Chemical sites are under pressure

The timing of a special issue devoted to chemical sites and clusters (17 August 2009 issue) could not have come at a more opportune ­moment. Seldom has the concept been tested more ­severely than in the current economic environment.

Many chemical companies, which announced temporary capacity reductions last year or in the early months of 2009, are now taking the decision to make them permanent. And all over the world the industry is taking a hard look at its manufacturing strategy with a view to rationalization.

Companies operating at chemical sites and clusters tend to rely heavily on each other for the supply of raw materials, sale of finished products, as well as benefitting from the reduced cost of sharing services such as power, steam and waste water treatment.

This makes it all the more difficult when one player pulls out. As we are seeing at the Wilton, Teesside, UK site, there is an danger that a domino effect may kick in, with one closure leading to another, undermining the ­viability of petrochemical manufacture there.

There is a good argument for state intervention during these unprecedented times. In the case of Wilton, the government needs to act now if it is serious about retaining a vibrant industrial base in the UK. Chemicals may not be as glamorous as the automotive industry, but they are the essential building blocks of a prosperous economy.

Large chemical sites and clusters which are well connected by pipeline can adapt to changes in production by the players there as they have a wide choice of other potential customers or feedstock providers. For this reason, US chemical clusters have fared better during this downturn as most are based around the Gulf coast with an excellent pipeline network.

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