In A.T. Kearney's 2012 Chemical Customer Connectivity Index (C3X) study of recent and future developments in the chemicals market, one major theme stands out: collaboration. Respondents in this year's study make it clear that those chemical manufacturers that exploit the benefits of supplier-customer collaboration across the entire value chain will have the brightest future. The potential value is enormous: The C3X study finds that for European chemical companies alone, collaboration could trigger additional sales of more than $30 billion over the long run.

For the sixth time since 2008, the C3X assesses the chemical industry from the vantage point of executives from both chemical companies and the companies that purchase products from them. This paper discusses the study findings, including the market's volution over the past year and the eff ects of volatility on the industry. We also look into the types and degrees of collaboration, its drivers and obstacles, and the benefits related to it.

The market for chemical raw materials has heated up in the year since A.T. Kearney conducted its last Chemical Customer Connectivity Index (C3X) survey of executives of European chemical companies and their customers. Demand to refill chemical supply chains is rising, with some strategic raw materials, such as titanium dioxide, butadiene and rare earth minerals, in short supply and most companies reporting price increases. Half of the study's participants report raw material price increases of 10 percent or more in the past year, while another 20 percent of participants report price increases of 30 percent. And debt troubles in the United States and the euro zone, continued global financial instability, and political unrest in the Middle East and North Africa continue to be concerns.

Amid this landscape, the 2011 C3X study, the fifth in a series since 2008, finds cautious optimism among survey participants as growth continues. More than 90 percent of chemical companies expect demand for chemicals to continue rising in the next 12 months. And while most chemical company executives expect these trends to continue, many fear the pace of growth will slow amid global economic pressure. This paper discusses the study findings, examining how relationships between chemical manufacturers and their customers have changed since the downturn, the search for new growth opportunities in developing markets, and the impact of mergers and acquisitions (M&A) on the industry.

As the global economic crisis eases, the future of the chemical industry in Europe looks bright. But with market conditions still volatile, a tireless focus on business agility, risk and sustainability will be vital for long-term success.

As European chemical companies struggle, the onsite service providers that supply these companies with utilities, maintenance and logistics also face an uncertain future. To survive, providers must prove flexible enough to stand up to global competition while also protecting their own interests.