With Covid-19 impacting every industry across the globe, the chemical industry has also been affected by it from all directions. Supply chain has been disrupted by outbreaks in different regions of the world and there is also a decrease in demand due to uncertainty in the global economy and capital markets. There is growing risk of infection among the workforce and governments are also taking necessary steps to restrict movement and ensure that the spread of the virus is contained.
Covid-19 has led to the creation of widespread concern and economic hardship for businesses, consumers, and communities all across the world. This crisis is spreading quickly, far and wide. Businesses do not have a one-size-fits-all solution for the current situation. Many companies already have a contingency plans for business problems. However, those plans may not address the current global coronavirus outbreak.
Typical contingency plans may help companies to take on natural disasters, cyber attacks, power outages, and so on. However, they do not usually take into account global pandemics, widespread quarantines, extensive school and office closures, travel restrictions, and so on.
Challenges Faced by the Chemical Industry
Just like any other industry, covid-19 has introduced many challenges for the chemical industry as well. The industry could not escape from the clutches of this vicious pandemic. Some of the challenges introduced by covid-19 are as follows:
- Chemical companies employ numerous people to carry out all the essential activities. A significant portion of the manpower has to be present in person to ensure swift production process, and these activities cannot be performed remotely. The increase in covid-19 infections has reduced the plant capacity and full workforce cannot be employed until proper preventive measures are used.
- During these challenging times of the pandemic, companies may have to consider outsourcing some corporate functions such as migrating IT to the cloud, shifting internal non-core operating functions to contractors, and much more.
- Owing to the widespread pandemic, chemical companies have faced challenges in obtaining necessary raw materials. It has also jeopardized the ability of many chemical producers to deliver finished products to the customers because it has crippled the global supply chains.
- The pandemic has disrupted global financial systems because of which many companies have faced the problem of long-lived asset impairments and have faced difficulties in recovering the receivables along with restructuring actions and/ or liquidity issues.
- Reduced productivity in chemical factories due to employee absence because of illness has put on more pressure on the company authorities.
Overcoming the Problems with Efficient Solutions
Although the challenges put forth by the pandemic are massive, but, proactive steps to efficiently utilize time, efforts, and resources can help the chemical industry in reaping better results. Some of the solutions through which the current pandemic situation can be dealt with have been mentioned below:
- Companies can assess how profitability, loans, revolving credit, and cash flow reserves can support them to meet the cash operating expenses and needs during the current low-revenue environment.
- It is important to make sure that the employees are safe. Concerned authorities should possess all the knowledge and means of how to protect them. Implementing sanitization rules in the workplace and encouraging remote working wherever necessary and possible can help the authorities to ensure employee safety.
- Companies in the chemical industry can evaluate automation solutions which will help in reducing employee density in manufacturing plants and back offices. Authorities should focus on autonomous materials movement, automation or repetitive tasks including assembly, and ensuring predictive maintenance.
- It is important to prioritize cyber security and system resiliency during these challenging times. Furthermore, employees should be provided with higher levels of remote access to core systems so that they can work efficiently even from remote locations.
- Companies should maintain regular communication with lenders and other stakeholders so that surprises are avoided and every party is provided with accurate information.
Marching Ahead
As with many other manufacturers, chemicals companies are also facing numerous challenges due to the covid-19 pandemic. In the immediate future, the prime focus of these companies will be to keep their employees and their families safe, while maintaining the operations, as smoothly as possible.
Commodity chemicals may have to contend with many challenges such as feedstock price volatility, supply chain and logistics issues, and the unpredictability of customer demand. We have seen that there is a decrease in demand for automobiles and certain consumer products. However, small pockets of the industry which produce sanitization products or certain plastics used in the medical industry may benefit from the current rise in demand.
At this point of time, containment is one of the key methods through which industries and companies can control the widespread of the virus. For this, they may have to take steps such as remote working, temporarily closing facilities, maintaining cash liquidity, and so on.
Focusing on the containment of the virus and an eventual economic recovery, companies should emphasize on issues such as how the industry recovery would look like. They should also come up with fool-proof plans regarding the steps to be taken to position themselves on the top in a post-covid-19 world.
- Ananda Kamal Das
