H2 force majeure reports show little improvement

FMs Jan12.pngThe blog’s 6 monthly review of force majeures (FM) reveals worryingly little improvement in performance. As the chart shows, H2 was slightly better than H2 2010. But realism suggests it was flattered by Q4’s low operating rates, which probably reduced the actual need for FMs.

The chart is based on the number of FM mentions in ICIS news. It shows FM reports in H2 by year since 2005. Clearly there was a great improvement between 2005-7. But since then, the momentum for change seems to have disappeared.

The industry’s near-record profitability over the past 18 months should really have led to a much greater reduction in outages.

This is very disappointing for anyone who remembers the pioneering work on this issue by the then giants of the industry, DuPont and ICI. They taught us that ‘all accidents are preventable’, and instilled a culture which led to safety reporting being the first item at Board meetings.

Many companies, of course, still follow these rules, and focus on continuous improvement. They benefit not only from ‘doing the right thing’, but also from better profitability and customer relationships.

But procurement professionals around the world line up to tell the blog about their frustration at the problems they encounter on a day-to-day basis. The blog only hopes their continued pressure will lead to it being able to show a better performance in July.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. He also serves as a Global Expert for the World Economic Forum. The aim of this blog is to share ideas about the influences that may shape the chemical industry and the global economy over the next 12 – 18 months. It looks behind today’s headlines, to understand what may happen next in critical areas such as oil prices, China and Emerging Markets, currencies, autos, housing, economic growth and the environment. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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