Flexibility is key

The market for chemical products is expected to grow to some 5.6 trillion euros by 2035, more than doubling its current size. But even though growth prospects are good, the industry's dynamism is set to wane—currently growing at an average annual pace of 4.1%, the chemicals market will expand by just 3.6% per year between 2030 and 2035. The European chemical industry will see itself especially hard hit, with annual growth amounting to as little as 1.5% through 2035. Besides sluggish growth in domestic markets, Europe's industry has other significant hurdles to clear, such as the high cost of raw materials and energy, and increased costs resulting from the tightening of EU regulations.

Our study into the the chemicals market, "Chemicals 2035 – Gearing up for growth: How Europe's chemical industry can gain traction in a digitized world”, outlines the current challenges facing the industry and how European market players can position themselves to remain competitive. "Even though European chemical companies are highly productive and very innovative, the market has been consolidating for years, especially in Europe," explained Alexander Belderok, Partner at Roland Berger. "Major topics like the growing digitization of industry and new customer demands are placing chemical concerns under ever-increasing pressure.”

• Realizing the chance to reverse the erosion of the European chemical industry's market share and participate in the strong global market growth that lies ahead between now and 2035 will be no easy task, but the good news is that Europe’s chemical industry has everything it needs to rise to the challenge—provided it can stay flexible and focused on building the right balance of capabilities, competencies, and innovation. Europe possesses deeply integrated industrial complexes on which to build for the future, it must simply work out how to migrate to a genuine, scalable multi-feedstock supply, keep an eye on process intensification, intelligence, and predictive maintenance, and cultivate true customer intimacy into application-driven innovation. Like all industries today, chemicals must remain agile and focused on customers needs. The prize is worth fighting for, however, and within Europe’s grasp.