Chemistry 4.0: Innovations for a dramatically changing world

Talk by Dr Kurt Bock, President of Verband der Chemischen Industrie eV (VCI) and Chief Executive of BASF SE. 

To a certain extent, short and medium-term economic fluctuations are normal in a market economic system. But beyond that, in the long run, the world of the chemical-pharmaceutical industry is also undergoing fundamental change.

This is emphasised in the joint analysis by Prognos and Verband der Chemischen Industrie eV (VCI) for the chemical industry to the year 2030. Growth centres are shifting geographically; competition is getting fiercer. Not only the emerging markets of Asia are more intensively investing in research and development. Also, industrial nations like the USA and Japan are vigorously driving forward their innovation processes, in order to gain market shares. Against this backdrop, the challenge of maintaining its top position in international competition is greater than ever before for the German chemical industry.

Moreover, the globalisation and digitalization of value chains change production and business models in the chemical industry. We need to get ready for this. Also, the vision of a global climate-neutral management style, the political goal of a circular economy in the EU or the Energiewende – energy transition – in Germany bring for us the task to utilise our ability to innovate for these challenges.

Many of our member companies are taking an active stance in the face of such challenges. The VCI is currently examining what consequences they can have for our industry. We will present the results of a relevant study in the 2nd half 2017.

I am convinced that we once more need to set a course for the future. This is expressed in “Chemistry 4.0” which is much more than another digitalization of the chemical industry.

For a qualitative assessment of new things, it is helpful to cast a glance back at the development stages of the industry.

In it's over 150 year-long histories, the chemical industry in Germany has proven more than once that it can successfully renew itself, both in technological and structural terms. This is evident in several periods.

Development stages of the chemical industry in Germany

Chemistry 1.0 (1865 and subsequent years)

The founding and pioneering time of the industry is strongly characterised by individual inventors who translate chemical findings into large-scale processes. The first chemical companies are founded and grow in this manner. Industrialisation stimulates the demand for chemical products like chemical fertilisers, soaps and pharmaceuticals. Natural dyes are replaced by synthetic colours, for example, indigo. The raw material base is provided by reprocessed residues from carbon chemistry (tar) or vegetable and animal fats and oils. Production is mainly in the discontinuous batch process.

Chemistry 2.0 (1950 and subsequent years)

Just under 100 years later, there is a successive changeover to the petroleum distillate naphtha as the raw material base. Naphtha opens up almost unlimited possibilities of new molecules for carbon chemistry. In integrated production over multi-step synthesis, a small number of primary chemicals as building blocks result in an enormous variety of industrial chemicals. Polymer materials from petrochemistry and man-made fibres become everyday products. The strongly growing demand encourages the construction of large plants where production costs are reduced by economies of scale. Big companies dominate the chemical business; they expand their central research departments. End-of-pipe environmental protection in the form of exhaust air filters and waste water purification is established in response to growing environmental problems.

Chemie 3.0 (1980 and subsequent years)

From the 1980s the increasing use of natural gas and renewables changes the existing raw material base. At the same time, bio-technology broadens the production processes of the industry and enables a new generation of medicines. The close cooperation between basic research in academia and application-oriented research strengthens the innovation ability of companies. The globalisation of exports and an internationalisation of production sites stimulate the growth of the industry. The outsourcing of services and a focus on the core business are parts of the change in large companies. There are rising numbers of mergers and take-overs. Medium-sized enterprises choose an orientation to niches and speciality chemicals. Structural change in the industry also brings the creation of chemical parks.

At the same time, the companies make major progress in environmental protection: The industry further cuts emissions by integrating environmental aspects already in production and plant planning. In parallel, product safety increases through a wider examination of substance properties.

After this glance back, we should return to the present and also look ahead.

What characterises the next level Chemistry 4.0 (from 2010)?

There are mainly the impacts of digitalization as well as sustainability. They change the interplay between companies at the location Germany across the industries. We are still at the very beginning. The horizontal linking of value chains is more and more moving to the fore – taking into consideration all three dimensions of sustainability. The intensive use of data and the communication between plants beyond company boundaries bring new chances for efficiency increases and innovative business models in our customer industries.

Chemistry is part of this development: Predictive maintenance of plants, pinpoint application of crop protectants and fertilizers in agriculture through “digital farming” or a better steering of logistics with radio tags (RFID chips) – these are just a few examples for fields of application where digitized information is already used to improve cost and resource efficiency.

Research and development strongly benefit from the evaluation options for huge volumes of data, particularly where results are elaborated in internationally connected teams.

Moreover, with Chemistry 4.0 the industry wants to further develop its function in the value chains. The goal: The industry’s role should not be limited to supplying inputs, the industry also wants to become an established provider of all-round solutions and service packages for customers. Here, 3D printing is an example of a new business model.

All this means that Chemistry 4.0 is more to us than just using the chances of digitalization: Sustainability becomes the comprehensive guiding principle and the concept for the future in the actions of the industry. Our initiative Chemie3 stands for this.

This includes that we can assume an important function in a circular economy by recovering carbon-containing waste. In the mid-term perspective, this also comprises the use of hydrogen from renewable energies in combination with CO2 for basic chemicals production. In this manner, we can concretize the vision of a climate-neutral management style globally. An outstanding topical example: With chemical innovations, the industry has a central role in the fundamental change in mobility through electric drive technology.

Chemistry 4.0 stands for the strategy to generate sustainable growth for the industry through innovations at all levels. The ability of companies to continuously evolve has made Germany one of the leading locations worldwide for the chemical and pharma industry. With Chemistry 4.0 we are working to maintain our top position globally – and to make our contribution to the location Germany also in the future.

NOTE: Excerpts from a press statement issued by VCI.

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