Expert Statement: Andreas Woschek, Executive Vice President Chemicals, Helm
Prospects for the Chemical Distribution Industry
The chemical distribution business is a diverse industry that provides customized solutions for important sectors such as pharmaceuticals, paints & coatings, agriculture, cosmetics, food & feed, and automotive. At the center of the supply chains of these sectors, distributors are critical partners for global corporations as well as for SMEs. This role has become particularly obvious and relevant during the corona crisis. But distributors also face many challenges in the aftermath of the pandemic and the current political and economic environment.
CHEManager asked executives and industry experts to share their views on the prospects for the chemical distribution sector. We proposed to discuss the following aspects:
- What, in your opinion, are the most important lessons learned after two years of operating in a pandemic environment?
- What will be the most important short- and long-term challenges facing the sector?
- How do chemical distributors support the chemical industry on its path toward carbon neutrality?
Andreas Woschek: The Covid pandemic confronted us with the biggest challenge since the financial crisis a decade ago, yet we managed well: transferring the entire organization to work from home within days and continuing to operate the business with no major interruptions was unthinkable for many in the industry. By now, everybody is a professional in using video conferences to interact with business partners so the toolbox for interaction has been widened. As the peak of the pandemic is behind us, we are highly welcoming that face-to-face meetings are possible again.
Global and regional supply chain constraints result in increased transportation costs and reduced reliability for deliveries. We see customers building larger inventories, as just-in-time (JIT) deliveries are not as given as they used to be. Severely increased raw material costs are raising product prices to record levels. All this creates a perfect storm for the chemical industry short- and mid-term. In the long-term, the challenges will not get smaller as we will have to offer crisp and decisive actions to minimize the effects of climate change — in light of increased social urgency, agreeing and coordinating these activities internationally will be even more challenging than in the past.
“The Covid pandemic confronted us with the biggest challenge
since the financial crisis a decade ago, yet we managed well.”
The path towards carbon neutrality is an enormous challenge for our energy intensive industry which is mainly based on fossil raw materials. Distributors will have to contribute their share to ensure that sustainable initiatives overcome the obstacles of lack of scale and remote locations close to the bio-based feedstocks. A long-term plan combined with tangible short and midterm actions will create new business opportunities which will compensate for businesses which need to be halted as they will become too costly and environmentally unbearable. Our industry needs to define these actions, yet the support of a realistic governmental frame is required as well.