Despite looming recession , SOCMA members anticipate growth
Buyer-toller collaboration and ESG principles are supporting resilience in the US custom market . Gregory Morris reports from Nashville
There was palpable energy at the SOCMA-sponsored Specialty & Custom Chemicals Show in Nashville , Tennessee , on 28 February to 3 March . Taking warnings of a likely recession later this year in stride , delegates were sanguine about growth .
In her welcoming remarks , Jennifer Abril , president and CEO of SOCMA , noted that she had thought that the main theme of the event would be volatility , but instead , the theme of resurgence emerged quickly as she spoke with delegates and exhibitors as they arrived .
“ You told us that you had a great 2021 , and most of 2022 , at least until Q3 ,” Abril related . “ Q4 was soft and numbers were two-thirds to three-quarters of projections in January and February . But that resurgence is expected as this year unrolls . About 70 % of you told us you are projecting growth this year or into 2024 .”
“ Three-quarters of you told us that you are looking for manufacturing , and 80 % are seeking new business partners . About two-thirds are eager to reconnect with existing customers . What we are likely seeing is a new baseline being set as compared to what we had before the pandemic .”
The consensus outlook , Abril suggested , is that the slowing of activity that many members are already experiencing is driven by a drawing-down of inventory , especially in line orders . Inventories are likely to be held a little higher than before the pandemic , but not as high as they had been as protection against persistent supply chain disruptions .
Even as the worst of the pandemic upheaval abates , some trends set in motion over the past few years are persisting , notably higher energy costs and overall inflation . Lead times are longer , raw-material costs are higher and workforce availability is tighter . Of all those , employment seems to be the most daunting . “ The new big challenge is workforce turnover and retention ,” Abril said .
One notable tailwind is the repatriation of manufacturing , specifically away from China and back into Europe and North America . To be sure , the long supply chains from China and other discount suppliers remain important to the industry , more and more companies are diversifying their number of suppliers . Some are even back-integrating .
Abril – Resurgence , not volatility , the main theme
Recession looming
The morning keynote speaker briefed delegates on the biggest possible headwind . “ The forecast is for a recession some time this year ,” said Robert Fry , former senior economist for DuPont , and now head of his own consulting and forecasting firm . He cited an inverted yield curve has been the best predictor of a recession for many decades . One happened during summer 2022 .
“ Most of the other leading indicators predict a recession as well , possibly as soon as the second half of this year ,” Fry elaborated , “ but it is likely to be mild . That is indicated by housing starts and corporate balance sheets are mostly in good shape . The sooner
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