Chemical production modernization in the formative phase of Industry 4.0: study of trends and problems of investment support

Authors

DOI:

https://doi.org/10.15587/2312-8372.2019.157152

Keywords:

modernization of chemical production, investment in innovative development, Industry 4.0 processes

Abstract

The object of the research is the investment process of modernization of chemical production. The long-term systemic crisis in the Ukrainian chemical industry, unprofitability and high capital intensity of production are constraining factors for its radical modernization. Modern tasks of digitalization of production and introduction of smart innovations form new problems and require new approaches to their solution.

In the process of research, the methods of analysis and synthesis, comparison, structural analysis, generalization and graphical method were used.

The analysis of foreign practice of innovative investment in chemical production found that the development strategies of companies and their investment priorities depend on the role of the segment in the global value chain. Industry leaders are diversifying their investment portfolios in the direction of high technologies for deep processing and production of high-tech low-tonnage products. At the same time, the technologies of Industry 4.0 and smart manufacturing become an integral part of their innovative investment strategies.

The study of trends and problems of investment support for the Ukrainian chemical industry showed that its traditional business model is gradually losing its resource and technological basis, and there are not enough investments within the industry for large-scale modernization. For external investors, certain segments of the chemical industry, producing liquid differentiated small-tonnage consumer goods, are of particular interest.

Promising approaches to the revitalization of investment activities in the chemical industry in the context of the formation of the Industry 4.0 are identified. They are based on the special role of chemical production as a supplier of smart materials and technologies, making it a necessary component of any innovation ecosystem. It is shown that external investments for the smart modernization of the industry should be sought among the industries consuming chemicals.

It is substantiated that small and medium-sized enterprises should become the key subject of Industry 4.0 processes in the Ukrainian chemical industry. Considering the insufficient technological readiness and investment support of such entities, their specialized support and program financing is necessary.

The proposed approaches allow overcoming the existing internal and external limited financial resources and mobilizing investments to launch smart modernization of chemical production.

Author Biographies

Hanna Shevtsova, Institute of Industrial Economics National Academy of Sciences of Ukraine, 2, Zheliabova str., Kyiv, Ukraine, 03057

Doctor of Economic Sciences, Associate Professor

Department of Economic Problems of Industrial Development

Olha Maslosh, Volodymyr Dahl East Ukrainian National University, 59-a, Tsentralnyi ave., Severodonetsk, Ukraine, 93400

PhD, Associate Professor

Department of Economics and Entrepreneurship

References

  1. Geissbauer, R., Vedso, J., Schrauf, S. (2016). Industry 4.0: Building the digital enterprise. PricewaterhouseCoopers, 36.
  2. Pro skhvalennia Stratehii rozvytku promyslovoho kompleksu Ukrainy na period do 2025 roku. Proekt rozporiadzhennia Kabinetu Ministriv Ukrainy. Available at: http://www.me.gov.ua/Documents/Detail?Lang=uk-UA&id=10ef5b65-0209-4aa1-a724-49fd0877d8d6&title=ProektRozporiadzhenniaKabinetuMinistrivUkrainiproSkhvalenniaStrategiiRozvitkuPromislovogoKompleksuUkrainiNaPeriodDo2025-Roku
  3. Leeuw, V. (2017). Industrie 4.0 in the Chemical Industry – Covestro’s View. ARC Insights. Available at: https://www.osisoft.com/whitepapers/wp-Covestro-Industrie-4-0.pdf
  4. Guertzgen, S. (2016). Chemical industry: 4 opportunities provided by Internet of Things. Digitalist. Available at: http://www.digitalistmag.com/iot/2016/05/12/chemical-industry-4-opportunities-provided-by-internet-of-things-04196654
  5. Meincke, H., Nickel, J.-P., Westerheide, P. (2018). Chemistry 4.0 – Growth through innovation in a transforming world. Journal of Business Chemistry, 15 (1), 42–53.
  6. Wehberg, G. (2015). Chemicals 4.0. Industry digitization from a business-strategic angle. Deloitte, 44.
  7. Shevtsova, H. Z. (2017). Khimichna industriia 4.0 yak haluzeva kontseptsiia realizatsii osnov chetvertoi promyslovoi revoliutsii. Ekonomichnyi visnyk Donbasu, 2 (48), 35–41.
  8. Goodman, T. H., Neamtiu, M., Shroff, N., White, H. D. (2014). Management Forecast Quality and Capital Investment Decisions. The Accounting Review, 89 (1), 331–365. doi: http://doi.org/10.2308/accr-50575
  9. Bogutska, O. (2018). Financial and economic mechanism of ensuring investment activity of enterprises within institutional models of financing the real sector of economics. Innovative Technologies and Scientific Solutions for Industries, 5 (3 (5)), 79–86. doi: http://doi.org/10.30837/2522-9818.2018.5.079
  10. Newman, C., Rand, J., Talbot, T., Tarp, F. (2015). Technology transfers, foreign investment and productivity spillovers. European Economic Review, 76, 168–187. doi: http://doi.org/10.1016/j.euroecorev.2015.02.005
  11. Gentner, S. (2016). Industry 4.0: reality, future or just science fiction? How to convince today's management to invest in tomorrow's future! Successful strategies for industry 4.0 and manufacturing IT. CHIMIA, 70 (9), 628–633. doi: https://doi: http://doi.org/10.2533/chimia.2016.628
  12. Gestrin, M., Staudt, J. (2018). The digital economy, multinational enterprises and international investment policy. Paris: OECD. Available at: http://www.oecd.org/investment/the-digital-economy-mnes-and-international-investment-policy.htm
  13. Kornieieva, I. (2018). The role of state in promoting investments in digital development. Ekonomìka ì Prognozuvannâ, 2018 (1), 120–134. doi: http://doi.org/10.15407/eip2018.01.120
  14. Zakharchenko, V. I. (2017). Investytsiine zabezpechennia neoindustrializatsii Ukrainy. Finansy Ukrainy, 11, 21–46.
  15. Grant, D., Yeo, B. (2018). A global perspective on tech investment, financing, and ICT on manufacturing and service industry performance. International Journal of Information Management, 43, 130–145. doi: http://doi.org/10.1016/j.ijinfomgt.2018.06.007
  16. Das, S., Brunet Icart, I. (2015). Innovation policy of European chemical companies with special focus on large companies. Revista Internacional de Organizaciones, 14, 123–157. doi: http://doi.org/10.17345/rio14.123-157
  17. Sheen, A. (2016). Do Public and Private Firms Behave Differently? An Examination of Investment in the Chemical Industry. SSRN Electronic Journal. doi: http://doi.org/10.2139/ssrn.2792410
  18. Katanidi, K. G. (2017). Mekhanizm otsenki ekonomicheskoy effektivnosti investitsiy khozyaystvuyushhikh sub"ektov khimicheskoy promyshlennosti. Konkurentosposobnost' v global'nom mire: ekonomika, nauka, tekhnologii, 7-3 (54), 66–73.
  19. Ostroukhova, V. A., Makarova, V. I., Kostin, A. V. (2015). Ekonomicheskoe razvitie, investitsionnyy analiz i otsenka effektivnosti investitsiy predpriyatiy khimicheskoy promyshlennosti. Vestnik Volzhskogo universiteta imeni V. N. Tatishheva, 3 (34), 314–324.
  20. Westerman, A., Morawietz, M., Geissbauer, R. et. al. (2016). Industry 4.0: Building the digital enterprise. Chemicals key findings. PricewaterhouseCoopers, 12.
  21. Kovenia, T. V., Kaniuka, I. V. (2017). Promyslove investuvannia khimichnoi promyslovosti Ukrainy: pliusy i minusy. Khimichna promyslovist Ukrainy, 1, 57–60.
  22. Shevtsova, G., Shvets, N. (2017). Research of the current factors influencing the development of chemical manufacturing within the neo-industrial context. Economy of Industry, 79 (3), 39–57. doi: http://doi.org/10.15407/econindustry2017.03.039
  23. Global Top 50 Chemical Companies of 2017. Chemical & Engineering News. Available at: https://cen.acs.org/sections/global-top-50.html
  24. Ezekoye, O., Milutinovic, A., Simons, T. (2018). Chemicals and capital markets: Back at the top. McKinsey&Company, 11.
  25. BASF Online Report 2017. BASF. Available at: https://report.basf.com/2017/en/
  26. Derzhavna sluzhba statystyky Ukrainy. Available at: http://www.ukrstat.gov.ua/
  27. Ofitsiinyi kurs hryvni shchodo inozemnykh valiut (serednii za period) 2011–2018. Ofitsiinyi sait Natsionalnoho banku Ukrainy. Available at: www.bank.gov.ua/files/Exchange_r.xls
  28. Shevtsova, H. Z., Shvets, N. V. (2018). Economics of structure-forming enterprises of basic chemistry: current trends and challengers. Economics and Law, 3 (51), 91–100. doi: http://doi.org/10.15407/econlaw.2018.03.091
  29. Budde, F., Ezekoye, O., Hundertmark, T., Prieto, M., Simons, T. (2017). Chemicals 2025: Will the industry be dancing to a very different tune? McKinsey&Company, 5.
  30. Spelman, M., Gomez, F., Weinelt, B. et. al. (2017). Digital Transformation Initiative. Chemistry and Advanced Materials industry. World Economic Forum. Assenture, 40.

Downloads

Published

2018-12-20

How to Cite

Shevtsova, H., & Maslosh, O. (2018). Chemical production modernization in the formative phase of Industry 4.0: study of trends and problems of investment support. Technology Audit and Production Reserves, 1(4(45), 30–37. https://doi.org/10.15587/2312-8372.2019.157152

Issue

Vol. 1 No. 4(45) (2019): Economics of enterprises

Section

Economics and Enterprise Management: Original Research

License

Copyright (c) 2019 Hanna Shevtsova, Olha Maslosh

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

The consolidation and conditions for the transfer of copyright (identification of authorship) is carried out in the License Agreement. In particular, the authors reserve the right to the authorship of their manuscript and transfer the first publication of this work to the journal under the terms of the Creative Commons CC BY license. At the same time, they have the right to conclude on their own additional agreements concerning the non-exclusive distribution of the work in the form in which it was published by this journal, but provided that the link to the first publication of the article in this journal is preserved.