Remarks by Lawrence D. Sloan, President & CEO, SOCMA
GlobalChem Conference & Expo
Wednesday, March 4, 2015
Hilton Baltimore, Baltimore, MD
Good morning everyone and welcome to Day Two of this year’s Global Chemical Regulations Conference. As Bill mentioned, my name is Larry Sloan and I am President and CEO of the Society of Chemical Manufacturers & Affiliates. It is a pleasure to be with you this morning and open today’s proceedings.
For those of you who are GlobalChem veterans, I welcome you back and thank you for your continued participation. I also extend a special welcome to our first-timers as well as attendees from afar and our friends from EPA. Finally, I thank our event’s umbrella sponsors: Beverage and Diamond, SafeTec and Steptoe and Johnson, for their support.
This morning, I want to share with you some good news about the state of the specialty chemical industry, which SOCMA represents, and also mention a few challenges facing our future growth, some of which have been presented here at GlobalChem or are on the agenda for today’s discussion.
Last month I was in New Orleans for the Informex Trade Show, where I walked the show floor and spoke with many of the world’s leading producers of specialty chemicals. I found that there is a lot of optimism within the sector that SOCMA represents about the current state of the specialty chemical market and prospects for 2015. In fact, the positive sentiment was underscored by a recent survey conducted by SOCMA and United Business Media that found that 88 percent of specialty chemical manufacturers feel the market is either good or excellent. Fifty-nine percent said they would finish 2014 with product sales up 10 percent or more over 2013, and the same percentage expect sales in 2015 to be 10 percent better than in 2014. The chemistries leading this increase in sales growth are pharmaceuticals, life sciences, electronics, polymers, and agrochemicals to name just a few.
The level of optimism is matched by plans voiced by a majority of survey respondents for increased spending in 2015 to expand facilities and/or develop new specialty chemistries or services.
Companies in the specialty chemical sector are hiring, too. Seventy percent said that their company head count increased last year, with more than half saying it increased by four percent or more. Nearly sixty percent surveyed said they have plans to hire new employees in 2015, the majority of which will work in production.
The outlook for specialty chemical production in the U.S. is remarkable and is in contrast to the overall less rosy outlook for chemical production in Europe, Asia, and the Middle East, where sales and production growth are expected to remain flat or stagnate slightly.
As we know, our industry attracts and demands a skilled workforce. We are unique among manufacturing industries for many reasons, not the least of which is our unique workforce. The chemical industry employs a large number of scientists – approximately 75,650, in fact, whose skills and expertise allow us to remain innovative. The ability to continually innovate is crucially important for specialty chemical manufacturers. It’s what keeps the industry sector SOCMA represents competitive, which, in turn, enhances the competitiveness of countless downstream industries that rely upon the niche chemistries that our members make. No other manufacturing industry has a workforce that is even a quarter as large. But, our industry requires not only scientific and technical expertise -- it also requires a particularly strong understanding of the regulatory landscape, for ours is one of the most heavily regulated and this is certainly a challenge. It isn’t always easy meeting these demands, however; SOCMA’s survey found that attracting qualified workers was the second highest barrier to growth for specialty manufacturers in 2014. As an aside, I want to put in a plug for our Chemical/Process Operator Training program, which scores of companies have used to train their operators. We are now aggressively targeting community colleges that are playing an increased role in STEM education. The course work covers everything from basic math and chemistry to unit operations and plant economics. Speaking as a recovering chemical engineer, I have found the syllabus offers the industry novice a superb to get up to speed quickly and pragmatically, so they can enter the workforce with the basic skills critical for success on the job.
Future growth of specialty chemicals faces other significant barriers as well. Those we surveyed named fears about the global economy, raw material prices, the cost of federal regulations, and tariff and non-tariff barriers as major areas of concern. If we are to maintain a competitive edge in the world, we must stay on top of the ever changing regulatory landscape, seize opportunities to gain market access, and advocate for rational policies set in sound science.
Gaining access to foreign markets as a way toward future growth is of high interest for specialty chemical firms, but it doesn’t come without some concerns. Among those concerns are compliance with regulations in those foreign markets, intellectual property protection, and disclosure of confidential business information. These are all legitimate fears, given the highly proprietary nature of the chemistries our industry sector produces.
Nevertheless, with 95 percent of consumers of U.S. goods residing outside our borders, it is important that we do all we can to increase exports, and we appear to be making inroads. In 2012, our industry accounted for 13 percent of all U.S. exports, which in 2013 increased to 16 percent. Top markets include the EU and Asian economies like China and South Korea – highlighting the importance for the U.S. to ensure the passage of two key free trade agreements currently being negotiated: the Transatlantic Trade and Investment Partnership with Europe and the Trans Pacific Partnership with the Asia-Pacific. Trade agreements such as these benefit our industry by mitigating barriers to trade, gaining commitments toward regulatory cooperation, and eliminating costly tariffs. Bear in mind that nearly half of all U.S. goods are exported to countries with which we have a trade agreement.
I’d like to mention one additional priority for SOCMA and that’s TSCA reform. We gained a lot of traction in Congress last year and hope to continue to see better legislative progress this year. As you heard yesterday, with a favorable Congressional landscape and continuing leadership from Congressman John Shimkus and Senators Inhofe, Vitter and Udall, prospects of getting TSCA reform legislation to President Obama’s desk are brighter than they’ve ever been.
The urgency for reform is ever present.
Emerging international chemical control laws, retail regulation imposed by big-box stores, and, of course, restrictions and bans imposed by progressive state legislatures are constant reminders that Washington needs to take action. There may not be a lot of consensus or uniformity around these trends, but one thing we know for sure is that retail and third party initiatives are causing chemicals to be deselected, and the rationale is oftentimes predicated on fear stoked by activists rather than set in sound science. The market disruptions these actions cause have ripple effects throughout the entire supply chain all the way up to chemical manufacturers. It serves as a constant reminder of why we need to continue to advocate for sound science over emotion, a strong federal law over a myriad of conflicting and confusing state laws.
Thank you for your time and attention this morning and for your attendance at GlobalChem this year.