[an error occurred while processing this directive]
Skip to Main Content

Cover Story

January 11, 2010
Volume 88, Number 2
p. 13

World Chemical Outlook

United States: Chemical industry prepares for a slow recovery in 2010

Melody Voith

  • Print this article
  • Email the editor

Text Size A A

The deepest recession since the Great Depression is in the rearview mirror, and economists have turned their attention to the shape of the recovery. In the U.S. and other developed economies, the modest growth projected for 2010 will not make up for the precipitous drop in demand that began in late 2008.

For the U.S. chemical industry, output excluding pharmaceuticals declined by 9.4% in 2009, according to T. Kevin Swift, senior economist at the American Chemistry Council (ACC), a chemical industry trade association. In 2008, output fell 6.5%. Basic chemicals were especially hard hit in 2009, contracting 21.5%.

After bottoming out in June of last year, the chemical industry’s fortunes began to turn in the third quarter as demand stabilized. Swift projects U.S. chemical output will grow 3.0% in 2010 and that pharmaceuticals will see a 4.1% boost.

The beginnings of the recovery will be seen in rising inventories, now that the rapid destocking that followed the financial collapse has ended. “The construction and auto markets have run out of inventory and are upping production,” Swift observes. However, underlying demand is questionable.

A normal economic recovery is V-shaped due to pent-up demand, but this one is expected to be more shallow, agrees Tim Hanley, chemical group leader at business consultancy Deloitte. “We should expect a reset environment rather than a rebound environment,” Hanley warns. “Some consumer product end markets are strong—for example, soaps and detergents and personal care. But auto, housing, and construction markets will stay weak.”

Swift says low natural gas prices and the weak dollar will make the U.S. more competitive than other developed economies. But many U.S. chemical plants that were idled during the recession will not come back on-line.

During the recession, the chemical industry conserved cash by cutting capital spending by 20.1%, according to ACC. Even if growth comes back, companies have significant excess capacity. In 2009, capacity utilization was extremely low, at 70.1%, and will grow only to 72.9% in 2010. Swift says firms won’t begin investing again until 2011.

But any increase in spending will not reverse the loss in chemical employment. The industry lost more than 37,000 jobs, or 4.4% of its workforce, in 2009. Swift anticipates productivity gains will cause more job losses in 2010.

Chemical & Engineering News
ISSN 0009-2347
Copyright © 2011 American Chemical Society
  • Print this article
  • Email the editor

Services & Tools

ACS Resources

ACS is the leading employment source for recruiting scientific professionals. ACS Careers and C&EN Classifieds provide employers direct access to scientific talent both in print and online. Jobseekers | Employers

» Join ACS

Join more than 161,000 professionals in the chemical sciences world-wide, as a member of the American Chemical Society.
» Join Now!