CitaçãoA lot has happened in world finance markets since Rebekkah Marshall's relatively optimistic assessment of the economic outlook in Chemical Engineering's December 2007 issue. A welter of bad news about poorly made housing loans that were subsequently repackaged and sold as high-value securities has turned into a full-blown, but slow-motion, global financial crisis.

While, to date, this has been largely a U.S. phenomenon, its international ramifications are only just beginning to show themselves, and almost all of the big names in international financing have been taking write downs.

What does all of this financial gloom mean for chemical engineers? While it is too early to foresee all the ramifications of the financial crisis, we are ready to make a few brave predictions, based on current trends and assuming that U.S. consumption does not come to a screeching halt:

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      We are likely to see a slowdown in the implementation of large ($1 billion plus) projects, where construction has not started. Financing for these projects is likely to be harder to get, even if the business plan is completely watertight — none of the big banks want to hold mega-loans on their balance sheets and the securitization market has disappeared
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      Projects that are already proceeding will go ahead, but expect some delays and quiet periods for those where there is no steel yet in the ground. There is some doubt about how fast petrochemical projects, for example, will proceed after the current burst of expansion is completed in 2011
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      More modest expansions and rebuilds will still have access to financing from middle market ($50 — 500,000) banks, where, so far, there seems to be no lack of investment funds and willing lenders
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      Mergers and acquisitions (M&A) will make a lot of sense in the U.S. and Europe, as companies seek to strengthen their competitive positions and their balance sheets, and regain their borrowing power. Also, expect a move to more exclusive technologies and added-value products in these regions
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      Private equity, with its beguiling mix of available capital and forward-thinking management philosophy, will grab a bigger role in manufacturing. Compared with the past, however, private equity will look more like a strategic player in its investments. It may decide to acquire with a view actively to consolidate a chemical process industries (CPI) market sector

While all of this sounds like the start of the Apocalyse, engineers should have some reason for cautious optimism, and not only in the "hot" regions of the world. Anything that brings more order to the investment cycle in the highly capital intensive industries of the CPI is ultimately to be welcomed, and a round of M&A activity in the U.S. and Europe might be good medicine in the end.

In addition, the drift to higher value products and processes in the U.S. and Europe is logical and overdue. Look at U.S. and European advances in biotechnological processes and we may be standing on the brink of a new engineering renaissance. It is chemical engineers who can solve the conundrums of greening the world's affluent consumer societies.

The bottom line throughout the coming crisis is that the world is woefully short of qualified engineers to accommodate the insatiable needs of emerging nations and to rebuild the infrastructure of established behemoths like the U.S. No matter what the mix of news in the next 12 months, chemical engineers will remain a rare and valuable specialty.