One of the world's largest chemical companies was well positioned at the forefront of the solar energy sector – where it was providing essential materials to manufacturers of photovoltaic (PV) cells – and its leadership team wanted to expand that market footprint. For more than 100 years, this global giant had successfully entered various emerging markets and established competitive advantages by correctly identifying new opportunities and moving quickly to develop innovative products and materials.
In 2008, government subsidies for photovoltaic systems and other innovations set off a boom market in the renewable energy industry. Adoption of solar energy systems soared and a host of companies with supporting products and services rushed in. The PV market, in particular, grew rapidly at an average rate of almost 100 percent per year between 2008 and 2010.1 Then, in 2011, the end markets for PV continued to grow but the industry went through a period of consolidation induced by massive overcapacity. Many players in the market went out of business even as use of solar energy expanded.
Remarkably, throughout this period of volatility, the global chemical company maintained and even strengthened its leadership position in the emerging PV market space. Corporate strategy planners had seen that they needed timely, reliable information and expert analysis of volatile photovoltaic markets. They had to know if high rates of growth in the PV space were sustainable, how to gain market share, how to improve profitability, who was the competition, what inventories existed or could be maintained, and which products to prioritize as part of a full-fledged business strategy. Seeking insight into various market dynamics, customers' future needs and the outlook for PV materials purchasing, the company's Global Marketing Director looked to S&P Global.
Accessing Broad, Deep Data and Analysis
As an Technology subscriber with the S&P Global PV Integrated Market Tracker™ service, this Global Marketing Director had access to detailed quarterly reports that deliver independent analysis, along with fresh, accurate and granular PV market data and forecasts. Each quarter, the Global Marketing Director built a total market picture and incorporated updates from S&P Global forecasts for a 5-year forward window. He was able to do this by competitor and country or region. He leveraged data that included changes to country/segment installations, production capacity, production, shipments, inventories, prices, megawatts installed and revenues. He could track the entire value chain for PV, basing his forecasts on integrated supply and demand analysis that provides a realistic view for scenario planning.
The Global Marketing Director supplemented his team's research, analysis and planning by taking advantage of S&P Global consulting services, which enable him to review findings and discuss market developments with independent industry experts.
While roughly two-thirds of the market players who were active in 2010 have since gone out of business, this major chemical company has strengthened its position as a leading PV materials supplier.
Taking an Informed Short and Long View
The global PV industry is intensely competitive, with constant pressure throughout the supply chain to reduce costs while keeping pace with demand for higher production. As a result, this leading chemical company needed to ensure profitability while scaling up its newly formed line of business. Strategy planners set out to secure and increase the company's market share by delivering leading-edge PV materials and technologies that would help its customers to keep their manufacturing costs in check.
By consulting with S&P Global, the Global Marketing Director gained a clearer understanding of how market shifts might impact his company's business so he could offer company decision-makers advice on the best course of action – for example, adapting certain products to meet changing market demands. He leveraged S&P Global data and analysis in the development of a strategic roadmap that would enable his company to capitalize on future market trends while also responding nimbly to current opportunities. For example, the company was able to quickly navigate pressing issues, such as international trade conflicts and changing political positions. Exchanges with S&P Global analysts and consultants helped the company's decision makers understand how such scenarios would impact the industry-wide PV supply chain as well as the price and sales of their own materials and components.
Tapping Opportunities, Avoiding Risks
As the market for photovoltaics continues to evolve, the chemical company's leadership has continued to rely on quarterly reports from S&P Global and consultations with S&P Global industry experts. They leveraged S&P Global input when making critical decisions about how to enhance the company's competitiveness by altering its market strategies or organizational structure when necessary. Having access to S&P Global industry insights on demand helped new team members get up to speed quickly on their market and maintain or increase momentum in the face of changing circumstances.
Fluctuating political positions and trade issues can dramatically impact the industry and demand for PV components. For instance: could new government policies in one region reduce the number of future PV installations there or elsewhere around the world? If so, where exactly and by how much? Continually tracking and analyzing these complex factors requires time, energy, infrastructure and expertise.
This company's Global Marketing Director leveraged S&P Global resources to efficiently track and anticipate ever- changing market opportunities and hazards – for instance, using S&P Global data and commentary as a basis for his team's economic risk analysis. With these insights, the company continually tailored production to align with market needs. To hedge itself against risks in the market, it also balanced its client portfolio by taking into account which clients are in a robust position and which clients are struggling.
Looking to the Future in a Dynamic Market
Recently, the global PV industry has gone through a massive overcapacity cycle followed by another wave of consolidation. And yet, while roughly two-thirds of the market players who were active in 2010 have since gone out of business, this major chemical company has strengthened its position as a leading PV materials supplier.
Internationally, 2014 is expected to be a strong year for PV solar installations. The Technology research team projects PV installations will rise globally to 45.4 gigawatts, with a third of those taking place in the fourth quarter of the year.2
The Global Marketing Director plans to help his company capitalize on these growing opportunities while maintaining tight control over production and inventory in order to gain market share while also maximizing profitability. He looks forward to continuing to his partnership with S&P Global – maintaining his subscription and engaging with S&P Global consultants on a regular basis – as his company builds its PV business and further strengthens its position in the solar energy industry.
1 S&P Global Solar PV Integrated Market Tracker
2 https://technology.ihs.com/512713/solar-installations-to-rise-20-percent-in-2014- thanks-to-strong-fourth-quarter
