San Francisco, CA — A new report finds that the chemical management services (CMS) industry has seen steady revenue growth over the past three years, with more companies seeing profits rising because of chemical lifecycle management, chemical reduction and waste reduction services than from selling more chemicals.
The Chemical Management Services Industry Report 2009, prepared by The ChemQuest Group, says that CMS providers have seen more than 30 percent revenue growth per year from 2006-2008, and projects that the global market for CMS will more than triple in the next 5-10 years.
The report based some of its findings off a survey of 15 CMS providers and 15 customers, including Intel, Lockheed Martin, Chrysler, Delta, Ford, Delphi and Pacific Gas and Electric.
Chemical suppliers say they are no longer seeing profit from selling more chemicals, but are instead seeing more profit from services like helping customers manage chemicals over their lifecycles, improving inventory management, reducing chemical use and waste, and enhancing IT infrastructure.
Customers say that they've seen savings as high as 40-50 percent in the first year of their CMS programs, and some even see savings 5-10 years into their programs. The main benefits they cited include improved inventory, reduced chemical purchase costs, lower waste costs and lower chemical use. Customers also see greener chemical products as a positive, but say they must be the same or lower price, and work we well or better than current products.
The majority of the CMS market is centered in the U.S., which accounts for $900 million to $1 billion of the global CMS market, which is $1.3-1.6 billion. While 70-75 percent of CMS activity takes part in the U.S., Canada and Mexico, the CMS model has expanded from five to nine global regions in the past five years, with the greatest activity happening in Western Europe and China. Most CMS activity outside of the U.S. is being initiated by U.S.-based companies' international operations, one of the barriers to industry growth pointed out by the report.
Other barriers are the shrinking automotive sector - which makes it hard to point to auto companies as examples of effective CMS programs, the lack of understanding and acceptance of CMS in other countries and regions, and newer machinery that requires lower level of chemical fluids, which would require decreased CMS.
The report recommends that CMS providers be proactive in educating customers about CMS, approach customers at their highest level, bundle other services with CMS, establish footholds in China and South Korea, and develop strategies for serving smaller companies.
Barrels - http://www.flickr.com/photos/mobilestreetlife/ / CC BY 2.0