"The chemical industry is leaving the United States, and it won't be back," said Peter Huntsman, CEO of chemical firm Huntsman Corp. "When demand picks back up, they'll build new capacity overseas--in the Middle East, Singapore and China." He was quoted in a February Wall Street Journal article, "Radical Shifts Take Hold in U.S. Manufacturing." Reporter Mark Whitehouse noted, "For chemical makers, the recession has intensified an exodus from the U.S. that has been happening for at least a decade, amid rising energy costs, environmental concerns and growing demand in developing countries."
Articles in publications such as Chemical & Engineering News, Chemical Week, and BusinessWeek have documented the closure of U.S. laboratories and the opening of new laboratories by the same firms in other countries, particularly China and India. This trend has major implications for U.S. research and technical service contract labs. The natural tendency for the growing number of new, large laboratories is for their managers to assign contract research, analytical work and other technical service work to laboratories that are in their own countries – often geographically close and staff by people whose native language is the same as their own. So even if your own firm does not open an overseas laboratory, your lab's work load could be adversely affected/
Responding to the situation
How can U.S.-based lab managers and staff members compete in this environment and avoid their labs shrinking or disappearing altogether?
I don't have an answer to this question. I do have some speculations, however. First, American adaptability could see us through as new industries grow up alongside of the declining ones. Advanced materials, catalysts, green industries, nanotechnology and biotechnology are all areas where the U.S. can potentially lead the world. The growth of these industries will be accompanied by their increased need for contract laboratory services. In many cases the details of these services such as the types of analyses performed will change. Contract and analytical services laboratory managers will need to equip their labs, train current personnel and hire new staff to perform these analyses.
Environmental technology will be a growing field as businesses are forced to address climate issues such as reducing greenhouse gas emissions and perhaps commercialize processes for carbon dioxide sequestration.
All of these opportunities could create export markets that could offset the import of bulk chemicals produced in other markets.
The government may also play a role in ensuring the future of U.S.-based contract and analytical services labs. Increasing government regulations enforced by agencies such as the EPA and FDA could increase the need for analytical laboratory services. While clinical laboratory trials are increasingly conducted overseas, new government regulations may require these trials be conducted in the U.S. Already the FDA conducts on-site inspections of some pharmaceutical contract laboratories overseas.
Finally, developments in other industries could stem the U.S. chemical exodus. New technology has increased U.S. natural gas supplies from 30 years to 100 years in less than a decade. New supplies already reaching the market have contributed to lower natural gas prices and could keep them under control in the future. While much of the world's petrochemical industries are based on naphtha, those of the U.S. are almost completely based on natural gas. Heretofore, that has been an economic disadvantage. This could change as a result of more abundant natural gas prices and the consequent lower prices.