Facts & Figures Of The Chemical Industry

The story of the turnaround in the chemical industry may have begun in 2004, but it didn't end there. Many of the elements in that story continued into 2005. Higher pricing and cost cutting to offset rising raw material and energy costs, increased production, and growing world trade are all continuing chapters.

As in 2004, probably the most important factor in advancing chemical fortunes last year was the industry's ability to raise prices enough to offset higher costs. Cost/price squeezes that were onerous in the first three years of the decade seem to have disappeared, giving chemical companies higher sales, earnings, and profitability. Many firms directed their improved earnings at increased spending on R&D and new plants and equipment.

Employment declined at many European companies but picked up at Japanese and U.S. firms. Interestingly, within U.S. borders, total chemical employment declined, but worldwide employment for companies with U.S. headquarters increased.

Production in many countries increased last year, although sometimes at a lower rate than in 2004. But in the U.S., overall chemical production fell slightly. This decline is one of the more interesting, if not tragic, episodes for the year. It did not come from lack of demand but rather from weather. The plant outages in the latter part of 2005 caused by Hurricanes Katrina and Rita knocked the stuffing out of chemical production, especially for basic chemicals.