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The Datacor Blog

(Part 1) COVID-19: Chemical Industry Impact and Future Trends

May 20, 2020 by Admin

The novel coronavirus (COVID-19) crisis is changing the world as we know it, causing ripple effects throughout national, state and local economies and forcing businesses to rapidly adapt. Unemployment claims have surpassed the highest in history; over 30 million claims, totaling nearly 20 percent of the U.S. labor force, were filed in the six weeks between mid-March and April 25, 2020 alone. And in one of the most shocking developments, the price of oil dropped below zero for the first time in history.

While chemical manufacturers and distributors have not been spared from the impact of this crisis, not all of the outcomes have been entirely negative for businesses in this sector. To take a closer look at how the changing global landscape has affected chemical companies, what we can learn from the past and what the future might hold, we spoke with four experts in this sector:

  • Tom Jackson, president at Datacor
  • Dan McCusker, vice president of sales at Datacor
  • Eric Byer, president and CEO of the National Association of Chemical Distributors (NACD)
  • Colie Whitaker, president of Whitaker Oil Company

This is the first in a two-part series on coronavirus-related trends in the chemical industry. In part one, we’ll cover how the crisis has impacted companies so far and business strategies they’re using to respond. Part two will focus on how organizations are adjusting to remote work, and look to what the future might hold.

Coronavirus means boom or bust for chemical companies

The first-ever global shutdown, caused by the COVID-19 crisis, has impacted different businesses in the chemical industry in different ways. The past six weeks saw the widespread enforcement of stay-at-home orders across the U.S. and the world, mandating working from home and widespread office closures — except for those companies deemed “essential businesses.” This definition varies by state, but generally, it refers to businesses that offer groceries, utilities, health or financial support.

Eric Byer is president and CEO of the National Association of Chemical Distributors (NACD): an international association of chemical distributors and their supply-chain partners. Member companies manage aspects of producing, storing, distributing and/or marketing chemical products for over 750,000 global customers. Chemical distributors employ more than 80,000 people and serve every industry sector delivering vital products — including the pandemic’s most-needed goods, such as cleaners and sanitizers and their key ingredients: isopropyl alcohol and ethanol.

This fact allowed the NACD to successfully petition the Department of Homeland Security (DHS) and other federal agencies to classify chemical companies as essential businesses, Byer says. While some businesses, especially those in retail and food service, saw demand plummet with the shutdown, for many chemical companies, demand actually increased. This was the case for over half of NACD member companies who are involved with isopropyl alcohol distribution, Byer says.



Tom Jackson, president at Datacor — an enterprise resource planning (ERP) system designed for chemical and process manufacturers and distributors — and Dan McCusker, vice president of sales at Datacor, say their customers fall into three categories: those who lost business; those who saw a temporary spike; and those who are seeing a steady upward trend. 

“If you make cleaning and sanitizing chemicals, of course the demand for your product skyrocketed,” says McCusker.


To aid in the effort to restock sold-out shelves, some of Datacor’s customers who didn’t previously deal in sanitizing supplies have pivoted to begin producing these products, Jackson notes.

Demand has been so high that, for some, product management has been a challenge. Colie Whitaker, president at Whitaker Oil Company, describes how his company has had to carefully control supply levels for cleaning and sanitizing ingredients to avoid running out.

“We could have sold every drop of ethanol and isopropyl alcohol in the first few weeks of March,” Whitaker says. “Thus, we put most of those products and others on sales control to manage costs and inventory … [which] puts a strain on the sales and procurement teams.”

For many of the companies that initially saw a large jump in demand, sales are now beginning to level off. McCusker gives the example of Datacor customers who produce inks for toilet-paper labels or adhesives that glue rolls together.

“People were hoarding these consumer products, and that drove demand way up,” McCusker says. “Now that we’re six weeks in, sanitizing chemicals are still going strong, but demand for others that saw a big spike are starting to see … a 20-30% decrease in orders.”

“The month of March could be categorized by ‘lots of panic buying,’” Whitaker affirms. “Our customers were stocking up on material due to the uncertainty of how long certain products would be available. This is particularly true for products in the HI&I market (Household Industrial and Institutional [products]: cleaners, surfactants, disinfectants and sanitizers). Volume tapered off in April for most of the non-HI&I products.”

“The last few weeks have been more of a struggle [for NACD member companies],” Byer adds. “The replenishment of supplies coming in is taking longer to get to distributors for them to sell it. I foresee that being the case over the weeks ahead, until the economy opens up a bit more.”

Other customer segments haven’t even gotten a temporary reprieve — primarily those that make oil field chemicals, which help extract oil from the ground and make it flow more efficiently. With streets across the globe suddenly free from commuters, businesses closed and many factories ceasing or slowing production, demand dropped so low that for the first time in history, oil prices dropped below zero. “When oil is at a negative price, you don’t want it coming out of the ground. Keeping it in the ground is free storage,” McCusker observes. “The demand for those chemicals didn’t just dwindle, it shut off, and these companies went from being very busy to having zero orders. They were probably hit the most significantly.”

Diversification is key for chemical manufacturers and distributors

Chemical companies have found that diversification is crucial to success in the midst of these market fluctuations.

“A lot of our members were heavily focused on the distribution of one product, and now a lot of them have diversified,” Byer says. “What [they] have done well is making sure they have their revenue streams covered, so that if one or two lines of business go down, they have two or three others to make up for it. … That’s one of the reasons we’ve seen so few of our companies laying off or having to furlough employees.”


Byer gives the example of distributors who deal in hand sanitizer or related products and were able to use that spike in sales to offset losses in other markets. However, at many companies, the balance of bumps and drops may not be equal, nor is the trade-off sustainable for the long term.

“The challenge, for us, became how to manage our business with just one market sector running strong and the others falling flat,” Whitaker says. “In other words, how are we going to keep this V8 car in the race running on two cylinders versus eight?”

Manufacturers, too, are learning from this crisis and looking to diversify, whether by pivoting to produce cleaning and sanitizing chemicals or by simply expanding their supplier base. Going forward, Jackson and McCusker note, these companies will be prepared to get in front of a future crisis much more quickly now that they know what steps to take to respond.

“When [the crisis] happened, global supply chains took a big hit; people couldn’t get the supplies they needed,” McCusker says. “Now they’re seeing the value of having both local and international suppliers for their products.”

“I think supply chains will be rethought, with more manufacturing capacity being done in the United States,” Jackson affirms.


While the scale of the COVID-19 pandemic is unprecedented in modern history, diverse distribution channels and supply chains have proven a successful way to weather the storm in past global crises, Jackson observes. Chemical and process manufacturers and distributors were among America’s first industries, and some of Datacor’s customers were in business during the 1918 Spanish flu pandemic as well as World War II.

“This industry tends to provide basic GDP [gross domestic product] things required for an economy, so there is always a demand for them. That doesn’t mean there aren’t still real spikes when these really big world events happen, but it does mean [these companies] can survive them,” Jackson says.

Check back next week for our follow-up post to see what the future holds for chemical companies. To learn how Datacor can help your business adapt in these uncertain times, contact an advisor for a free demo. You can also subscribe to our blog so you never miss an update on the latest news about the COVID-19 crisis and its impact on chemical companies.

Topics: Industry Trends


Written by Admin

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