Roland Berger: Chemicals market to grow to 5.3 trillion

04 June 2015 Consultancy.uk

The global chemical market is expected to more than double from its current €2.3 trillion to €5.6 trillion in 2035, research from Roland Berger finds. The market share is projected to shift further away from Europe and North America to Asia, which will see its share of chemical sales rise to 62% by 2035. Europe, while growing in real term, is seeing its once dominant position fall back, even while it continues to hold considerable R&D lab potential.

The global chemical industry has seen steady growth over the past decade with high demand emanating from Asia, where chemical sales have risen from 32% of total sales in 2000 to 53% expected by the end of 2015. The total chemical market is today worth €2,300 billion, although it is expected to grow rapidly recent research from Roland Berger finds. The consulting firm, in its report ‘Chemicals 2035 - Gearing for Growth’, explores changes in the dynamics of the chemical market over the coming 20 years and its forecast growth. 

World growth
According to Roland Berger, the global chemical industry is expected to outgrow the increase in GDP and reach €5,600 billion by 2035. The firm projects the growth rate of the market at be 4.1% annually between now and 2020, before attaining a rate of 3.6% between 2030 and 2035. While the slowdown in the Chinese economy has seen the regions high demand and growth in chemicals slow, the long term projection still finds that the region will continue to pick up market share, with an expected market share of 62% in 2035.

Global chemical market growth trajectory

Europe runs out of steam
While Asia has been doing well on the back of high demand for its rapid expansion, Europe has seen its once dominant position deteriorate over the past decade, down from a dominant 33% of the total market in 2000 to 19% today, with further deterioration expected between now and 2035 when it is expected to drop to 13%.

Besides the massive strides made by Asia as it nearly doubles its market position, Latin America and the rest of the world are also expected to see their position strengthen, up 1% and 2% on 2000 levels. North America is looking toward tumbling growth figures as its position from 27% of the market in 2000 falls to 18% today, to reach 14% in 2035. 

Global sales in Europe

While Europe’s market share is expected to fall, in absolute terms the region will continue to see modest growth of 1.5% annually, with much of the market growth in the downstream, higher-value-added segments such as agrochemicals and engineering plastics. The region is still facing some stiff competition from outside the region, with imports now outstripping exports, and with Europe having one of the highest plant closure rates, which peaked at 71.4% of global shutdowns in spring 2011. The consultancy does however highlight that it is not all bad news for Europe’s chemical industry. The region still has highly sophisticated and productive chemical plants in which world class R&D continues to take place.

Alexander Belderok, Partner at Roland Berger Strategy Consultants, concludes: “Even though European chemical companies are highly productive and very innovative, the market has been consolidating for years, especially in Europe. Major topics like the growing digitisation of industry and new customer demands are placing chemical concerns under ever-increasing pressure.”

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Project management industry adds £156 billion of value to UK economy

15 April 2019 Consultancy.uk

Project management has grown into one of UK’s largest areas of business over the past decade, amid the increasing ‘projectification’ of work. With the gross value added to the UK economy by project management estimated to be £156 billion, this trend is likely to continue in the coming era.

Despite the huge success of project management in recent years, until now there has been relatively little data available on the size of project activity. As a result, there has been a great deal of debate on things like the number of people involved in the sector, the number of projects, and how it contributes to economic output. Due to this need for clarity, APM, the UK’s professional body for project management (the largest organisation of its kind in Europe, with 28,000 individual members) commissioned economists from PwC to shed light on the industry's economic impact.

The research concluded that the profession makes a more significant contribution to the UK economy than the financial services sector. 2.13 million full-time equivalent workers (FTEs) were employed in the UK project management sector, generating £156.5 billion of annual gross value added (GVA). In comparison, the financial services sector contributes £115 billion, and the construction industry adds £113 billion.

Gross value added to UK economy

Commenting on the discovery, Debbie Dore, Chief Executive of APM said, “Project management runs as a ‘golden thread’ through businesses, helping to develop new services, driving strategic change and sector-wide reform.”

Who is a ‘project manager’?

To reach these estimates, PwC’s researchers used detailed models to map out the value of project management activity. They ultimately defined relevant ‘projects’ as “temporary, non-routine endeavours or rolling programmes of change designed to produce a distinct product, service or end result… [with] a defined beginning and end, a specific scope, a ring-fenced budget, [and] an identified and potentially dedicated team with a project manager in charge.”

Building on this, they then went on to define what the act of project management actually is. The job consists of applying “processes, methods, knowledge, skills and experience” so that clients can meet their objectives and bring about planned outputs or outcomes. The analysts added that this includes “initiating the project, planning, executing, controlling, quality assuring and closing the work of an identified and dedicated team according to a specified budget and timeframe.”

Importantly, it should be noted that the profession is not exclusive to only roles explicitly labelled as ‘project manager’, but to any role where specialist project management skills are used. This means that across sectors these roles can have very different titles, from the self-explanatory contract managers of procurement, or the campaign managers of advertising, to the likes of festival co-ordinators in the events sector, and many more. The roles in question also span all strategic levels of the profession, from strategic to tactical and operational positions.

Gross value added of project management profession

From a sector perspective, the financial and professional services, construction and healthcare industries make up almost two-thirds of the total project management GVA. At the same time, understandably, the UK Government has a huge project portfolio, which further drives the size of the GVA the sector contributes, thanks to megaprojects like HS2 and Crossrail.

Commenting on this to the report’s authors, Oliver Dowden, Minister for Implementation remarked, “Project delivery is at the heart of all Government activity, whether it’s building roads and rail, strengthening our armed forces, modernising IT or transforming the way government provides public services to citizens. Getting these projects right is essential if we are to ensure that we build a country that works for everyone.”

Throughout 2019, 26 major government projects were delivered, representing a fifth of the overall Government Major Projects Portfolio (GMPP) of 133 projects. According to the IPA annual report 2017-18, these represented a whole life cost of £423 billion. In addition to this were a plethora of smaller scale projects, and those in early development.

Elsewhere, with the increasing digitalisation of the economy impacting entities of all shapes and sizes, IT and digital transformations tended to dominate the projects of the UK scene alongside new product development projects, with a respective 55% and 46% of organisations in the research sample having undertaken these types of project in the past year. At the same time, this varied across sectors, and unsurprisingly, in the construction and local government sectors, fixed capital projects were the main project type undertaken.

Outlook

Looking to the future, 40% of business leaders expect project management will grow in the coming years due to the increased use of projects – or the ‘projectification’ of the UK. In a trend that has been witnessed elsewhere, organisations have to rapidly and continuously change in the digital age of business, driving the need for project management.

Outlook for project management services

An increased focus on value over cost – especially in the construction sector – and a forecast increase in the number of international projects are predicted to be key drivers of growth, according to the expert contributors. However, this will not happen in the absence of challenges; more than half of organisations expressed concern over the perceived impact of political uncertainty in the UK. Skills and capability shortages were also cited as a potential barrier by a third of organisations.

With regard to budgets, meanwhile, a third of those surveyed by PwC said they expect the size of project budgets will increase in the coming three years, while 40% anticipate a growth in project size. As the profession continues to mature, and as the recognition of the importance of good project management grows, it is expected that a greater proportion of project work will gain more distinct attribution to the profession itself, giving more recognition and appreciation to the role of the project manager.

Speaking on the findings of the study, Sandie Grimshaw, a Partner at PwC, concluded, “The project management profession is relatively new compared to some other professions, such as lawyers, teachers and doctors. However, as project management is a core competence vital to organisations in the UK, the profession is critical and will continue to grow in stature.”