Gulf Petrochemicals and Chemicals Industry needs to transform itself in order to reap the benefits of industry’s potential, Al-Benyan tells GPCA forum
The outlook for the Gulf petrochemical and chemical industry is strong, but the good times won’t last forever and the region’s industry sector needs to “get fit” and transform itself for the challenges to come.
That was the message to the 12th annual Forum of the Gulf Petrochemicals and Chemicals Association (GPCA) from Yousef Al-Benyan, SABIC Vice Chairman and CEO and Chairman of the GPCA in his welcome address. In his remarks, Mr. Al-Benyan embraced the theme of this year’s conference, “The Chemical Industry in Transformation: The Journey Begins.”
“Our industry has experienced rapid structural shifts in its business environment,” he told the assembled industry leaders. “Just about three years ago, no one could predict the changes it is now undergoing.
“I believe there is tremendous potential for the industry, but to reap the benefits, we need to realize the rules of the game have changed. The players must transform themselves.”
He said the GCC petrochemical industry “needs to get fitter, more nimble and more agile. We need to invest in the right technology and innovation that delivers results. Consolidation needs to be looked at very seriously.”
The industry is facing fast-paced disruptions caused by technology and recent economic developments in the US, Europe, China and elsewhere, Mr. Al-Benyan said.
“Times are changing very fast,” he said. “And we have to adapt even faster.”
GPCA members need to manage costs more effectively, institute world-class commercial manufacturing, supply chain and functional operations, and look seriously at the possibilities of both divestiture and consolidation.
“Transformation is the fundamental change that our industry needs to embrace if only we are to come out stronger in these challenging times,” he said. “Our strategic actions today will define our position in the industry tomorrow.”
The conference also heard from Mosaed Al-Ohali, SABIC Executive Vice President, Corporate Finance, who appeared on a panel examining the importance of controlling risk.
“Catastrophic incidents have direct impact on the bottom line of the company and can have a long-lasting effect,” he said. “Risk impact can extend to brand damage, and difficulty in recruiting and retaining top talent. 'License to operate' can be severely compromised.”
To prevent such an outcome, Mr. Al-Ohali said, requires two main pillars:
- A leadership mindset that counteracts complacency; and
- Organizational capabilities that continuously discover and control risks.
To achieve this, leaders and organizations must cultivate a sense of vulnerability that brings focus to dynamic risk discovery tools, early signals detection and driving effective learning into the organization. These, he says, are the tools that reveal risk “blind spots.”
“You must be in control,” he said, “not think you are in control.”
The GPCA represents the downstream hydrocarbon industry in the Arabian Gulf. Established in 2006, the association voices the common interests of more than 250 member companies from the chemical and allied industries, accounting for over 95 percent of chemical output in the Gulf region. The industry makes up the second largest manufacturing sector in the region, producing over US$ 108 billion worth of products a year.