined with skepticism and pessimism for the future that it is foreseeable that confidence will soon head South in the way that sales, prices, investment and the value of the Euro has.

There is the possibility that the trend can be reveresed. Industry leaders have been promised that the EUs implementation of REACH will prove to be a groundbreaking development that will set a global industry standard, and not act as a dead weight of legislation around the neck of a dying industry.

Similarly, if the TTiP trans-Atlantic trade agreement can free up restrictions on businesses, then there is hope for the 1.2 million Europeans employed in the chemicals industry. But at present, failure to act will see continued stagnation at a time when the rest of the world’s chemical industries are beginning to blossom.