June 24, 1996
Copyright © 1996 by the American Chemical Society.
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For more than four decades, C&EN has been publishing Facts & Figures for the Chemical Industry, first every couple of years and then, since the mid-1950s, annually. During that time, countless people have worked to gather the information from government, trade association, and industry sources; check the facts; set the type; and get it into the form seen in the magazine. This year, Assistant Managing Editor William J. Storck; Senior Editors Patricia L. Layman, Marc S. Reisch, and Ann M. Thayer; and Associate Editors Elisabeth M. Kirschner, George Peaff, and Jean-François Tremblay worked on gathering the information.
Chemical output grew much more slowly in 1995 than it did the year before. Data from the Federal Reserve Board indicate that the gains came in most chemical sectors; however, inorganic chemicals showed a 3% decline. |
U.S. chemical companies continued to strengthen their sales, earnings, and other financial results last year. Future-oriented spending such as capital expenditures and research and development at most companies got increased attention. |
Chemical companies continued to trim workforces, but the drop was less than in past years. Productivity increased, but higher wages for production workers raised unit labor costs. |
Markets for chemicals - such big-ticket items as housing, automobiles, and durable goods - slowed, but smaller items and services drove personal consumption expenditures to new levels. |
The U.S.'s chemical trade surplus continued to be strong as exports of chemicals rose 20% and imports increased 19%. Worldwide chemical trade rose 15% to $437 billion. |
Chemical economies continued to improve in Canada, Europe, and the Asia-Pacific region as prices and demand rose and new markets opened. |
It is not easy. Each year, some data are late, incomplete, or nonexistent. This year, the compilation is one page shorter than it was last year as a result of the Commerce Department's having ceased publication of its survey of industry capital expenditures.
Next year, it may be even shorter because the government has ceased compilation and publication of production statistics for organic chemicals. C&EN has noted before that the government's cutback on data gathering and publication will ultimately be a disservice to the drive for increased competitiveness for U.S. industry. It will also hurt foreign chemical industries that need U.S. data to gauge how they are doing.
Much has been said of statistics over the years, most of it derogatory. Although it is true that figures are simply a way of keeping score, if you don't keep score, you don't know if you're winning.
Chemical producers are constantly trying to achieve numerical goals - profitability, productivity, market share, low-cost producer. Part of this comes from each company's own data, but a big part comes from the collective data that only a government or trade association can assemble.
The data that C&EN has collected this year show that in 1995, the chemical industry around the world generally built on the foundation that it laid in 1994. In last year's Facts & Figures, C&EN said that "by the end of the year [1994], chemical companies were once again talking of expansion - of opening new markets, especially in the Asia- Pacific region, and of building new plants. This all came on healthy increases in chemical shipments, which led to increased production, prices, and profitability."
It also said: "In the end, one has to wonder if the enthusiasm will continue. It looks unlikely, even in the short term. Although the first part of 1995 has proven to be extremely good to the chemical industry, executives are beginning to fret about the economy in the second half and immediately beyond as demand and prices begin to level off."
The worry was somewhat well founded. The chemical economy did soften in the second half of last year, pretty much around the world. However, it certainly did not turn down enough to affect the gains piled up in the first six months.
In almost all countries with significant chemical-producing industries, sales increased, exports increased, and production and prices increased. And, therefore, profits and profit margins increased over those achieved in 1994.
As in 1994, the U.S. led the way in chemical performance, with Canada close behind. They were followed by the European chemical industries and then Japan and other countries in the Asia-Pacific region.
One trend of the 1990s that continued last year was the decline in chemical employment around the world. Whether through attrition or firings, chemical industries in most countries ended last year with fewer employees than they had at the beginning of 1995 as companies continued to try to increase efficiency, eliminate duplicate operations, and cut employment costs. On the plus side, the rate of contraction slowed during the past year indicating that perhaps, at last, the chemical industry is nearing the bottom on payrolls.
Last year at this time, chemical executives and economists were saying that the second half of 1995 would be slower than the first six months. This year, they are saying just the opposite about 1996. After lackluster pricing, demand, and trade performance in the first half, they say, the second half will be stronger and ultimately will show 1996 to be a good year.
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