OM Group Competition
Now Viewing OM Group's competition in: Chemical Manufacturing - Industrial (primary)
Call Preparation Questions
Customers, Marketing, Pricing, Competition
What are the major end-uses for the company's products? -
Does the company have a few high-volume customers? - Customer concentration is typical.
Does the company have long-term contracts with big customers? -
What percentage of total production goes to big customers? -
How much of total production does the company sell to wholesalers or through brokers? -
How many competitors make the same product? - There are often just a few competitors for each product.
What substitute products does the company compete against? - Other products with similar characteristics can often be used by customers.
Is a dominant company in the industry the price leader? -
Competitive Landscape
Demand depends on the overall strength of the US economy, because most industrial chemicals are used in the manufacture of more-complicated products like fibers, plastics, paints, and paper. The profitability of individual companies is closely linked to efficient operations, because most products are commodities. Big producers have large economies of scale in production, which is why some chemicals are made by just a handful of companies. Small companies can compete effectively by making specialized or highly-purified products. The industry is capital-intensive: average annual revenue per employee is about $600,000.
Full Industry Overview For Chemical Manufacturing - Industrial
Business Challenges
CRITICAL ISSUES
Demand Highly Cyclical - Demand for industrial chemicals is more volatile than for many other manufactured products. For example, during the recession of the late 2000s, when total US industrial production was down 2.2 percent, organic chemical production was down nearly 12 percent.
Sensitivity to Energy Costs - Extracting and processing basic chemicals from raw materials typically requires large amounts of energy, usually in the form of heat. Many chemicals also use natural gas or petroleum as a raw material. Since energy costs can account for more than 30 percent of manufacturing costs, even small changes in energy prices can affect profitability.
Industries Where OM Group Competes
- Chemicals
- Specialty Chemical Manufacturing(primary)
- Metals & Mining
- Industrial Metals & Minerals
