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2014 another bad year for force majeures

Chemical companies
By Paul Hodges on 13-Feb-2015

FMs Feb152013 wasn’t a good year for chemical plant reliability.  As I noted a year ago, force majeures (when plants go offline unexpectedly) were close to a record level.

Very worryingly, 2014 turns out to have been far worse as the chart above shows, based on the reports in ICIS news:

  • 2014 saw a total of 620 reports, far above the previous high of 495 in 2011
  • 2011 was, of course, the year of the Fukushima disaster in Japan
  • This caused an additional 31 force majeures, but these were “knock-on” effects from the disaster

It is hard to see any justification for this increase.  We all know that accidents don’t just “happen”, but are caused by faulty procedures, lack of maintenance or training, or other human error.  It was also clear a year ago that the trend was already deteriorating.  As I warned then, the number of force majeures had been above 2012 levels since May, and had reached a then-record high in the June – August period.

I really don’t understand why this trend has been allowed to continue.   Safety should always be the first item on the agenda for any business.

Is today’s rise in force majeures therefore the result of management time being wasted by the distraction of having to deal with so-called “activist investors“?  Are these developments undermining morale, and causing cash to be held back from essential maintenance and training to try and boost the stock price?

I don’t know the answer.  But I do know that the industry is risking its licence to operate if it allows this trend to continue for much longer.  I profoundly hope that senior managements are already focused on ensuring that this alarming increase is quickly reversed.