US chemical manufacturers optimistic over business outlook
Ninety per cent expect sales upturn by the end of 2010
Batch, custom and speciality chemical manufacturers in the US are optimistic about business conditions in 2010, according to the annual survey of member companies by the Society of Chemical Manufacturers and Affiliates (SOCMA), with 90% of respondents expecting an upturn in sales activity by the end of the year.
The SOCMA 2009 Business Outlook Survey was conducted via the Internet between 13 November 2009 and 13 January 2010 and 28% of SOCMA member companies responded.
As expected, the overall state of the market was seen as weaker than the previous year, with only 60% rating it good, very good or excellent, compared with 72% a year ago and 92% in 2007. In particular many fewer companies (27%) reported an increase in sales over the previous year, while 67% saw a decline. The level of enquiries and leads was also lower than in previous years.
There is, however, high optimism that this trend will not continue, says SOCMA, with 90% of reporting companies expecting to see an increase in sales by the end of 2010. The majority report expected increases of 10% or more.
The state of the US and global economies was deemed greatest outside factor influencing the market during the coming year, while energy prices and competition from emerging markets were seen as less significant than previously. Another important factor driving down sales was layoffs among customers.
In line with the overall downturn, capacity utilisation was also down on previous years, with more than half of all respondents operating at only 50-74% of full capacity.
Planned r&d spending is expected to remain more or less constant in 2010, with 40% of those surveyed planning to invest more than 6% of sales in r&d, although the average percentage spend fell slightly from 8.6% in the two preceding years to 7.4%.
Similarly plans for capital investment are also similar to the last two years, with 74% of companies saying they were either very likely to invest in equipment or already had actual plans to do so.
Another positive feature of the survey is the decline in the number of companies likely to reduce capacity over the next 12 months. More than half of all respondents said they are not likely or have no plans to cut capacity. Fewer companies are also expecting consolidation among their customers than in 2007 and 2008.
Plans to merge, acquire or be acquired remain low to moderate and are comparable to previous years; consolidation continues to be more likely to come about through strategic alliances and partnerships.
