The chemical industry has shown phenomenal growth for more than fifty years. It was in the manufacture of synthetic organic polymers used as plastics, fibres and elastomers where most of the growth originated. Synthetic polymers form 80% of the chemical industry’s output worldwide. In 1999 the chemical industry was calculated to be nearly a $1.5 trillion global enterprise. Historically and presently the chemical industry is still concentrated in three areas of the world, Western Europe, North America and Japan (the Triad). The European Community remains the largest producer area followed by the USA and Japan.

The traditional dominance of chemical production by the Triad countries is being challenged by changes in feedstock availability and price, labour cost, utility cost, differential rates of economic growth and environmental pressures. Instrumental in the changing structure of the global chemical industry has been the growing participation of developing countries and regions such as the Middle East, South East Asia, Nigeria, Trinidad, Thailand, Brazil, Venezuela, and Indonesia.

Chemical and Engineering News lists and monitors the performance of the global top 50 chemical companies since 1989. In their recent publication (June 2000) they reported that although sales for the top 50 companies were up, the average operating profit margins were down slightly from the previous years, strengthening the feeling that the industry is on the down side of its traditional cycle. The distribution of the sales of the top 50 companies is depicted in the chart below, it indicates that the total sales of the distinguished companies was US$ 397 billion in 1999. The report further reinforces the dominance of the European based companies with their sales accounting for 54% of the total amongst the leaders.

The chemical industry is the most globalised of all manufacturing industries and the globalisation is still in progress. The driving factors for the trend is the need for improvement of profitability by reducing production costs and proximity to markets. Companies choose location for a specific operation based on the levels of trade between countries and high competition for markets.

The recent increasing cost of feedstock (largely crude oil) and other factors increasing production costs has led to consolidation and merger of multinational companies. The most significant of the mergers being in the petrochemical industry and basic organic chemicals:

• BP and Amoco and later Arco to form BP Amoco,
• Exxon and Mobil to form Exxonmobil
• Total and Petrofina and later Elf Atochem to form TotalFinaElf
• Chevron and Texaco
• Consolidation of petrochemical operations of Chevron and Phillips to form PhillipsChevron.

Other significant are in the pharmaceutical industry:

• Glaxo Wellcome and SmithKline Beecham
• Novartis from merger of Rhone Poulenc and Hoechst

The increasing feedstock costs has led the industry to explore alternative sources like gas. This is evident by Chevron and Sasol’s investment in a gas based petrochemical plant in Nigeria, Shell has recently bought gas fields in New Zealand for exploration and Sasol has also been exploring gas fields in Mozambique. Even with this move oil will remain the most favoured feed stock because of large reserves, which guarantee sustainable supply for the future.