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Chemistry 4.0 Growth through in a transforming world 4.0 | Table of contents

Table of contents

A new development in the chemical : the era of Chemistry 4.0 06

Incremental and disruptive changes in the chemical sector 08

The digital transformation of the chemical industry 11

The chemical industry’s key role in the circular economy 15

Mutual enhancement between digitalization and circular economy 19

Recommendations 23

Contact 28

03 Chemistry 4.0 | Foreword by the VCI President

Dr. Kurt Bock, President, German Chemical Industry Association (VCI)

04 Chemistry 4.0 | Foreword by the VCI President

Foreword by the VCI President

Chemical and pharmaceutical com- Digitalizing the chemical industry today in order to take advantage of panies in have shown time offers new opportunities as well as opportunities through transforma- and again that they can successfully risks. , tion tomorrow. From this foundation, master the tectonic shifts in our com- , and business models we have derived recommendations petitive environment; examples in will be transformed. It is not easy aimed at the association and its the 150 year old history of industrial to separate myths from real risks member , as well as poli- chemistry are changes in raw mate- and opportunities, take appropriate cy-makers. If we all together, we rials, relocation of growth centers measures, and gain a competitive will be able to expand the role of the to emerging economies, and the call advantage. This transformation offers chemical industry as an innovation to make business more sustainable, great opportunities for the highly center for Germany. which has been receiving broad pub- developed chemical industry in Ger- lic support recently. many in terms of enhancing its global I would like to express my special competitiveness. The chemical and thanks to the many experts, The key to our competitiveness is ’s innovative particularly from the member com- the innovative power held in our processes, products, and services panies, who took part in numerous companies: new and improved make a significant contribution to sus- workshops and contributed to this molecules, production and business tainable development of our society. study, as well as the medium-sized processes. In Europe, our sector has Our sector will continue to be a tradi- enterprises that responded to the been characterized by globalization, tional supplier of materials, while our online survey. specialization, and focusing on the role as a provider will grow in core business since the 1980s. We importance at the same time. Their knowledge and their assess- have now reached the next level: ment of the industry’s future have Chemistry 4.0. Digitalization and Against this background, the VCI, its made this study possible at all. circular economy are the key cha- member companies, and Deloitte racteristics, and these two elements Consulting have examined which will fundamentally alter the way we developments will influence the work, as well as support sustainable chemical and pharma business up . to 2030, and what we need to do

05 Chemistry 4.0 | A new development in the chemical industry: the era of Chemistry 4.0

A new development in the chemical industry: the era of Chemistry 4.0

The chemical and pharmaceutical icals that until now had often been Circular economies will gain in impor- industry (in the following: chemical covered by German exports. These tance, and digitalization will lead to industry) is an important driver for changes mean a further increase in extensive changes in all sectors. These innovation and growth in the German competitive intensity for the chemical two core topics are of central impor- economy. However, fulfilling this role sector in Germany, both in its Euro- tance to the trends in the chemical in the long term will require significant pean home market and in the export sector up to 2030 and beyond. efforts; like all industries in Germany, markets: in Europe, import pressure the chemical and pharma sector is on base chemicals and intermediate As part of these changes, a new phase faced with elementary strategic and products from resource-rich regions of development is beginning in the structural challenges. will go up, while in export markets, German chemical industry. Following competition with local providers and industrialization and chemistry On the one hand, demand for chemical other importers will intensify. (Chemistry 1.0), the emergence of products in will grow petrochemistry (Chemistry 2.0), and only modestly in the decades ahead, On the other hand, a paradigm change increasing globalization and speciali- moving the focus toward markets in in demand structures and public zation (Chemistry 3.0), the industry is Asia, , and, eventually, preferences has been taking place for a entering a new phase with Chemistry Africa. Since international and local while. The desire to use resources in an 4.0, in which digitalization, circular competitors are expanding their pro- efficient and environmentally friendly economy, and sustainability play key duction capacities there, and additional way has noticeable effects on energy roles (see diagram). capacities in resource-rich regions are supply and consumption habits. The to be expected, the whole competitive trend toward the Sharing Economy environment in the chemical industry is illustrates this transformation. By about to face a transformation. In addi- developing strategies to serve changing tion, manufacturers in developing and customer requirements, companies resource-rich countries are expanding make an important contribution toward their scope to include specialty chem- reaching UN sustainability goals.

06 Chemistry 4.0 | A new development in the chemical industry: the era of Chemistry 4.0

Development from Chemistry 3.0 to Chemistry 4.0

Chemistry 3.0 Chemistry 4.0 lobalization Specialization Digitalization Circular Economy

Globalization, the European internal market, Drivers for growing competition from gas-based chemistry, Digital revolution, sustainability, climate protection, transformation the influence of financial markets on corporate closing material cycles strategies, commodification

Intensive use of data, of carbon-containing Increasing use of renewable raw materials and Raw materials waste, H from renewable energies in combination 2 with CO2 used to produce base chemicals

New synthesis and production processes through biotechnology and gene technology, enlargement Digitalization of manufacturing processes of individual processes

Close cooperation between basic research in of R&D in customer markets, Research and application-oriented research in utilization of Big Data, oint development with companies customers

Internationalization of trade and on-site Corporate production abroad, specialization and growth in More flexible cooperation as part of economic net- structure SMEs, consolidation through M&A, creation of works, digital business models, and consolidation chemical parks

Expanding range, specialty chemicals Expanding the spectrum of value creation: chemical oriented to specific customer requirements, new sector becomes a supplier of extensive and Products drugs, replacement of traditional materials with sustainable solutions for customers and the chemical products environment

Environmental protection integrated into produc- With Chemie3 (ecology, economy, and social affairs), Environment, tion, increasing product safety through expanded sustainability becomes a comprehensive model and Health and Safety review of material properties, Responsible Care future concept for the industry

07 Chemistry 4.0 | Incremental innovations and disruptive changes in the chemical sector

Incremental innovations and disruptive changes in the chemical sector

As part of this study, a systematic continue to offer growth opportunities analysis identified 30 trends that will in future. be of key importance to the chemical industry in Germany until 2030. These The chemical sector in Germany is trends were analyzed with regard to well-positioned to master the chal- the underlying drivers, and assessed lenges of incremental change. A strong according to their probable impact industry network in Germany, the inno- (see diagram). vative power of the chemical industry, and especially well-developed, focused, The results show that many innova- and customer-oriented medium-sized tions in important customer industries enterprises are key success factors. of the chemical industry, e.g. in the au- As such, these incremental changes tomotive, , and packaging continue to offer the chemical sector industries, will likely happen gradually. opportunities for growth, although any Specific examples of such fields of competitive advantages gained erode innovation are lightweight construction faster and faster due to intensifying using and composite materials competitive pressure. in the , and more energy-efficient construction mate- rials. These incremental innovation processes are part of the business and success models that already exist in the chemical industry in Germany, and will

08 Chemistry 4.0 | Incremental innovations and disruptive changes in the chemical sector

Trends in the chemical industry up to 2030

Societal politically driven Genome editing in – medical applications Bio-plastics as production packaging material Carbon Capture Storage / Genome editing for Carbon Capture Utilization precision breeding

Lightweight Waste-to-Chemicals Bio-refinery Renewable Agricultural turnaround resources Self- New medical technology Genetically modified plants Electro mobility Energy-efficient Power-to- Material mix for Perception of chemicals packaging (discussion on ingredients)

Personalized Disruptive

Incremental Urban Farming Personalization medicine

New mobility Changing relationship mix concepts chemical supplier – and supply for end customer ermany Industrial Biotechnology Digitalization of Modular Material efficiency E-Health in construction Additive Manufacturing Small impact

Medium impact

Big impact Entrepreneurial economically driven

09 Chemistry 4.0 | Incremental innovations and disruptive changes in the chemical sector

An exceptionally large proportion of electricity, hydrogen, and CO2 will gain the changes expected over the coming in importance. The chemical sector years has a disruptive character for the can play a key role here in linking the chemical industry, however. Several energy and industrial sectors by mak- of these expected developments are ing use of supply peaks in renewable closely linked to the ongoing digitaliza- energies to manufacture synthetic raw tion of business models. In addition, materials, thus reducing the share of many developments have an evident fossil resources. relationship with sustainability topics and circular economy concepts (e.g., renewable raw materials, renewable Product portfolios energy, carbon capture & utilization, biorefineries, bioplastics). On the one An example of fundamental change in hand, these disruptive changes offer demand structures is the increase in opportunities in new growth areas electro mobility, which causes demand for chemical companies. On the other to decline for many chemical products hand they also pose challenges. from catalysts to heat, , and gaso- line-resistant plastics, as well as oil They have a massive influence on tech- and fuel additives. At the same time, nologies, product portfolios, structures new business segments are opening of value creation, and business models around electric engines such as batte- in the chemical industry, as well as on ry technology and battery recycling. its clients and suppliers. Additionally, the demand for lightweight materials increases. Process technologies

Examples of disruptive changes in Business models process technologies can be found in biotechnology and the utilization of The digital transformation can also renewable sources of energy. The ad- change whole value creation struc- vances in industrial biotechnology will tures. Depending on the scope of the lead to an increased and more efficient disruptive change, chemical companies application of biological raw materials will then need to redefine their custom- in production processes (biologization er relationships or business models of chemistry). In the medium term, (examples in the following chapter). the production of chemicals from

10 Chemistry 4.0 | The digital transformation of the chemical industry

The digital transformation of the chemical industry

Digitalization offers an opportunity for Transparency and areas like predictive maintenance, net- chemical companies to collect extensi- digital processes worked logistics, and the application ve data in their own businesses, then of concepts from virtual reality and evaluate and utilize it to improve ope- ...as the first category, include the advanced simulation (‘in-silico’) for rational processes within the . collection and initial utilization of research. The chemical industry is comparatively comprehensive process data within the well-developed in this area, especially company. These lift efficiency potenti- its continuous and discontinuous als in the context of largely unchanged production processes, as well as its bu- manufacturing and business models. siness processes. However, due to new Even in an industry that is already technologies and a systematic collec- comparatively advanced in this respect, tion of large data volumes (digital bulk digitalization offers new technologies data, e.g., on customer behavior and for progress, for example, by further preferences, utilization of products, automating manufacturing processes. environmental properties of products), digitalization opens new opportunities to make further improvements in the Data-based operating efficiency of processes and operating models models, and to develop new business models. In future, data utilization will ...intensively utilize operational big therefore become more and more data, external data (e.g., about the important for value creation in the che- behavior of markets, customers, and mical sector. It can be split into three competitors), and advanced methods categories: of analysis for making decisions and increasing efficiency. The industry is currently driving developments in

11 Chemistry 4.0 | The digital transformation of the chemical industry

Digital business models undergoing dynamic expansion: 30% of chemical SMEs in Germany already ...describe value creation structures achieve 5% of their revenue through that fundamentally alter existing digital business models, and a further processes, products, or business 40% intend to introduce digital busi- models. What differentiates them is ness models in future years. Over the that products and services are digitally next three to five years, chemical com- augmented to increase customer utility. panies are planning to invest a total of Often, this is not created by an individu- more than a billion euros in digitaliza- al company, but within digital networks tion projects and new digital business in which different providers join to models to achieve this. Digitalization generate solutions for their customers. will therefore become an integral part Customers are often actively involved of the business and success model of in this process, enabling them to the chemical industry. specify their individual requirements. The combination of digital services with products from the chemical industry in the digitalization of agriculture, in addi- tive manufacturing (3D ), and in e-health concepts in the health sector are examples of current developments in this area.

The industry currently finds itself in a phase of change and development. Digital processes and data-based operating models are applied more frequently. Half of small and medi- um-sized chemical companies (SME) intend to invest extensively into the digitalization of their processes and business activities. Likewise, the importance of digital business models to the future viability of the German chemical industry has been recog- nized, and digital business models are

12 Chemistry 4.0 | The digital transformation of the chemical industry

Digital case examples in the chemical sector

Data-based operating models Digital business models

1. The further development of ‘in-silico’ experiments aims 1. In digital agriculture, established companies from the at simulating larger chemical systems with regard to chemical, agricultural and industries quantity, foresight and scalability. Advances in quantum form an economic network with new providers, which computing technologies, in analysis methods such as enable a realtime analysis of weather, soil, plant, and the atomic force , as well as in machine machine data, as well as realtime optimization of agricul- learning are intended to make these possible. Based on tural processes. Field View by Climate Corp. is an exam- these insights, companies can digitally conceptualize ple of a digital business model in the chemical industry materials with the required chemical, electronic, and in this network. The platform collects and analyzes physical characteristics, and determine an economically images and data about weather and soil conditions to and ecologically efficient manufacturing route. calculate the optimum use of , seeds, and crop protection for the farmer.

2. In predictive maintenance, sensors collect realtime big 2. A number of established companies and start-ups are data about the current operating status, with which spe- crowding into all areas of additive value creation, e.g. cifically developed algorithms predict machine failures into hardware manufacturing, software development, as well as their cause. In this way, production losses can service provision, and material manufacturing. Such be avoided through appropriate maintenance measures, as BASF: the company is working with HP to offer significantly reducing the costs and time required for customers novel materials for through the maintenance. Multi Jet Fusion Open Platform. Customers can directly contact BASF via the platform to commission the de- velopment of materials for specific 3D applications.

13 Chemistry 4.0 | The digital transformation of the chemical industry

The potential for increasing efficiency through remote-controlled, preventati- through digital processes and data-ba- ve, and proactive maintenance and the sed operating models differs depending corresponding operation of plants. In on the specific segment of chemical downstream segments, closer to the industry. In upstream segments of the customer, efficiency gains lie more in value chain, close to raw materials and the improvement of , , energy, efficiency gains in manufac- and administration. turing come into effect, for example

Overview of implications of digitalization

Industrial , varnishes, Crop protection Max. Inorg. basic chemicals , Consumer expected chemicals Fine & specialty chemicals efficiency Chemicals Pharmaceuticals gain Research 30 Development

Purchasing

ogistics 20

Manufacturing 1

Sales 40 Marketing

Administration 40

Small impact Big impact

14 Chemistry 4.0 | The chemical industry’s key role in the circular economy

The chemical industry’s key role in the circular economy

The change in public preferences • Increasing resource efficiency at all toward sustainable production and levels of the value chain (suppliers, consumption requires the development chemical industry, customers) of new products and business models. In a circular economy, the chemical • Extending the lifespan of products sector can utilize growth potentials: and components, as well as reducing for example by supporting customers resource consumption in the applica- in reaching their sustainability targets tion phase or extending their core business with new circular business models, such as • As far as possible, closing cycles by chemical leasing. Circular economy re- reusing, recycling, energetic utiliza- quires rethinking: the focus here is less tion, and biological degradation, as on volume, and more on application well as maximally efficient utilization utility and value-based pricing. of residual materials

In this study, the circular economy Accordingly, seven levers can be concept encompasses all contributions distinguished for activities in a circular toward saving resources (such as raw economy (see diagram). material base and ecological systems) and includes the following measures:

15 Chemistry 4.0 | The chemical industry’s key role in the circular economy

Seven circular economy levers (“Rs”) in the chemical sector

Customers and users of chemicals Remove

Production of chemicals

(Re-) Resource-efficient Return Recycling Recovery and climate friendly of energy production

Residue depositing

16 Chemistry 4.0 | The chemical industry’s key role in the circular economy

It is a task, a challenge, and an oppor- levers mentioned above. Sustainability tunity for chemical companies to take and circular economy are also very all aspects of the circular economy important to small and medium-sized over the whole product life cycle into enterprises. Over 20% of respondents account. This begins with the produc- are looking closely at the effects of a tion of base chemicals and extends circular economy on their company. over subsequent steps to the Just under 40% of the companies utilization phase of the (end) product. already have a sustainability strategy, Options are avoiding waste by multi- and another 25% plan to introduce one ple usage, as well as higher efficiency in the coming years. through the utilization of byproducts, waste materials, and CO2 as raw mate- At a sector level, the chemical industry rials (Waste-to-Chemicals and Carbon in Germany has already started a Capture Utilization). Additional possibi- number of sustainability initiatives. Of lities are chemical recycling (also called particular importance in this context is feedstock recycling), biodegradability the German chemical industry’s Che- as CO2 cycle, and climate protection mie³ sustainability initiative. through “biologization of chemistry“ (use of industrial biotechnology, ge- Digitalization and circular economy nome editing for precision breeding, represent key future topics in the Che- biorefineries, and the utilization of mistry 4.0 era in Germany. Above all, renewables as raw materials). the interplay between the two aspects holds particular potential. Following this broad definition of circular economy, the chemical sector delivers an increasing quantity of appli- cation examples (see p.18).

Chemical companies are actively involved in sustainability and circular economy: all of the large companies analyzed in this study regard sustain- ability as an important aspect of their corporate strategy, and the concept of circular economy has entered corporate strategies through the

17 Chemistry 4.0 | The chemical industry’s key role in the circular economy

Circular case examples from the chemical sector

(Re)Design Resource-efficient production

Carbon fiber-reinforced composites can replace steel and Since 2016, replaces 20% of the crude oil usually aluminum in various components and reduce the required in manufacturing with CO2, which weight of these components by up to 50%. This results is generated by other production processes. Production in reduced fuel consumption and CO2 emissions. The capacity currently amounts to 5,000 tons of polyol per advantages over the lifetime of the vehicle outweigh both year. This is an example of climate-protecting and resour- the disadvantages from higher energy consumption in the ce-efficient chemical manufacturing. production of composite materials and the fact that these cannot be optimally recycled yet. The overall balance of this “Design-to-Performance“ is therefore positive.

Return Recycling

SafeChem offers its customers a leasing model for sol- An example of chemical recycling is the Waste2Chemicals vents, together with manufacturers of cleaning machines, initiative. This is a consortium of 8 international compa- chemical dealers, and waste disposal companies. Through nies, including Enerkem, , and AkzoNobel, which its portfolio in surface and cleaning, SafeChem intend to begin a joint production of bio-based has been able to achieve a reduction in the proportion of and ethanol from municipal waste. The technology is com- in waste by up to 80%, a reduction in the patible with existing waste infrastructure and is intended health risk for employees, and a reduction in the quantity to enable wastes that cannot be mechanically recycled of the newly required by up to 80%. to be converted into fuels and high-quality chemicals via synthesis gas.

18 Chemistry 4.0 | Mutual enhancement between digitalization and circular economy

Mutual enhancement between digitalization and circular economy

comparison with other customers and In all aspects of circular economy, the Resource-efficient set in relationship to other available generation and analysis of digital mass production information. By using customer data, data play an increasingly important e.g., through sensors in their manufac- role, as does exchanging data. Nu- Detailed and comprehensive insights turing plants, chemical companies can merous technological options in the into production processes as well as draw conclusions about their products areas of connectivity, computing, and the analysis of process information and and recognize when they need to be manufacturing technology affect the process simulation enable optimized replaced. interface between digitalization and cir- processes and plant utilization with cular economy. Digitalization can thus minimal application of resources. enable the development of circular technologies Recycling business models, accelerate them, and like modular production and robotics make them more efficient. allow an increase in efficiency and in Digital traceability and innovative pro- the degree of . cesses, e.g. through modern sorting The following approaches can serve as technologies, create transparency examples: . about material information. Recycling Return is made easier by efficient harmoni- (Re)Design zation of waste capture and logistics, The analysis of internal and external sorting and/or treatment, and sub- Detailed, digitally collected and evalua- customer data (for example from sequent utilization. ted utilization patterns and specific social media via ‘Social Listening’) en- data on environmental effects enable ables the identification of those cases an improved, data-supported product in which a take-back business model design to enhance product performan- holds advantages - for both customers ce and durability, and utility for the and chemical companies. To do so, customer. for example the consumption of chemicals over time is analyzed in

19 Chemistry 4.0 | Mutual enhancement between digitalization and circular economy

Recycling – digital marketplace Recycling – digital transparency

The Materials Marketplace, a digital marketplace initiated Digital tracking is already in effect in the construction in- by the US Business Council for Sustainable Development, dustry, where complex supply chains and long product life is one example of efficient harmonization. Excess raw cycles are characteristic. Building Information Modeling materials, industrial by-products, and packaging can be (BIM) captures all relevant building data and materials offered through a cooperation platform and be bought digitally across the various partners in a 3D building mo- by participating companies. During the pilot phase, 23 del. The transparency thus generated about the materials companies from various industries participated, including and chemicals in construction waste enables the optimi- four in the chemical and advanced materials sector, which zation of its recycling. listed 150 materials (2.4 million tons).

20 Chemistry 4.0 | Mutual enhancement between digitalization and circular economy

These examples reveal that there are different suppliers and customers in a significant parallels in the structures broad range of customer industries. of future digital and circular business models. A significant commonality However, the opportunities inherent between circular and digital business in digital economic networks are models is that several companies not yet being fully exploited by the deliver an extensive range of chemical industry. To better develop and services to their customers within these opportunities, chemical com- network-structures. Companies that panies not only need to recognize want to be successful therefore must the development and dynamics of combine technical and network com- economic networks at an early stage, petencies to develop innovative solu- but also identify the role of their own tions and successfully establish these company in these structures (see box) in complex and dynamic networks in and organize themselves strategically. the market. For many companies, these complex economic networks with new partners In principle, chemical companies alrea- from other sectors are still unknown dy have a high degree of network rea- territory, characterized by uncertain- diness and ability, because they have ties and risks. been operating in a complex environ- ment from the start: they run complex manufacturing networks at integrated production sites or chemistry parks, and deal with a large number of

21 Chemistry 4.0 | Mutual enhancement between digitalization and circular economy

Roles in an economic network

Followers contribute to the network An Orchestrator provides central but little differentiates them from coordination between the various other suppliers. To followers – e.g. players and their value contribu- cost leaders within their product tions - a function that is required in line – an economic network offers the complex and multi-layered networks. advantage of easier customer access Besides delivering own services, the without their own sales network and orchestrator analyzes both customer the chance of integrating themselves requirements and critical success fac- and their range of products and ser- tors, and the network in such vices in an end-to-end solution. a way that it can supply a competitive product. Partners are companies with more influence and a higher share in value creation. A partner delivers a sub- stantial and specific value contribu- tion, for example due to a particular competence, good customer access, or a special product.

22 Chemistry 4.0 | Recommendations

Recommendations

The chemical industry must face the Recommended actions developed by economic networks profound technical, economic, and for companies and require extensive analysis of incentive social changes. Companies should associations structures, value contributions, and scrutinize their current portfolio of compensation structures, on the basis products and services and adjust their Set strategic goals of which chemical companies should business models. The chemical indus- Digitalization and circular economy identify their best strategic role. try should continue and accelerate the offer new, not yet established growth transformation process that has begun, options, frequently in economic net- both as a sector overall and on compa- works. The future significance of both ny level. Political decision makers are topics demands that the chemical sec- called upon to support these efforts tor in Germany looks even more closely with adequate industrial policy and to into recognizing disruptions, as well as create globally competitive framework identifying, assessing, and introducing conditions for the chemical industry. digital and circular business models Only then will the chemical industry as early on. Chemical associations can a core industrial sector be able to make help companies to systematically iden- its contribution toward retaining and tify these opportunities and support strengthening Germany as an industrial them by exchanging between them. location in the long term. Companies must define digitalization, the circular economy, and innovation as integral parts of their corporate strategy, and consider the interactions between these. Business models

23 Chemistry 4.0 | Recommendations

Recommended actions for companies and their associations

Set strategic goals Enhance resources • Anticipate disruptions • Company structure

• Make digital and circular an s En • Competences al ha integral part of corporate o n • Investments g c c e i strategy g r e e • Amend decision criteria t s o a r u

t r

s Transform

c

e

t

corporate s e

S

Transform corporate culture Seize opportunities

• Ideate freely • Transparent and open

• Utilize economic networks • Agile and tolerant

S

s

e

e

• Establish co-operations iz ti • Collaborative and e o uni and platforms pport communicative • Develop new concepts for • Act multi-modal participation

Transform corporate culture tolerance, and a culture of cooperation Enhance resources The successful development and and communication even across com- Digital and circular business models scaling of new business models for pany boundaries. require additional skillsets; in particular, digitalization and circular economy, technical and network competencies in particular at the interface between Large parts of the business model of will gain in importance. The chemical both fields, requires corporate the chemical industry are based on industry is in a good starting position, that resemble start-ups. Innovation protecting intellectual property. This is as its core business is characterized by cycles are becoming shorter, and new a potential obstacle for a rapid cultural complex value creation and Verbund products and business models must shift toward openness and cooperation structures, as well as cooperation bet- be implemented in an agile and timely across company boundaries. It is im- ween large companies and SME specia- way. Important building blocks of the portant here to debate openly. Asso- lists. However, these resources must be required company culture are transpa- ciations should actively support the augmented requiring high investments rency and openness, agility and failure transformation in the sector’s culture. in , physical assets, and

24 Chemistry 4.0 | Recommendations

software. Existing competencies need sets of criteria (Best Practice analyses, to be complemented via continuous toolboxes, guidelines) for adequately training measures that are appropriate evaluating circular and digital business to requirements and target groups, and models and implementing them in targeted employee recruitment should companies. be used to overcome existing barriers and fully exploit growth opportunities. Many people are afraid of digital and This requires attractive employer posi- circular transformations, not least tioning of the chemical sector. In order because of the great speed and to meet the challenges of digitalization complexity of change. The chemical in its work environment, the chemical industry should take these fears seri- sector should continue with its social ously and explain the advantages that dialog, WORK@indust- innovations bring in order to seize ry4.0, in which it is developing a joint the opportunities of digitalization and understanding of the challenges of and circular economy. Beyond intense recommends actions for designing the communication, associations and com- future of work in the chemical industry. panies should open their innovation development for stronger participation Seize opportunities in by governments and other public Digital and circular business models interest groups. Thinking and acting in demand extensive cooperation and networks, a prerequisite of success in economic networks within the chemical digitalization, should also apply to co- sector, but also across industries. operation with stakeholders in society. Through its associations, the chemical Associations and companies should sector can promote the development develop new participation concepts to of platforms for knowledge sharing achieve this. and initiating within the industry, position itself as an open and attractive partner for start-ups and technology companies, and expand research collaborations. Chemical as- sociations should additionally develop

25 Chemistry 4.0 | Recommendations

Recommended political and of technical infrastructure must be regulatory conditions accompanied by the development of a high-performance IT network Governments should support the between government agencies, compa- efforts of companies and associations nies, and research facilities in Germany with policy measures that promote and Europe. It should be assessed to digitalization and circular economy in what extent data protection measures Germany. The goal: to create globally could impede the development of end competitive conditions for the German user-oriented, individualized business chemical industry. models, and whether adjustments to data protection laws are possible and Support digital education required. Machine data must be usable The target-group specific dissemination to the extent that innovations in the of digital competencies that match development of products and services requirements within professional and are not hampered. Here, contractual academic education and training agreements on the use and the secure is a success factor for the German handling of data are preferable to sta- economy. Governments can support tutory () regulations. this knowledge-building by creating suitable framework conditions and Promote cooperation and unbu- infrastructures for teaching digital skills reaucratic development of plat- in schools and universities. Universities forms also need to be open to offer extra- The public sector should support the occupational training. development of the necessary network structures and the establishment of Expand technical infrastructure, cross-industry platforms and innova- improve data security, review data tion clusters for knowledge sharing. protection rules What is important here is equal consi- Fast and stable connections deration of all sectors, thus recognizing that can provide a broad network to and utilizing all synergies as fully as companies, suppliers, customers, and possible. employees, are urgently required. Broadband provision must gain speed, the corresponding infrastructure should achieve full regional coverage by 2025. Alongside this, the expansion

26 Chemistry 4.0 | Recommendations

Initiate dialog on the necessity of Raise public awareness for circular regulations throughout Europe and and perspectives on digitalization economy across industries, dismantle contradic- Governments should take fears about Circular economy cannot be success- tory or redundant rules, and reduce digitalization seriously and initiate fully established without the joint regulatory uncertainties through dialog with citizens. This should be efforts of all business sectors as well consistent, integrated legislation with supplemented with online forums as consumers. Governments should high transparency regarding future and accompanying therefore promote fundamental framework conditions. New and measures on the topic of digitalization. knowledge of the content of circular existing regulations should be placed It is important to show that although economy through relevant dialog and under scrutiny in an ‘innovation check’, digitalization requires an ongoing pro- educational offers on a societal level, in particular regarding whether and to cess of change and adaptation, it is also and be transparent about objectives what extent they support or hamper capable of increasing macroeconomic and costs. innovations and enhancements and/ productivity, supporting a self-deter- or the development of new business mined life, and enabling sustainable Expand innovation support models. living. There is a close relationship to Political support measures should Germany’s demographic problems: di- accompany the paradigm change in gitalization is an important component the chemical industry and its customer in overcoming the economic problems industries. Investment in future-orien- of demographic change in Germany. ted fields should be stimulated through research funds open to all companies Understand circular economy as an in the form of project funding plus integrated and open approach additional tax incentives, start-up Circular economy provides efficiency finance for novel projects in the circular gains at every level of value creation economy, easier access to venture and in the whole product life cycle capital, as well as support for start-ups through the seven levers outlined and private-public partnerships, for above. Detailed feasibility analyses are example as pilot projects. Such measu- needed to determine which levers can res would meet the needs of the new be utilized in individual cases. These dynamic business environment. should be carried out depending on technical options and take into Review regulatory framework account environmental, economic, and In view of the dynamics and openness social aspects. The existing regulatory of current developments in the digital framework needs to be reviewed for and circular economy, it is important any obstacles impeding expanding to allow for leeway to act. Government circular economy concepts. should aim to harmonize laws and

27 Chemistry 4.0 | Contact

Contact

Dr. Wolfgang Falter Partner | Strategy Consulting Global Chemicals & Specialty Materials Sector Leader phone +49 (0)211 8772 4912 [email protected]

Dr. Alexander Keller Partner | Strategy Consulting phone +49 (0)69 9713 7161 [email protected]

28 Chemistry 4.0 | Contact

Johann-Peter Nickel Director | Financial and Economic Affairs, IT German Chemical Industry Association (VCI) phone +49 (0)2556 1443 [email protected]

Dr. Henrik Meincke Head of Economics | Financial and Economic Affairs, IT German Chemical Industry Association (VCI) phone +49 (0)2556 1545 [email protected]

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