CONTRACT & TOLL MANUFACTURING
speciality chemicals and other components must also expand . Data from ICIS estimates that chemical demand in the US will increase by nearly 15 % by 2033.5
Responsible chemical manufacturing can be executed in a safe and environmentally sound manner , but environmental concerns must be respected and changing legislation must be observed . Companies are looking to increase the sustainability of their operations in response to rising consumer pressure and government regulations , addressing production materials and processes to increase energy-efficiency , reduce greenhouse gas ( GHG ) emissions and remove substances of concern .
For example , the use of per- and polyfluoroalkyl substances ( PFAS ) is currently being studied and restricted . Clean Water Act permits and effluent limitations guidelines are changing to reduce discharges of unwanted materials into groundwater and water treatment plants . 6
Onshoring and nearshoring also support shorter supply chains , which reduce emissions from transportation and logistics . While a small number of global industry supply chains are responsible for more than 50 % of all annual GHG emissions , BCG research found that only a small amount of these emissions are produced during manufacturing – the rest come from other supply chain activities like freight transport . 7
Customer priorities
As companies strive to meet customer requirements and remain profitable , contract manufacturers can offer the material and process expertise to help companies stay ahead of the dynamic manufacturing industry .
Working with domestic contract manufacturers supports supply
References : 1 : US Treasury , Unpacking the Boom in US Construction of Manufacturing Facilities 2 : Journal of Economic Behavior & Organization , Economic and Organisational Insights
3 : Centre for Economic Policy Research , European Energy Crisis and Consequences for the Global Natural Gas Market 4 : US Department of Commerce , Two Years Later : Funding the CHIPS and Science Act 5 : American Chemistry Council , The Global Demand for Chemistry is Growing
chain resilience , and more companies are locating suppliers near other production sites and employment centres . In a survey of supply chain leaders conducted by McKinsey , 64 % of respondents said they were regionalising their supply chains , up significantly from 44 % last year . 8
In the chemical industry , collaboration and customer retention efforts are leading to more custom and tailored products . Deloitte reports that chemical companies are beginning to work with customers to develop new products and build more customercentric business models . 9 Speciality services that are custom-crafted from the ground up require careful planning and testing to ensure commercial viability and scalability , all of which can be carried out by contract manufacturers .
Sustainable processes represent another top priority for customers . Companies are focused on reducing overall energy consumption and transitioning to electrified power and renewable energy sources . Chemical process design has a huge impact on the amount of energy needed during the manufacturing process , with continuous research needed to support process optimisation and innovation .
Contract manufacturers
As manufacturing capabilities return to the US , contract manufacturers are essential for strengthening supply chains and driving innovation . Contract manufacturers who focus on R & D and process design have the experience and agility to source materials , design efficient systems , and predict and respond to challenges . Manufacturing research on process intensification can consolidate and refine chemical processes to reduce energy consumption and increase productivity , resulting in time and cost savings for companies .
6 : EPA , EPA ’ s PFAS Strategic Roadmap 7 : BCG , Fighting Climate Change with Supply Chain Decarbonisation 8 : McKinsey , Tech and Regionalisation Bolster Supply Chains 9 : Deloitte , Chemical Industry Outlook
Using laboratory research , technical expertise and pilot facilities , contract manufacturers can help companies avoid unnecessary process steps and employ efficient process technologies . They can also explore raw material sourcing and applications for performance and sustainability benefits .
For example , AVN , an R & D , advanced software and chemical manufacturing firm with expertise in operations , design , and construction of chemical and manufacturing processes , has saved customers as much as 50 % of total capital costs throughout the development to commercialisation process .
Adapting to these new realities will bring positive changes for the US economy and US workers if companies can embrace new methods of development and production . To meet increasing demands , chemical companies need to meet customer expectations quickly with costeffective solutions .
Contract manufacturers can quickly adapt to market trends and explore new technology , enhancing efficiency and productivity . They are an important factor in the manufacturing landscape overall , contributing to the increased visibility and transparency of the value chain and helping companies harness the true potential of US manufacturing . ●
J j
Steve Hedrick
CHAIRMAN , PRESIDENT & CEO
AVN CORPORATION steven . hedrick @ avncorp . com www . avncorp . com
22 SPECIALITY CHEMICALS MAGAZINE ESTABLISHED 1981