U is for Uncertainty

Consumer demand


US housing May12.pngThe blog’s series on the emerging ‘VUCA world’ today looks at how companies have to manage increased levels of Uncertainty. This can be seen in key areas of demand, such as housing.

The above chart shows how US housing starts (blue line) have fallen from 2.1m in 2005 to just 0.6m last year. Housing permits (red line) have followed a similar trend.

Each new home contains ~$15k of chemicals and polymers (paint, furnishings, kitchen/bath fittings, adhesives, appliances etc), according to American Chemistry Council data. So the US market is now worth just $9bn, compared to $32bn then.

Housing markets have been equally key to demand growth in other major regions such as China, Europe and Latin America. So the question of what happen next is critical to anyone in the chemicals business.

The honest answer, is ‘nobody knows’. Instead, Uncertanty abounds:

• In the USA, starts have never been this low since records began. Does this mean housing markets may now rebound strongly, or have rates of household formation changed direction?
• In China, investment in real estate has been 13% of GDP, and also a major source of chemical industry demand. But with 64.5m apartments empty, and prices now falling, will this continue?
• Europe has seen a collapse in housing markets in countries such as Spain and Ireland. Many construction projects are now being cancelled across the continent, as austerity programmes bite. Can demand recover?
• Latin American demand has been supported by an economy boosted by increasing exports to China. If China is slowing, will its growth also slip?

Uncertainty of this intensity in such a key market has a major impact on confidence. Even if a company wants to be bold, and bet on an upturn, it may find its bankers harder to persuade.


V is for Volatility


Unilever CEO Paul Polman suggests we are living in a VUCA world, as we discuss i...

Learn more

Interesting quote (6)


Nobody ever bothers to deny something that is plainly impossible. So when CEOs o...

Learn more
More posts
The Top 5 pandemic paradigm shifts

The Covid-19 pandemic has accelerated the fundamental changes which were already underway in global ...

Hertz goes bankrupt as non-essential consumer demand disappears

The US Federal Reserve has now spent $7tn bailing out Wall Street. But it couldn’t save the 10...

Smartphone sales head into decline as affordability becomes key

The smartphone sales decline accelerated in Q1, as Strategy Analytics report: “Global smartpho...

China’s plastic ban and recycling launch marks end of ‘business as usual’ for plastics industry

Paradigm shifts start slowly at first, and it is easy to miss them. But then one day, they suddenly ...

Automakers face stiff headwinds in big emerging markets

Brazil, Russia, India and China disappoint as manufacturers face investment demands of EVs © Bloomb...

Portugal shows the way to climate neutrality by 2050

“If you don’t know where you are going, any road will do”. The Irish proverb’...

The next billion phone users will be buying $10 smart feature phones, not $1000 iPhones

Smartphone sales plateaued in Q3, down 9% since Q3 2017’s peak of 1.55bn, as the chart shows....

Companies ignore the Perennials 55+ generation at their peril

Nearly a third of the the world’s High Income population are now in the Perennials 55+ generat...


Market Intelligence

ICIS provides market intelligence that help businesses in the energy, petrochemical and fertilizer industries.

Learn more


Across the globe, ICIS consultants provide detailed analysis and forecasting for the petrochemical, energy and fertilizer markets.

Learn more

Specialist Services

Find out more about how our specialist consulting services, events, conferences and training courses can help your teams.

Learn more

ICIS Insight

From our news service to our thought-leadership content, ICIS experts bring you the latest news and insight, when you need it.

Learn more

Uncover exclusive industry upates from ICIS

Interested to uncover more articles related to this topic? Explore additional news, insights and intelligence, tailored to the markets you are interested in by accessing exclusive content from ICIS.com