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The Seventh Disruption to the Global Polymer Industry

The Seventh Disruption to the Global Polymer Industry

November 3, 2022

New report by Roland Berger highlights the seventh - and most complex - disruption to the global polymers industry

As the global polymer industry has matured, it has experienced a series of disruptions which have shaped the industry, changed the competition landscape, and generated opportunities for value creation. While the first six disruptions each were characterized by a single, overall defining development, the seventh (and current) disruption highlights a confluence of simultaneous strategic global challenges - and the most complex disruption to date.

Once the invention of industrial scale polymerization established the industry, companies able to develop and commercialize new molecules and product technologies thrived. Growing demand for plastics allowed product manufacturers to improve their product cost-value profile
Once the invention of industrial scale polymerization established the industry, companies able to develop and commercialize new molecules and product technologies thrived. Growing demand for plastics allowed product manufacturers to improve their product cost-value profile
"Companies will not succeed by addressing the current disruption's challenges individually; they must all be addressed holistically."
Portrait of Robert Henske
Senior Partner, Managing Partner USA, Member of Supervisory Board
Boston Office, North America

The evolution of polymer industry disruption

Though plastics are everywhere, the global polymer industry is still relatively young. Since the first fully synthetic plastic (Bakelite) was invented in 1907 – and industrial scale expansion beginning at the start of World War II – plastics use has grown exponentially, largely due to product attributes and cost.

The first disruption was characterized by Technology Development, where companies able to develop new molecules and project technologies thrived, and growing demand for plastics use allowed product manufacturers to improve their product cost-value profile. Growing Demand and Supply drove the second disruption, with supply increasing to meet demand and global volume growth. The third disruption was driven by Technology Licensing, where polymer innovators began licensing technology to emerging firms around the globe, and countries outside the West were able to leverage lower costs and sell resins to more developed countries.

The fourth disruption, Middle East Downstream Production, saw the region move from oil to petrochemicals and polymers by leveraging its low-cost feedstocks, such as ethylene. The U.S. Shale Revolution (which lowered the cost of ethylene used in polymer production) was the basis for the fifth disruption; U.S. production costs thus became lower than Western Europe and Asia, bucking expected globalization trends. In the late 1990s to early 2000s, China began to strategically invest in growing its capacity across multiple industries (including polymers) which benefitted local producers but negatively impacted polymer producers dependent upon China trade, making China Self Sufficiency the sixth disruption in the global polymer industry.

Disruption #7: Multiple simultaneous challenges

While the lessons and success drivers from the previous disruption are still valid and relevant today, the world has become increasingly more complex. The current disruption to the polymer industry is not caused by a single prominent factor, but rather, six simultaneous challenges:

  1. ESG policies including potential CO2 taxes on production and shipment, and circularity concern
  2. Innovation including the use of more green materials
  3. Energy price volatility shifting cost curves and creating supply/demand uncertainly
  4. Supply chain disruptions causing shortages of raw materials, shipment delays, and potential changes in materials specifications
  5. Rising geopolitical tensions causing higher tariffs, trade route changes, and increasing uncertainly
  6. Re-onshoring driven by a variety of factors, and with long-term ramifications due to long asset life

Addressing the current disruption's factors singularly will not present an effective solution; rather, all six must be resolved as a whole, making the seventh disruption the most challenging one to date. At the same time, there is the potential to turn the polymers industry on its head and for new winners to emerge.

As polymer companies contemplate the challenges and risks associated with the current disruption, two major steps must be taken: first, understanding the operational risks and how to establish resiliency, and the second, understanding the strategic ramifications of the emerging risks and how they will impact future cycles. Polymer industry players who understand the risks and opportunities, think clearly and holistically, and move strategically and decisively to address the challenges effectively will come out on top.

Roland Berger's depth of industry knowledge over the entire polymer and chemicals value chain, along with our functional, strategic, and operational expertise, makes us uniquely prepared to support clients as they navigate this and future industry cycles. Download the study and reach out to learn how we can help your company navigate the disruption and come out a winner.

Download the full study

Register now to download the full study “Seventh Disruption to the Global Polymers Industry 2022” including key insights, current developments as well as future challenges for players in the industry. Additionally, you get detailed insights on the recent upheavals in the polymer industry, which are driven by six factors (including ESG policy, supply chain volatility and innovation) that need to be considered and resolved together.

Further readings
Portrait of Robert Henske
Senior Partner, Managing Partner USA, Member of Supervisory Board
Boston Office, North America
+1 617 310-6600
Portrait of Jonathon Wright
Partner
Boston Office, North America
+1 617 310-6600
Portrait of Alexander Baumgartner
Principal
Chicago Office, North America
+13 12 662-5540
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