Recently, a new wave of large-scale layoffs has swept the global chemical industry. In just four months, leading European and American chemical giants including Dow, Evonik, Wacker, Lanxess and Arkema have launched massive workforce optimization. Coupled with the layoff plan of Continental Group’s ContiTech, the total number of job cuts in the industry has exceeded 12,500, drawing widespread attention across the global chemical market.
Specifically, major enterprises have implemented drastic staff reductions. Dow cut 4,500 jobs, Evonik eliminated 2,000 positions, Wacker downsized its workforce by 1,600 employees, Arkema streamlined 1,800 roles, and rubber and fluid technology specialist ContiTech laid off 3,000 staff. Such large-scale and intensive personnel adjustments represent an unprecedented contraction within the European and American chemical sector in recent years.
Data released by the German Chemical Industry Association further reflects the sluggish industry climate. Currently, the capacity utilization rate of Europe’s chemical industry has dropped to 70%, hitting a historic low. Contrary to common perceptions, this round of layoffs does not stem from failures in scale competition, but manifests the overall setbacks of European and American chemical giants amid fierce competition driven by industrial core strength.
Over the past three decades, the global chemical industry has long adhered to the development philosophy of "scale supremacy". Relying on large-scale integrated production facilities, overseas giants kept lowering production costs and expanding market shares, building solid moats through scale advantages and dominating the market landscape of basic chemical products. Nevertheless, with continuous expansion of global chemical production capacity, general chemical products are now in full oversupply, rendering the traditional scale-oriented development model obsolete.
The rapid rise of large-scale refining and coal chemical industries in China has formed a complete industrial chain, stable energy supply and prominent cost advantages, which have pushed down the market prices of general plastics, basic chemicals and other bulk chemical products to rock bottom. In the bulk chemical sector, European and American enterprises can no longer compete with Chinese counterparts in terms of cost and production scale, losing their original market edge.
The core dilemma plaguing European chemical enterprises lies in the dual squeeze of surging energy costs and low product added value. Since the Russia-Ukraine conflict, natural gas prices in Europe have skyrocketed, driving up full-chain production and operational costs for local chemical firms. Meanwhile, most core production capacities of major European chemical giants remain concentrated on low-value-added products such as basic chemicals and general plastics with weak technical barriers, leaving no premium space compared with domestic alternatives. Soaring costs coupled with slim profit margins have severely squeezed profitability, making downsizing and business streamlining inevitable for enterprises to survive.
Senior executives at ICIS stated that a full-scale recovery of the global petrochemical market is unlikely in the short term, and in-depth industrial restructuring is inevitable, forcing enterprises to carry out strategic reforms. The adjustments made by European and American chemical giants are not mere cuts in production capacity, but targeted divestment of low-quality assets and elimination of inefficient businesses.
To reverse business downturns, major players have rolled out pragmatic reform measures. Evonik streamlined its organizational structure by cutting management levels from 10 to 6 to boost operational efficiency; BASF has continuously shut down long-term loss-making and inefficient production plants; Dow has fully advanced transformation and cost reduction initiatives, targeting a profit increase of 2 billion US dollars. The core logic behind these moves is clear: phase out low-end businesses lacking technical barriers and market irreplaceability, and focus on high-value tracks.
Competition for core industrial competitiveness ultimately hinges on three core strengths. First, technological prowess. High-end products such as photoresists, high-purity electronic chemicals, specialty gases and medical-grade polymer materials cannot be developed simply by expanding production scale and feature extremely high technical thresholds. Second, process advantages. Exclusive core technologies including high-end membrane materials, special catalysts and precision coating are hard to replicate and replace. Third, application capabilities. Leading enterprises maintain in-depth cooperation with downstream clients to jointly develop customized solutions, with long industrial certification cycles and high supplier replacement costs, thus consolidating stable market dominance. These three core strengths are precisely the key areas that European and American chemical giants are striving to safeguard.
Driven by this industrial reshuffle, the global chemical landscape is undergoing accelerated differentiation, entering a new era marked by bipolar division and segmented market positioning. Chinese chemical enterprises will further consolidate their advantages in production capacity, cost and complete industrial chains for bulk chemicals to expand global market presence. In contrast, European and American chemical giants will retreat from low-end markets and fully focus on high-barrier, high-value-added, small-batch and diversified specialty materials and fine chemicals.
Industry insiders warn that mid-tier enterprises caught in the middle face the toughest situation. Lacking both the scale cost advantages of leading bulk chemical manufacturers and the core technical barriers of high-end material producers, they are trapped in a predicament of being squeezed from both ends, with shrinking room for future development.
