How has CSL performed over the past year?

The chemical industry saw a strong recovery in 2021, especially coming from APAC. Demand for toll manufacturing picked up together with our customers’ activity. Naturally, some segments performed better than others, specialty chemicals for automotive, specialist plastics and high-tech applications saw a faster recovery curve and growth rate.

Known in the market as a go-to partner for large scale toll chemical manufacturing and a fast implementation of product-to-market capabilities, CSL has benefited from the support of our customers who have been looking to increase their supply security and capabilities in anticipation of the growing regional demand. We continue to actively engage with our customers to enhance their regional supply footprint and continue to add value to our existing network.

How has the trend towards regionalizing global supply chains evolved?

Over the past two years we saw a breaking down of the global supply chain, which resulted in significant time and price pressures on imports coming from Europe and the US that created huge supply gaps with high uncertainties. Adopting an “in the region, for the region” strategy, many MNCs are redesigning their supply chains footprint to become more regionalized. What we witness is a continuing trend in supply chain transformation, which means not only localizing the production facility but also the raw materials supply chain, without which local manufacturing would make little sense. As a toll manufacturer, we find ourselves in a sweet spot because we can offer a speed-to-market solution in our current facility to producers, many of which wish the localization to be done yesterday.

What are the main challenges for toll manufacturers in Singapore?

Tolling versus producing for oneself is always an economics balancing equation for producers with their current capacity and/or geographical footprint locations constraints. The other important dimension is the choice of a reputable toller, considering the IP aspects and in-country laws regarding IP protection. If the toller has their own product line, they could be your potential competitor or may decide to prioritize capacities for their own production needs. In that respect, it is important for Singapore tollers to present themselves to have a high level of conformance with IP protection as well as offering tolling services  that are intrinsically non-competitive and with a reliable capacity assurance. For CSL, these have been our key success factors for building sustainable long term partnerships with our customers.

Another challenge for manufacturers in Singapore versus those in other parts of the world is the energy cost, which is one of the highest in the world. Energy costs are a significant portion of operating costs for all manufacturers, and these also include waste disposal costs when it comes to incineration. Since Q4 last year, not dissimilar to other parts of the world, we saw a sharp rise in energy costs and this situation is likely to linger this year. Fortunately, Singapore operates to ensure a stable energy supply, power outage and power usage allocation are a big issue for some countries and can be very disruptive for chemical plants.

Finally, attracting and retaining human resources can also be challenging in a small country like Singapore. There is heightened competition over talent in the petrochemicals space.

What are CSL’s investment priorities?

CSL continuously invests to enhance the safety, reliability and sustainability of our facility, as well as developing the capabilities of our people, our most valued asset. Our decision to invest in hardware capability and capacity will always match the evolving needs of our customers and their products. 

Although our chemistry and raw materials are dependent on our customers, we also play our part in sustainability by making sure we are energy efficient and we have good control of our emissions.

Do you have a final message for our international audience?

We see the conversation on supply chain transformation gaining momentum among MNCs and we are of course happy to work with our customers in these efforts.

Personally, it was a little disheartening to see globally integrated supply chains that took years to build and optimize, or  connected economies, all tested till breaking point; during this period of unprecedented supply chain challenges, the weakest links were highlighted.

However, regionalization / localization is becoming a new norm, challenging global supply chain leaders to redesign and build more resilient footprints. With this new order come new opportunities and adaptations. Exciting times ahead!