A delegation of Womble Bond Dickinson attorneys attended the Specialty and Custom Chemicals Conference held by Chemicals America and SOCMA in February. Over the course of the two-day event we had opportunity to chat with many of the nearly 1,300 specialty chemicals manufacturers and other industry-related companies in attendance. What we heard is that the industry is thriving and evolving, but there are challenges and many in the industry are keeping their eyes on the horizon.
Here are some of the larger insights our team took from the conference:
“A number of big issues jumped out to me. First off, I think a lot of people would be surprised to know much of the industry is diversifying production away from China to India, Vietnam and other locations. Some production is even coming back to the US in “fine” chemicals. I’d say year-over-year expansion in the US is probably one of my biggest takeaways. Tolling arrangements are a bigger driver of that growth, so companies need to be working closely with legal counsel to make sure those contracts are well-thought-out.
Related to growth, we heard from many companies who are choosing to stay private rather than go public. As you might expect, private equity is currently dominating investment.
On the regulatory side, it’s clear that the cultural shift in perspective on single-use plastics and the potential legal implications that could have is fueling growth of biodegradable and recyclable plastics. Additionally, ethylene oxide and 1,4-D will continue to pose issues to some manufacturers of ethoxylated materials.”
- Brad De Vore, Environmental Litigation
“Sustainability came up again and again. The industry leaders clearly view it as an important value that needs to be considered the same way companies look at profits. Companies and their legal counsel need to think about how they can make their business more sustainable, how they can partner with organizations promoting sustainability, and how they can showcase their commitment.”
- Mark Henriques, Business Litigation
“There seem to be distinct levels of sustainability and what companies are doing. Some just want to do the bare minimum and satisfy regulations (which requires making sure the disclosures are correct from a legal perspective). On the other end of the spectrum, some companies are devoting a large portion of their research and development budget to innovations related to sustainability. Those companies need to have a comprehensive legal strategy to protect their intellectual property.
Private equity is becoming more niche-based, as are a lot of service organizations. The fact that private capital folks see the value in attending a specialty chemicals conference tells me a lot. It shows they recognize how valuable some of these chemical companies, and their new technologies, have become.
And we did hear a lot about innovation, not just in terms of new chemical processes, but in terms of toll manufacturers figuring out how to make their processes much more efficient. Downtime is the enemy of toll manufacturers – the quicker they can turn around the product line and start the next project, the better. More and more companies are investing in innovation so they can differentiate themselves from their competitors.”
- Barry Herman, IP Litigation