In March of this year, the World Health Organization declared the Novel Coronavirus Disease, COVID-19, a pandemic. Now, six months later, we are still deep in the grips of this crisis as we experience its far-reaching effects and navigate how to move forward. The severity of the global situation demanded emergency responses from many sectors, including the chemical process industries (CPI). Now, attention is turning to longer-term strategies for navigating through the disruption, even while much uncertainty remains.
Lockdowns throughout the world, necessitated by the pandemic, have led to a sudden and steep drop in global economic activity. Markets that are major consumers of CPI products, such as vehicles and housing, plummeted, while the increased need for chemical components used for disinfectants, personal protective equipment and medical-related instruments, may have somewhat offset the decline in the other market areas.
In its “Mid-Year Situation Outlook,” published in late June, the American Chemistry Council (ACC; www.americanchemistry.com) projects that this year, the global GDP will contract 4.6%, and global industrial production will drop by 3.8%. The projections for the U.S. are somewhat more severe, with GDP dropping by 6.0%, consumer spending falling 6.4% and business investment dropping by 9.9%. The projections do, however, include potential rebounding in 2021. For example, Martha Moore, senior director of policy analysis and economics at ACC, projects that “Capital spending will fall 17.6% to $29.0 billion in 2020, then increase by 15.7% to $33.5 billion in 2021.”
According to the report, data suggest that the global recession may have bottomed out. Kevin Swift, chief economist at ACC, says “After suffering the sharpest pullback on record in April, many industrial sectors are showing signs of recovery.” At the time of this writing, the latest Chemical Activity Barometer (CAB; an economic indicator created by the ACC) in late July showed an increase, at which time Swift commented, “With three consecutive months of gains, the latest CAB reading is consistent with recovery in the U.S. economy.”
As we look forward to economic recovery, still with much uncertainty, companies are evaluating strategies to move forward. One area that has been pushed into the spotlight is digitization. While the advantages of digitization and the need for adoption in order to remain competitive in a global economy had been recognized before the pandemic, the lockdowns and need for distancing during the pandemic suddenly accelerated this trend. This has been noted by management consulting firms. McKinsey & Company, for example, is looking at “how the acceleration of digitization during the COVID-19 pandemic is shaping the next normal,” in its report “How six companies are using technology and data to transform themselves,” (www.mckinsey.com; August 12, 2020).
And, in his keynote address at the AIChE Spring meeting last month, Bhavesh Patel, CEO of LyondellBasell, cited digitization as one of four key areas to shape the next decade of CPI operations (“Shaping the Next Decade: AIChE Virtual Keynote Highlights Digitization, Sustainability,” www.chemengonline.com). The other areas he outlined were sustainability, globalization and plastic circularity. ■
Dorothy Lozowski, Editorial Director