First Research US Industry Profile

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Chemical Manufacturing
SIC Codes: 2813, 2819, 2865, 2869, 2899
NAICS Codes: 325
Last Quarterly Update: 8/24/2020
Companies in this industry manufacture basic, intermediate, and specialty chemicals. Major companies in the US include Dow, DuPont, and Pfizer. Other foreign companies include BASF (Germany), Formosa Plastics (Taiwan), Roche (Switzerland), SABIC (Saudi Arabia), and Sinopec (China).
The global chemical manufacturing industry generates more than $5 trillion in annual revenue. China, the US, Germany, and Japan produce the most chemicals and also are among the largest importers of chemicals. China, India, and other emerging markets are being targeted for industry growth.
The US chemical manufacturing industry includes about 14,000 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $750 billion.
Competitive Landscape
The overall health of the US economy drives the demand for chemical industry since chemicals are used to make a wide variety of industrial and consumer products. The profitability of individual companies is closely tied to efficient operations. Big companies have economies of scale in purchasing and production. Small companies can compete effectively by producing specialty products, of which there are a large number. The US industry is concentrated: the top 50 companies account for about 53% of revenue.
Many specialty chemicals are protected by patents, either for the product itself or the manufacturing process, and have no direct competition. Indirect competition comes from products with similar properties. Patents are especially important to many smaller manufacturers, which may license their product or technology to larger companies for manufacture and sale.
Because they often have a high value-to-weight ratio, many chemicals are traded internationally, and many US manufacturers have production plants overseas. The largest sources of US chemical imports are Ireland (a major source of pharmaceuticals), Canada, and Germany. The biggest export markets for US chemicals are Canada, Mexico, China, and Belgium.
Competitive Advantages:
Access to Capital - The cost of chemical production facilities is extremely high. Companies require considerable capital for manufacturing equipment, safety systems, and raw materials.
Global Scale - Consolidation among chemical companies has resulted in a highly concentrated industry dominated by large producers who operate and market globally.
Proximity to Feedstocks - Large chemical companies require abundant supplies of oil and gas, which are used to fuel plants and as chemical feedstocks.
Companies to Watch:
BASF is the largest chemical company in the world, with products in every major chemical segment.
DuPont was spun off after the demerger of DowDuPont and now specializes in markets including everything from animal nutrition to water solutions.
Bayer may be best known for its pharmaceuticals, but the company is also a leading agricultural chemical maker and broadened its agrochemical offerings with its 2018 acquisition of Monsanto.
Products, Operations & Technology
Major product categories include pharmaceuticals and basic chemicals, while other leading chemical product groups are resins and synthetic fibers, soaps ... plus:
Sales & Marketing
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Finance & Regulation
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Regional & International Issues
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Human Resources
Also includes the following chapters:
Quarterly Industry Update
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Industry Indicators
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Business Challenges
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Trends and Opportunities
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Call Preparation Questions
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Financial Information
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Industry Forecast
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Industry Websites
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Glossary of Acronyms

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