InterviewCloser ties needed between Europe’s auto and chems sectors

04 October 2009 08:00  [Source: ICIS news]

Watch the interview with Thorsten Ploss

LONDON (ICIS news)--Closer links and better communication between Europe’s chemical industry and automotive sector will allow both to prosper, a leading consultant claimed as delegates gathered at the European Petrochemical Association (EPCA) conference in Berlin, Germany, on Sunday.

More direct communication between the two sectors on a long-term, strategic level will give the chemical industry the confidence to invest in more bespoke products for the auto industry and improve supply-chain efficiency, said Thorsten Ploss, a partner at Roland Berger Strategy Consultants.

At present, the chemical industry tends to respond to the immediate requirements of the plastics converters, or “tier one” suppliers, rather than reaching beyond them to auto companies, which are known as original equipment manufacturers (OEMs), said Ploss.

Ploss called for chemical manufacturers to develop a new relationship, whereby OEMs and chemical players would share information on long-term trends and new product requirements.

“The auto industry is under severe cost pressure and faces a huge task complying with new regulations. This is a significant opportunity for the chemical industry to help fulfil these needs. Both can gain from a closer relationship,” said Ploss.

The new relationship could also involve OEMs guaranteeing a certain level of orders so that the chemical sector has the confidence to invest, Ploss said.

“If there is no clarity or certainty because there is no business case behind it, [investment] will not happen. Imagine if a chemical company spent a lot of time on R&D for a new product and then, after six months, the auto company swapped to a Middle East supplier,” he said.

Ploss said it should be possible to form consortia while maintaining healthy competition.

“Players from the chemical and auto industry could form consortia for R&D on a product such as a new polymer. Each manufacturer would get the basic material, which it would turn into a refined product. That way the auto industry can still choose from a variety of suppliers.”

He added: “The auto industry has the reassurance that there is backup from a consortium. Would the auto industry bet on a new polymer if there was only one supplier?”

Ploss said that with a closer relationship, OEMs would only pay for what they needed while the chemical industry would save money on marketing.

“There will be big savings across the value chain and less unfocused investment,” he said.

The results of the joint study "Conjoint Value Chains – Chemicals and Automotive" between Roland Berger and the European Chemical Marketing and Strategy Association will be presented at its meeting on 27 October in Brussels, Belgium.

Click here to read Roland Berger’s article about the study in the 5 October edition of ICIS Chemical Business
Read Paul Hodges’ Chemicals and the Economy Blog
To discuss issues facing the chemical industry visit ICIS connect

By: Will Beacham
+44 20 8652 3214

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