Findings from L.E.K. Consulting’s second annual chemical manufacturer study found that industry executives across the chemicals value chain are confident about the future of growth and innovation in the sector. Chemicals industry executives are most interested in investing in chemicals that serve end markets that are large and resilient during economic downturns, such as agriculture, life sciences, and food and beverage, as well as those where consumers have a high willingness to pay for premium solutions such as consumer-facing markets like automotive and building and construction. About 40% of executives are looking to invest in specialty chemicals that deliver product performance and sustainability to automotive and building and construction applications (see Figure 1).

As part of the survey, L.E.K. spoke to chemicals firm executives about their companies’ strategic initiatives moving forward. Many cited acquisition and development, improving operational efficiency, and supply chain optimization as the most critical priorities (see Figure 2). Interestingly, strategic priorities vary by the scale of the chemicals firm, with large-cap companies focusing on talent development and midsize firms placing paramount importance on supply chain optimization.

The majority of chemicals companies have initiatives to address their top strategic priorities, with most working actively to implement them. The most prevalent initiatives are business continuity/risk management and improving financial performance (see Figure 3); training programs and digital optimization are the two main initiatives expected to best achieve strategic priorities.

Looking ahead, growth in industry investment across strategic priorities is expected to accelerate broadly over the next three years (see Figure 4). The largest increases are expected in improving risk management, operational efficiency and financial performance.

This article is part of a series highlighting the results of an L.E.K. survey of specialty chemical producers across the landscape of manufacturers, distributors and end users. In upcoming articles, we will review chemicals companies’ prevailing strategic priorities in depth, including where firms are investing in digital strategy, improving sustainability and optimizing supply chain.

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