Declining Confidence

Chief executive officers of the world's chemical companies are less confident about the next 12 months than are their counterparts in industry as a whole.

According to a survey just released by the tax and advisory services firm PricewaterhouseCoopers (PwC), only 44% of chemical CEOs are very confident about the next 12 months, compared with 52% of CEOs in general. Moreover, only 36% of chemical CEOs are more confident than they were a year ago, compared with 50% of CEOs in general.

PwC surveyed nearly 1,100 CEOs, 36 of whom lead chemical companies.

The main drains on chemical CEOs' confidence, PwC reports, are low-cost competition, energy prices, energy security, and overregulation. "It is not surprising to see that regulation is concerning chemical CEOs," says Volker Fitzner, global chemicals advisory leader at PwC. He notes that REACH-Europe's new system for the registration, evaluation, and authorization of chemicals-will have a considerable impact on manufacturers in Europe and elsewhere.

Concerns aside, chemical company chief executives are more global in their deal-making than are their colleagues in other industries. PwC found that 39% of chemical CEOs completed a cross-border acquisition in the past year, compared with just 27% of CEOs in general. Of those chemical acquisitions, 41% involved the Asian market.

Chemists should be heartened that R&D seems to be important to chemical industry CEOs: 28% of them identified new product development as the key means of future growth.