Petrochemical, Commodity & Specialty Chemicals
Chemical companies, particularly those involved in the production of petroleum-based chemicals, are facing challenging problems and opportunities; e.g., shift from regional to global production and marketing; impact of inexpensive energy sources such as shale gas; unprecedented volatility in energy markets; competition from biochemical innovations; and industry consolidation, with the inevitable M&A litigation and arbitration fallout. The highly integrated nature of the chemical industry and the complex nature of supply agreements mean that changes in ownership, strategy, pricing, profitability and company management require expert advisory services. FTI Consulting Energy professionals are not generalists. We don’t have to learn the industry at our clients’ expense. Rather, our decades of experience and hands-on expertise make us valuable partners — as business strategists and as expert witnesses.
How We Help
As a result of robust market conditions in North America, there are dozens of new petrochemical plants being planned or constructed, and there often are contractual disputes associated with construction delays, underperforming plants, etc. Other disputes involving commercial arrangements such as supply contracts, tolling arrangements and joint ventures continually arise. FTI Consulting understands the issues involved and provides experienced counsel and expert testimony. There is no learning curve for us to climb.
Particularly in specialty chemicals, the secret to success is performance. Performance is fueled by intellectual property (“IP”), and there are frequent IP disputes; i.e., patent infringement on product design and on production processes and methods. FTI Consulting Energy professionals combine financial, competitive and industry information with our in-depth understanding of IP value to provide litigation support and damages quantification.
Many investigations in the petrochemical arena are rooted in regulations such as the Foreign Corrupt Practices Act. In addition, because of the robust shale oil market conditions in North America, there are many new players that don’t play by the rules and try shortcuts or attempt to reinvent the wheel. Drawing on regulatory and industry experience, FTI Consulting Energy professionals are extremely proficient in building and analyzing tremendously large databases. This gives us a pivotal vantage point in conducting successful investigations.
Policy challenges largely are focused on liquefied natural gas (“LNG”) exports and the debate over their effect on natural gas prices in the United States. Some argue that even if prices rise with LNG exports, these increases will be offset because more ethane and propane are produced in the United States at lower prices. One LNG export project already is under construction, and several more are close to starting in early 2015. FTI Consulting experienced professionals are up to speed on the policy issues that concern chemical clients, and we respond quickly to their specific needs with informed solutions.
Global and domestic market activity in commodity and specialty chemicals has increased substantially due to shale oil and gas abundance in the United States. As a result, companies are facing heightened regulatory scrutiny. In addition, as business expands, there is an increasing need to communicate corporate stories and positions; e.g., investor relations, recruitment, employee retention, public affairs and community relations, to offset heightened competition and possible community opposition to expansion. FTI Consulting communications professionals bring critical perspective to our clients, drawing upon experience working on Capitol Hill, covering the industry from both the buy and sell sides, and working on policy at the Environmental Protection Agency.
In the global chemicals arena, struggling companies are looking to jettison underperforming divisions or businesses. Successful companies are looking for ways to grow. There is a robust market for acquiring these kinds of assets; e.g., companies looking to add to their portfolios — and private equity firms looking to buy those businesses, improve their performance and then sell them back. Prior to joining FTI Consulting, some of our Energy professionals worked for commodity or specialty chemicals companies or in financial services and investment banking. FTI Consulting has participated in many of these transactions, on both the buy and the sell side, and is well-positioned to help our clients complete their deals successfully.
Restructuring often is an option used to meet the challenges of poor business conditions. This can translate into the rationalization of plants and other assets that usually leads to selling off some of those resources. FTI Consulting has teams of experts who understand the capital structure of chemical companies. We have the methodological framework and are well-versed in the financial analytics that support a chemical company’s restructuring.
Strategic & Business Consulting
FTI Consulting is experienced in providing analysis of supply/demand curves for different chemical types, growth forecast, return on investment, competitive outlook and market segmentation. Such analyses help our clients evaluate possible growth strategies, current positions within product lines, the decision of whether or not to expand that position, or the decision of whether or not to invest elsewhere. Commodity market participants are continually examining growth options that were not available prior to the shale gas and oil revolution. Petrochemical companies that had the vision to see the impact of this revolution on their operations seized the moment, built new capacity and expanded operations. The Energy professionals at FTI Consulting helped many companies do that.
Many petrochemical and chemical companies are wrestling with Maximum Achievable Control Technology. This Environmental Protection Agency requirement, designed to limit emissions, requires petrochemical and chemical facilities to switch from coal-based to gas-based boilers in order to comply with emissions standards. The experienced Energy professionals at FTI Consulting are exceedingly well-positioned to help our clients navigate the regulatory environment, analyze engineering and conversion options, and provide viable solutions.
The success of a restructuring, merger, acquisition, carveout, spin-off or divestiture may depend on how quickly management voids can be filled once the transaction is completed. The seasoned Energy professionals with C-level experience at FTI Consulting are prepared to fill the void when client companies face leadership, financial or operational challenges. In a moment’s notice, our experienced and credentialed senior executives assume C-level roles, providing the leadership and strategic decision-making ability to maintain momentum, establish corporate priorities, build morale and provide critical continuity. Our C-level executives serve in the following roles: chief executive officer, chief operating officer, chief financial officer, chief restructuring officer, controller and treasurer.