The European petrochemical industry is in transition. Traditionally, the industry has been one of the hallmarks of European business, important for economic prosperity at home and successful in global competition abroad. This position is now under threat. Many of the traditional strengths of the European petrochemical industry remain in place – a stock of skills, knowledge and experience; well integrated facilities with a rich set of specialized suppliers, services providers, and producers; highly developed infrastructure; demanding consumers. But new locations with different sets of advantages – preferential access to foodstocks; large and growing markets; new facilities able to better exploit economies of scale; aggressive government support – are challenging these strengths. The European petrochemical industry needs to develop new sources of competitive advantage, not because the old ones have failed but because on their own they are no longer sufficient to succeed in global competition.
There is a clear realization in the industry, that business-as-usual is not an option. The ever increasing pressure from competing locations has been one factor. The bruising debates with European policy makers about environmental regulations have been another. EPCA and others have been platforms for the industry to discuss where the industry stands, what challenges it is facing, and how it can react. This report aims to make a contribution to this debate.
First, it discusses the role of clusters in global competition more generally. The chemical industry has, for reasons to be discussed, a tradition of strong cluster-like linkages between companies. As the comparison with clusters in other parts of the economy shows, however, this legacy has not only been a blessing; it has in ways also limited the way in which clusters and cluster initiatives are being discussed in the chemical industry.
Second, it presents empirical facts on chemical clusters, focusing on Europe. The analysis draws on proprietary data from the Institute for Strategy and Competitiveness at Harvard Business School, the European Cluster Observatory, the Global Cluster Initiative Survey, and a number of other sources. This data has its limitations – in particular, it covers mostly Europe and North America – but it provides an important perspective on clusters and cluster initiatives in this industry; the first broad quantitative study of this sort that we are aware of.
Based on this analysis, it offers a number of observations and conclusions that are based on the data, on a review of the documents prepared by industry working groups in collaboration with EPCA, and on the experience of working with cluster initiatives and cluster policies across a broad range of countries and economic sectors.