Looking back at 2023, the chemical industry experienced a year of highs and lows, marked by positive strides in sustainability, including advancements in green hydrogen and plastics circularity, along with a resilient rebound from the pandemic. But amidst these successes, the industry also encountered challenges, such as the East Palestine, Ohio, train derailment, mounting PFAS lawsuits, more stringent regulations and workforce reductions. As we move on to 2024, the chemical landscape promises continued change.
I discussed some of these issues during IndustryWeek’s “Production Pulse: What's Ahead for Manufacturing in 2024” LinkedIn livestream chat, which you can watch below. Following the video is a recap some of the issues I discussed and others that I didn’t make the production cut due to time constraints.
What happened in 2023?
Regulations, Regulations, Regulations
“Forever chemicals” lived up to their name and seemingly stuck around all year. These per- and polyfluoroalkyl substances, or PFAS, dominated the news with thousands of lawsuits being filed against PFAS manufacturers, resulting in more than $11 billion in settlements in 2023.
- In October, the U.S. Environmental Protection Agency released its final rule on PFAS reporting and recordkeeping requirements under the Toxic Substances Control Act (TSCA). The final ruling eliminated some exemptions for PFAS reporting. Previously, manufacturers that produced formulations with small amounts of PFAS didn’t have to file reporting forms. That’s changed with this ruling. As our regulatory columnist Lynn Bergeson noted, the final rule also requires manufacturers of mixtures containing PFAS to also report those materials to the EPA. This may have a far-reaching impact on the chemical supply chain, as many of these manufacturers will have to phase out production or find alternate materials.
- Also, the EPA recently announced that it’s considering five new chemicals for review under TSCA. This includes vinyl chloride, the chemical that was aboard the train that derailed in East Palestine, Ohio, on Feb. 3, 2023. Emergency responders burned off the chemical which has had some significant environmental and public health impacts in that region. Vinyl chloride is the chemical used to make polyvinyl chloride (PVC) piping, and some news outlets have speculated that the move could lead to an outright ban of PVC.
- The EPA has also recently proposed under TSCA a requirement that chemical manufacturers using plastics-waste-derived feedstocks to prove these materials don’t contain contaminants like PFAS or heavy metals before using them to make transportation fuels, which could jeopardize efforts around plastics circularity.
Supply Chain Issues Persisted
In October, we conducted an online poll, and nearly 20% of CP readers responding to the survey said supply chain issues have impacted their site significantly. The industry has been going through a destocking cycle as customers built up inventories during the pandemic to combat shortages.
As Martha Gilchrist Moore, chief economist at the American Chemistry Council (ACC), discussed in her year-end outlook, it looks like we’re nearing the end of that cycle.
In my most recent Chemical Processing Notebook column, I interviewed Nate Norris, the AkzoNobel’s North America manufacturing and supply chain director. He mentioned that on-time delivery from suppliers is improving, but it was still only in the mid- to upper-60% range. He talked about how delivery issues have forced the company to take a closer look at its supply network and develop a business continuity plan aimed at identifying backup suppliers when necessary.
Chemical manufacturers were also grappling with ways to cut their emissions, including those that occur throughout the supply chain, also known as Scope 3, to meet climate mandates. Seán Ottewell, CP’s editor-at-large, discussed some of these issues in a May 24, 2023, article entitled “Untangling Emissions: How The Chemical Industry Is Addressing Scope 3 Challenges.” As he mentioned, many companies are struggling to identify the best ways to calculate greenhouse gas (GHG) emissions from upstream value chains and how to gather the data.
Shrinking Workforce and Shortages
Several major chemical manufacturers announced workforce reductions early in the year, beginning in January with Dow’s announcement that it would slash 2,000 jobs and then BASF’s plan to cut 2,600 jobs and close several plants. On a positive note, salaries rose to their highest level ever recorded in the Chemical Processing Salary Survey, reaching an average of $135,000 annually.
During my interview with Norris, he talked about how his organization had to get creative to attract talent. He mentioned that there are “three jobs for everyone one person” at the company. To fill roles, the company began providing more flexible work hours and opportunities for workers who don’t have previous experience in the industry. In his words, “You can teach people about paint and coatings but you can’t teach them to be good people managers and decision makers.”
What’s in Store for the Chemical Industry in 2024?
Emissions reductions will continue to be a big issue in 2024 and the years ahead. We may see more announcements like Air Liquide’s plan to build and operate a large-scale carbon capture unit in Rotterdam, Netherlands.
We could see more developments around clean hydrogen. The Biden administration announced in October that under the Bipartisan Infrastructure Law it would fund $7 billion in regional hydrogen hubs that leverage existing capabilities in various regions to produce hydrogen.
Presidential Election Could Impact Chemical Industry
The presidential election will obviously loom large. ACC has been critical of regulations imposed by the EPA under the Biden administration calling it regulatory overreach. The Biden administration also has prioritized environmental justice initiatives in low-income communities and communities of color that have impacted the chemical industry.
Capital Spending
In her outlook, Moore also discussed some of the capital projects we can expect. She talked about how the industry is still bringing plants online that are taking advantage of shale gas boom that took off more than a decade ago. There are about 20 projects valued at $20 billion that are under construction right now and 37 projects are in the planning phase. Also expect more investments in lower-carbon emissions technologies so a lot of spending on that.
In her presentation, Moore highlighted that a survey among their members revealed that they expect to dedicate 25% of their capital budgets to sustainable manufacturing.
The issues we encountered in 2023 are not going away, and the stories will continue to unfold. This includes the aftermath of disasters like the one we saw in East Palestine, Ohio. The day before I sat down to write this blog, a truck overturned about 7 miles from my home. That truck was carrying hazardous waste from the accident site in East Palestine. It will be intriguing to see how the industry responds to such adversity and how it will leverage its own ingenuity to continue its post-pandemic rebound.
