Chemical E-Business Platforms Continue To Evolve And Change

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Ascorecard would have been really-useful—somewhere to record the teams and players and who is

scoring hits, runs, and errors. At this year's E-Business for Chemicals & Plastics meet­ing in Philadelphia, nearly 700 people— about three times last year's atten­dance—showed up to watch the game. And they weren't disappointed with the face-offs among industry networks and dot-coms, including a few last-minute substitutions.

On the industry networks side, it's be­coming clearer that chemi­cal-company-backed e-business­es are gaining ground. Last year, dot-coms dominated the meeting, but not so any more. Industry observers said they are astounded by the rate and degree at which chemical companies have joined together—for example, the biggest group effort, Elemica, was announced in May and officially formed in August.

Days before the meeting, Elemica an­nounced that 22 major worldwide chemi­cal producers and distributors have signed up. The Philadelphia-based inde­pendent, business-to-business e-market­place has the top four global chemical producers as members, seven of the top 10, and half of the top 40. Although com­monly referred to as the industry's "800-lb gorilla," Elemica has not yet started electronic transactions, but it expects to by the first quarter of 2001.

Elemica also does not anticipate hav­ing to raise more capital, subsisting in the near term on $100 million from its members and then becoming self-funding. Skeptics at the meeting ques­tioned whether $100 million is enough. And others, such as Deutsche Bank an­alyst Robert A. Koort, still ponder the prospects for e-commerce strategies, in­cluding extremely modest—if any— short-term gains for producers; low-rev­enue business models; long-term mar­gin erosion; and how cost savings are to be distributed among e-business firms, investors or partners, and customers.

Attendees further scrutinized and compared industry-backed e-marketplac­es when Elemica twice shared the dais with Envera, Richmond, Va. To its advan­tage, Envera came to the meeting with the news that it had just gone live a week before, launching its neutral network for

chemical transactions. Envera clearly has first-mover advantage, but not the indus­try mass behind it. Its major partners in­clude Albemarle, Borden Chemicals, Equistar Chemicals, Ethyl, Lubrizol, Lyondell Chemical, Mays Chemical, Oc­cidental Chemical, and Solutia.

Although absent from the meeting agenda, the more narrowly focused Om-nexus and ElastomerSolutions sent news that their sites just started up. Atlanta-

emConnect based Omnexus—formed by BASF, Bay­er, Dow Chemical, DuPont, and Celanese for the thermoplastics industry—offers an online catalog and expects to have transaction processing within about two months. ElastomerSolutions, Horsham, Pa., with 10 leading pro-

with the industry. The San Francisco-based firm also emphasized its 11,000 members (100 charter and corporate) from 110 countries, 16,000 products list­ed, and average transaction value of $311,000.

Despite the canceled stock sales, both CheMatch and ChemConnect say they have enough cash to operate for a while. But analysts and industry partici­pants suggest that these neutral ex­changes may not be getting the neces­sary critical mass of transactions and companies using their sites. On top of that, having glimpsed operating and fi­nancial details in their stock offering prospectuses, many have significant questions about the viability of dot­coms' business models.

Answers are already being provided. Fob.com—which had created the indus­

try-specific sites for chemicals, plastics, and paper—shifted its business model about a week before the meeting.

The dot-com now is a "leading provider of e-procurement ser-

ducers as investors, has busi-

^"o,,sendces CheMatch.com Chemical dot-coms also

came head-to-head, especially Chem­Connect and CheMatch.com, which faced each other on at least two panels and at neighboring exhibition booths. According to reports from meeting at­tendees and speakers, there are now 120 or more chemically related e-busi­ness sites and dot-coms. The surfeit of sites only further fueled debate about dot-com business models, liquidity, and long-term viability.

CheMatch appeared just after cancel­ing its initial public stock offering. How­ever, the chemicals exchange boasted more than 575 members and more than 1 million tons of product sold at a no­tional (in some cases speculative) value of more than $350 million in about 30 months. The Houston-based company is expanding into trading derivatives, regulated commodity chemical futures, and other risk management products. It will face, attendees learned, online com­petition in chemical trading from Hous­ton-based oil, gas, chemical, and energy firm Enron.

ChemConnect, which in July also had pulled its stock offering, announced that it had hired an industry executive, John K. Robinson of BP, as its new chief executive officer. The move is hoped to help cement the dot-com's credibility

vices for raw materials" and no longer supports industry sites. The Chicago-based company says the change was in response to customer desires for tech­nology solutions to automate and re­duce costs, rather than for aggregated purchasing to lower prices.

Earlier this year, e-Chemicals, Addi­son, Texas, made a similar change, be­coming a supply-chain solution technol­ogy provider and largely dropping its virtual distributor model. In the spring, Boston-based i2ichemicals.com shifted its focus to become an e-marketplace services provider. Even Ventro—parent of industry e-marketplaces, including research and lab chemical site Chem-dex, one of the most successful dot­coms—is reportedly planning to change its revenue model.

The conference also offered insight into the activities of chemical compa­nies, still largely from e-business lead­ers such as Dow, DuPont, Eastman Chemical, Celanese, GE Plastics, Bayer, PolyOne, BOC, BP, Air Products & Chemicals, and Shell Chemicals. But there weren't enough statistics about in­dividual producers, e-marketplaces, or dot-coms to know which will be taking home the pennant.

Ann Thayer

OCTOBER 23, 2000 C&EN 2 9