Chemistry is essential to our everyday lives and the economy. The business of chemistry transforms the natural raw materials of the earth, sea and air into products that we use everyday; it also drives innovation and creates jobs and economic growth by creating products that bring major societal benefits to quality of life, health, productivity, convenience and safety.

The science and materials of chemistry make the lives of Americans and others throughout the world healthier, safer, and more sustainable and more productive. Indeed, our food, safe water supply, clothing, shelter, health care, computer technology, clean energy sources, transportation and every other facet of modern life, all depend upon the business of chemistry.

Not only is the business of chemistry essential to the economy for the jobs it generates through its business activities, it is essential to the economy through its products. More than $700 billion of chemistry products flow through the economy each year. The products of chemistry are present in some form in nearly every facet of the American economy. In fact, over 96 percent of all manufactured goods are directly touched by chemistry. Industries consume products made by other industries that have large chemical inputs, i.e., plastics, rubber, synthetic textiles, and components using these materials. A significant amount of the chemistry use in many products comes from packaging. Chemistry is also essential to the American standard of living.

Companies in this industry transform organic and inorganic raw materials by a chemical process and formulate products. Major companies in the US include Dow, DuPont, and Pfizer. Major companies outside the US include BASF (Germany), Formosa Plastics (Taiwan), Roche (Switzerland), SABIC (Saudi Arabia), and Sinopec Group (China).

The global chemical manufacturing industry remains at about $5 trillion annually, according to Statista. China, the US, Ireland, Germany, and Belgium produce the most chemicals and also are among the largest importers of chemicals, according to Global Newswire.

The US chemical manufacturing industry includes about 14,000 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $740 billion.



Chemistry is essential to our economy and plays a vital role in the creation of ground-breaking products that make our lives and our world healthier, safer, more sustainable and more productive. The business of chemistry provides 784,000 skilled, good-paying American jobs. The business of chemistry supports nearly 25% of the U.S. GDP and accounts for 12% of U.S. exports, $188 billion in 2012, and is the second largest exporting sector in the U.S.

The economic contributions of the chemical industry are numerous, though often overlooked in traditional analyses that consider only the direct jobs and output of the industry. In addition to the jobs created directly by the industry, additional jobs are supported by the purchases of the chemical industry and by the subsequent expenditure-induced activity. The chemical industry paid its employees wages and salaries and purchased supplies and services (including transportation, contract workers, warehousing, maintenance, accounting, etc.). These supplier businesses, in turn, made purchases and paid their employees, thus generating several rounds of economic spending and re-spending generated by the chemical industry.

Production jobs in chemical manufacturing typically involve operating and maintaining complex process machinery. Many workers have technical training or an engineering degree. Average hourly industry wages for the industry in the US are about the same as the national average. The injury rate for the chemical manufacturing industry is moderately lower than the national average.


Most production of basic chemicals is concentrated along the Gulf Coast, where petroleum and natural gas feedstocks are available in refineries. Texas and Louisiana produce a majority of all primary petrochemicals. Production of other products, such as plastics, pharmaceuticals, and fertilizers is more widely dispersed among the states.

The U.S. chemicals industry’s end-use energy consumption (excluding electricity generation, transmission, and distribution losses) totaled almost 5.2 quadrillion Btu in 2006; accounting for about 24% of all energy use in U.S. manufacturing.4 According to the American Chemistry Council, the industry has reduced energy consumption by more than half since 1974.

Regional & International Issues

The global chemical manufacturing industry remains at about $5 trillion annually, according to Global Newswire. Major chemical manufacturers based outside the US include BASF (Germany), Formosa Plastics (Taiwan), Roche (Switzerland), SABIC (Saudi Arabia), and Sinopec (China).

China, the US, Ireland, Germany, and Belgium produce the most chemicals and also are among the largest importers of chemicals, according to NES Fircroft. Despite slowing growth in emerging economies, most notably China, those markets still represent a relatively high growth opportunity for chemical companies. However, manufacturers moving into emerging markets face numerous challenges, including increasingly stiff competition from local suppliers. Established players may benefit from lower costs and other advantages that allow them to undercut prices offered by multinationals, and transporting chemicals and setting up local operations can be particularly challenging in emerging markets where infrastructure is often underdeveloped.

Chemical producers are subject to numerous laws addressing business and trade, and the highly regulated nature of the chemical industry can make compliance management exceptionally burdensome. Companies entering foreign markets must assess a number of factors that can significantly impact the operating environment within a given country. Emission standards, as well as laws regulating the management and disposal of hazardous waste, are typically extensive. Other major concerns include intellectual property protections and regulations addressing chemical security.

In the US, regions with competitive utility rates, ready access to ports and other transportation infrastructure, and proximity to raw materials such as crude oil and natural gas tend to attract chemical facilities. Based on number of establishments, California,?Texas,?Ohio, and?Illinois?are the leading chemical-producing states.

Regional concentrations depend largely on the chemical being produced. For example, producers of petrochemicals require proximity to raw materials, making Texas and Louisiana top states for basic chemicals, while the heavy concentration of research universities in California, Massachusetts, and North Carolina has helped those states attract a large number of pharmaceutical companies.


Pharmaceuticals include prescription and over-the-counter drugs; in-vitro and other diagnostic substances, vaccines; serums, plasmas and other biological products; and vitamins and other pharmaceutical preparations for both human and veterinary use.

Basic chemicals include inorganic chemicals, bulk petrochemicals, organic chemical intermediates, plastic resins, synthetic rubber, man-made fibers, dyes and pigments, printing inks, etc. Also called commodity chemicals, these chemicals are produced in large volumes.

Specialty chemicals are low-volume, high-value compounds sold on the basis of what they do, not what they are. Also known as performance chemicals, some examples include paint, adhesives, electronic chemicals, water management chemicals, oilfield chemicals, flavors & fragrances, rubber processing additives, paper additives, industrial cleaners, and fine chemicals.

Agricultural chemicals include fertilizers and crop protection chemicals, i.e., pesticides.

Consumer products include soap, detergents, bleaches, laundry aids, toothpaste and other oral hygiene products, shampoos and other hair care products, skin care products, cosmetics, deodorants and other body care products, and perfume and cologne, among others.

Products & Operation

Major products of the chemical manufacturing industry include thermoplastic resin and plastic materials, accounting for about 10% of the industry’s revenue. Other products include liquefied refinery gases (about 5%), fuel ethanol (about 5%), and pharmaceutical preparations (less than 5%).

Basic chemicals include petrochemicals, industrial gases, dyes and pigments, alkalies and chlorine, alcohols, and various other organic (based on the chemistry of carbon and oxygen) and inorganic chemicals. These basic chemicals are made from mined materials such as crude oil, natural gas, and minerals, or from crops and other natural substances. The raw materials are called feedstocks. Chemicals companies use basic chemicals to produce intermediate products like polyethylene; polyethylene oxide (PO); ethylene oxide (EO); and ethylene glycol, or final products like phosphate and nitrogen agricultural fertilizers.

Basic and intermediate chemicals are collectively referred to as commodity chemicals. These chemicals are produced mainly by large companies, often as byproducts of petroleum refining. Margins on commodity chemicals are usually low because the chemicals are so widely produced.

Commodity chemicals are used to produce more complicated chemicals, known as specialty chemicals, which include resins, plastics, synthetic fibers, pesticides, lubricants, paints, coatings, adhesives, soaps and cleaners, pharmaceuticals, and a huge number of other products with special applications. Margins are generally higher on these products.

The manufacturing process usually involves mixing various raw materials and adding heat to produce a series of chemical reactions, then using various physical techniques to isolate the finished product. Production may involve dozens of intermediate steps. Many specialty chemicals are produced in batches, while commodity chemicals are often produced in continuous-flow operations. Special reaction vessels, valves, piping, and control instruments are used to produce different chemicals. Companies generally employ a large number of engineers to manage the manufacturing process. There are usually waste products to be disposed of, and energy inputs are often high. Large amounts of energy are typically used to drive chemical reactions, and natural gas or crude oil is used as feedstock for many chemicals.


Just like in other major industries, chemical manufacturers employ big data analytics and Internet of Things (IoT) in their production and operations. These digital technologies assist the chemical companies in integrating data with operations and in customizing products. IoT sets the foundation for machine learning, which is essential to manufacturing and asset management. It can collect, process and analyze data which can produce simulations and predictions in plant operations. Aside from IoT, artificial intelligence and robotics also improve the marketing processes in the chemical industry operations.

Manufacturing process technology is important in securing a high product yield from the raw materials. For the production of complex chemicals in particular, precise control of chemical reactions is required. Most manufacturing plants are highly automated. The design of esoteric chemicals such as drugs may be done with sophisticated computer systems. Plants are being retrofitted with networked sensors that can alert operators to problems with equipment such as pumps and compressors, and predictive analytics can be used to anticipate maintenance needs.

Chemical manufacturers are leaning towards going zero waste, resulting in less energy and resources consumption. The critical nodes of the sustainable ecosystem include chemical production, applications, raw materials, and end-users. The recycling of plastics is expected to reach a 20% year-over-year growth through 2030, according to McKinsey.


Competitive Landscape

The overall health of the US economy drives the demand for chemical industry since chemicals are used to make a wide variety of industrial and consumer products. The profitability of individual companies is closely tied to efficient operations. Big companies have economies of scale in purchasing and production. Small companies can compete effectively by producing specialty products, of which there are a large number. The US industry is concentrated: the top 50 companies account for about 50% of revenue.

Many specialty chemicals are protected by patents, either for the product itself or the manufacturing process, and have no direct competition. Indirect competition comes from products with similar properties. Patents are especially important to many smaller manufacturers, which may license their product or technology to larger companies for manufacture and sale.

Because they often have a high value-to-weight ratio, many chemicals are traded internationally, and many US manufacturers have production plants overseas. The largest sources of US chemical imports are Ireland (a major source of pharmaceuticals), Canada, and Germany. The biggest export markets for US chemicals are Canada and Mexico.

Competitive Advantages:

Access to Capital – The cost of chemical production facilities is extremely high. Companies require considerable capital for manufacturing equipment, safety systems, and raw materials.

Global Scale – Consolidation among chemical companies has resulted in a highly concentrated industry dominated by large producers who operate and market globally.

Proximity to Feedstocks – Large chemical companies require abundant supplies of oil and gas, which are used to fuel plants and as chemical feedstocks.

Companies to Watch:

BASF is the largest chemical company in the world, with products in every major chemical segment.

DuPont was spun off after the demerger of DowDuPont and now specializes in markets including everything from animal nutrition to water solutions.

Bayer may be best known for its pharmaceuticals, but the company is also a leading agricultural chemical maker and broadened its agrochemical offerings with its 2018 acquisition of Monsanto.

The chemicals industry is a keystone of the U.S. economy, converting raw materials (oil, natural gas, air, water, metals, minerals) into more than 70,000 different products. Chemicals are used to make a wide variety of consumer goods as well as thousands of products that are essential inputs to agriculture, manufacturing, computing, telecommunications, construction, and service industries.

Sales & Marketing

Chemical companies sell their products to a large variety of customers. These include customers in the industrial, agricultural, construction, textile, health care, and consumer products sectors. Within a specific product segment companies may do a sizable percentage of their business with just a few large customers, or in some cases produce a customized product for a single customer. Many chemicals are sold as intermediate products to other chemical manufacturers.

Chemical sales are primarily made through direct sales forces and distributors. Companies also participate in trade shows for marketing purposes. Technical specifications of products are crucial to customers, and many salespeople are chemists and chemical engineers.

Prices for commodity chemicals depend largely on raw material and energy prices. Prices for specialty chemicals are additionally dependent on demand in end-use markets.


The business of chemistry has consistently been one of the largest U.S. private-sector investors in new plants and equipment (P&E), as new products and processes resulting from R&D are brought into reality. Profit margins (and operating profits) and capacity utilization rates are drivers for P&E investment.

During much of the post-World War II period, real (that is, adjusted for the effects of inflation) capital investment in structures (or plants) and equipment by the business of chemistry paralleled overall U.S. economic activity. Investment rose during periods of business expansion and fell during periods of economic downturns. Overall, however, annual capital investment in the business of chemistry has experienced sustained long-term growth

Finance & Regulation

Specialty chemicals are generally more profitable than commodity chemicals. Because of this, many companies decide to develop specialty products. Because chemical plants run most efficiently at high capacity, companies generally produce large volumes of product even in the absence of sales, and therefore carry large inventories of finished product. To avoid production interruptions, they may also have large inventories of raw materials.

Most companies have large capital investments in production facilities and have heavy spending for maintenance and R&D. The industry is capital-intensive: average annual revenue per employee in the US is about $890,000.

The US industry’s working capital turnover ratio averages about 20%. Sales of some products can be seasonal, resulting in uneven inventories and accounts receivable. For the industry overall, accounts receivable average about 60 days’ sales. Risks associated with seasonality are particularly acute in the agricultural chemical industry, where companies commonly build inventories during periods of low demand. Manufacturers of chemicals with seasonal demand may incur substantial inventory carrying costs. Inventories in the US chemical manufacturing sector typically turn about five times per year.


Chemical manufacturers are subject to a large variety of local, state, and federal government regulations concerning worker safety and air, water, and ground pollution. Because of poor past practices, many older chemical plants have ground contamination from a variety of toxic products and may have liability for Superfund site cleanup.

US regulations governing chemical safety and security are extensive and are largely managed by the Occupational Safety and Health Administration (OSHA) and the Department of Homeland Security (DHS). OSHA’s Hazard Communications Standard (HCS) requires chemical companies to share information about chemical and toxic substance hazards to workers and customers. The DHS oversees Chemical Facility Anti-Terrorism Standards (CFATS), which require chemical companies to prepare security vulnerability assessments and develop site security plans.

American Chemistry Council,
Bureau of Economic Analysis, “GDP by Industry and Input-Output,” U.S. Department of Commerce.
Energy Information Administration, “Manufacturing Energy Consumption Survey 2006,” U.S. Department of Energy.

Location Specific Industry Data :

United Kingdom NA Grampound EDIT |COPY |DELETE
Australia VIC Landsborough West EDIT |COPY |DELETE
Germany BW Oberdischingen EDIT |COPY |DELETE
Switzerland NA Degermoos EDIT |COPY |DELETE
Australia SA Brownlow K.I. EDIT |COPY |DELETE
Germany RP Osann-Monzel EDIT |COPY |DELETE
Italy CO Caslino Al Piano EDIT |COPY |DELETE
Italy UD Pesariis EDIT |COPY |DELETE
Canada AB Calgary EDIT |COPY |DELETE
Netherlands NB Sprundel EDIT |COPY |DELETE
Belgium VBR Leefdaal EDIT |COPY |DELETE
Australia QLD South Mackay EDIT |COPY |DELETE
Canada ON Toronto EDIT |COPY |DELETE

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