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1 We will begin momentarily at 2pm ET Recordings will be available to ACS members after three weeks Contact ACS Webinars at 1 Have Questions? Why am I muted? Don t worry. Everyone is muted except the presenter and host. Thank you and enjoy the show. Type them into questions box! Contact ACS Webinars at acswebinars@acs.org 2 1

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5 All recordings of ACS Webinars will be available to current ACS members three weeks after the Live broadcast date. Live weekly ACS Webinars will continue to be available to the general public. Contact ACS Webinars at 9 Upcoming ACS Webinars Thursday, June 11, 2015 Science Communication in the Digital Media Age Nathan Allen, Moderator of /r/science, Reddit Chris McCarthy, Social Media Manager, American Chemical Society Thursday, June 18, 2015 Advanced Pyrotechnics 2: Ignition, Sensitivity, and Analysis of Energetic Materials Chris Mocella, U.S. Customs and Border Protection Laboratories Darren Griffin, University of Kent Contact ACS Webinars at 10 5

6 Chemistry & the Economy: 2015 Mid-Year Review Mark Jones Executive External Strategy and Communications Fellow, Dow Chemical Paul Hodges Chairman, International echem Recordings will be available to ACS members after one week Contact ACS Webinars at Mid-Year Review Today s Aging Populations - Challenges and Opportunities 4 June

7 OUR SERVICES BLOG & BOOK THE ph REPORT Senior Management KEYNOTE SPEECHES Conferences WORKSHOPS PROJECTS Strategy/Planning Making It Happen PAUL HODGES EXECUTIVE SUMMARY The global population is ageing: fertility rates have halved since 1950, life expectancy is up by 50% Household spending drives GDP, and it declines past the age of years Central banks have tried to compensate by creating wealth effects via sub-prime and quantitative easing China s New Normal policies are now the catalyst for change Affordability and new technologies will be the winning strategies for the future 7

8 AGENDA Aging US population creates headwinds for economic growth Impact on auto markets New growth opportunities 60 PEOPLE IN EVERY 100 HAVE THE SMALLPOX. OF THESE 60, 20 DIE OF IT IN THE MOST FAVOURABLE SEASON OF LIFE. Voltaire, Letter on Inoculation, 1733 In London during the 1700s, In certain districts the infant mortality rate reached 75% of all births whenever epidemics struck Matthew White, British Library Lady May Montagu with son, Edward Variolation vaccination Constantinople, 1718 Dr Edward Jenner with gardener s son Cowpox vaccination, Gloucestershire 14 May

9 ECONOMIC GROWTH TOOK OFF ONCE SMALLPOX VACCINATION WAS INVENTED Vaccination, disinfection, pharma and now healthy lifestyles have changed our lives US BABYBOOM OF SAW 9 MILLION EXTRA BABIES BEING BORN, VERSUS THE 25 YEARS

10 FERTILITY RATES HAVE BEEN BELOW REPLACEMENT LEVEL SINCE 1970, LIFE EXPECTANCY AT AGE 65 IS NOW 20 YEARS Fertility rates are now just 1.7 babies/woman in the Low Case Audience Survey Question ANSWER THE QUESTION ON BLUE SCREEN IN ONE MOMENT Who spends the most? year olds year olds year olds year olds older than

11 US HOUSEHOLD SPENDING DATA CONFIRMS MAJOR DECLINE AFTER AGE 55 SPENDING POWER NOW UNDER PRESSURE AS LABOR PARTICIPATION RATES DECLINE FOR MEN & WOMEN Spending power had increased as women entered the workforce in large numbers 11

12 US HOUSEHOLD SPENDING HIGHLIGHTS IMPACT OF THE AGEING BABYBOOMERS ON DEMAND Consumer spending is 2/3rds of GDP: Over-55s spend 15% less than under-55s, and their numbers are rising THE G-20 CONTAINS RICH BUT OLD GROUPS IN THE WEST: POOR & YOUNG AND POOR & AGEING ELSEWHERE 12

13 MOST G-20 DEVELOPED COUNTRIES ARE AGEING & IN DEBT, OTHERS ARE YOUNG & LOW DEBT OR AGEING & LOW DEBT AGENDA Aging US population creates headwinds for economic growth Impact on auto markets New growth opportunities 13

14 GLOBAL CHEMICAL INDUSTRY OPERATING RATES HAVE FAILED TO RECOVER SINCE 2009 AGEING POPULATIONS DRIVE LESS AS WORK AND FAMILY COMMITMENTS REDUCE USA GERMANY Co-products produced with each ton of ethylene 14

15 Audience Survey Question ANSWER THE QUESTION ON BLUE SCREEN IN ONE MOMENT In 2014, US drivers averaged the same number of miles travelled by car as in: US VEHICLE MILES TRAVELLED PER ADULT HAVE FALLEN 8% SINCE 2004 Page 30 15

16 US AUTO AND HOUSING MARKETS ARE SHOWING SIGNS OF AGE Co-products produced with each ton of ethylene GLOBAL AUTO SALES WOULD STILL BE BELOW 2007 LEVELS WITHOUT CHINA The top 7 are 80% of total world demand Page 32 16

17 THE COST OF CHINA S GROWTH AT ALL COSTS MODEL HAS BECOME TOO GREAT THE CONCEPT OF A NEW NORMAL FOR THE WORLD S SECOND LARGEST ECONOMY IS NOW PREVAILING AT HOME AND ABROAD Xinhua, September 2014 PRESIDENT XI JINPING, opening the 3 rd Plenum, November 2013 Co-products produced with each ton of ethylene The good meat is all gone; all that is left are hard bones to chew. PREMIER LI KEQIANG, in his Work Report to the National People s Congress, March 2015 China s economic growth model remains inefficient; our capacity for innovation is insufficient; overcapacity is a pronounced problem and the foundation of agriculture is weak. Growth in investment is sluggish; the number of new areas of strong consumer activity is limited; there is no sign the international market is about to significantly pick up; maintaining stable growth is becoming more difficult 17

18 CHINA S AUTO MARKET IS MATURING AND WILL SEE HIGHER GROWTH IN USED CAR SALES Co-products produced with each ton of ethylene AFFORDABILITY BASED ON INCOME, NOT PROPERTY WEALTH EFFECT, WILL DRIVE FUTURE GROWTH Average per capita urban incomes in 2013 were Rmb ($4769): Every household owns a mobile phone, colour TV and air conditioner Everyone owns a washing machine and refrigerator 1 in of 5 households own a motor bike and own a car Almost every household owns a computer and water heater Average per capita rural incomes were $1276: Every household has a mobile phone and a colour television 2 out of 3 households now own a washing machine and refrigerator 2 out of 3 households now own a motorbike, whilst bicycle ownership has halved since 1995 But only 1 in 5 own a computer 18

19 AGENDA Aging US population creates headwinds for economic growth Impact on auto markets New growth opportunities Audience Survey Question ANSWER THE QUESTION ON BLUE SCREEN IN ONE MOMENT What new technology areas do you think are most exciting? virtual reality wearable computing internet of things 3D printing quantum computing 38 19

20 BEYOND THE HYPE OF BIG DATA, NEW BUSINESSES ARE BEING CREATED TO MEET FUTURE NEEDS NEW BUSINESS MODELS ARE ENTERING AEROSPACE INDUSTRY AS ADDITIVE PRINTING ARRIVES $3.4bn/yr savings in maintenance, repair and operations PwC 20

21 3D PRINTING MOVES FROM PACKAGING TO SKIN CARE US ARMY DEVELOPS NEW SKIN FOR FRONT-LINE BURNS TREATMENT The scars that Soldiers develop as a result of burns constrict movement and disfigure them permanently. The initiative to restore high-quality skin that is elastic and complete with sweat glands, appropriate pigmentation and hair follicles is incredibly important Dr Michael Romanco, US Army P&G OFFERS $44M GRANT FOR 3D COSMETICS TESTING We want to look at the possibilities of bioprinting. It s definitely a very strong emerging area. We have a number of different in vitro skin models we re working on because we are very involved in beauty care. If companies are doing innovation and interested in new tools then bioprinting should very much be on their horizon. Prof Elena Lurie-Luke, head of P&G s Global Life Sciences Open Innovation PROCESS INTENSIFICATION OFFERS OPPORTUNITY TO MOVE FROM BATCH TO CONTINUOUS MANUFACTURING TIME FOR A CHANGE AFTER 500 YEARS Process Intensification reduces plant size and increases flexibility Manufacturing can take place locally, rather than centrally Major increases can be achieved in process efficiency Capex and Opex costs can be dramatically reduced Quality is improved whilst waste is reduced Operational simplicity benefits safety 21

22 SAFER, GREENER, FASTER AND CHEAPER Companies need to reduce manufacturing costs, and increase their flexibility to respond to changing market needs NiTech s continuous crystallisers and reactors are designed for this challenge They are portable, modular and easily scalable Costs are reduced whilst product quality and safety are improved Energy usage and waste are also reduced, improving sustainability They can handle a wide range of chemistries and be used across industry sectors Several major companies are already using the technology to improve their competitive position in today s fast-changing markets THE MIDDLE GROUND IS DISAPPEARING AS THE BOOMER SUPERCYCLE ENDS HIGH P E R V C A E L I U V E E D LOW HIGH NICHE AFFORDABILITY, LIFETIME COST, NOW KEY TO SUCCESS MIDDLE GROUND OF AFFORDABLE LUXURY DISAPPEARING D E L I V E R E D C O S T MASS-MARKET LOW 22

23 COMPANIES THAT FAIL TO ADAPT WILL GO OUT OF BUSINESS THE TRANSITION TO THE NEW NORMAL WILL CREATE WINNERS & LOSERS Losers in the transition to the New Normal believe: Stimulus programmes will return markets to the way they used to be. China s demand will be the saviour of the global industry The rise in oil prices meant end-user demand was robust. Companies now caught in the middle, neither low-cost or selling a solution, will somehow regain pricing power. 45 The megatrends Food Water Health Shelter Mobility Winners in the transition to the New Normal believe: The future will be different from the past, with new challenges and opportunities. Companies need to realign their offerings with key demographic drivers eg the ageing BabyBoomers and greater domestic consumption in emerging economies Profitable growth will come from providing sustainable solutions that meet real needs (not just wants ) in these new markets Disclaimer Strictly Private & Confidential This Research Note has been prepared by IeC for general circulation at the ACS webinar on 4 June The information contained in this Research Note may be retained. It has not been prepared for the benefit of any particular company or client and may not be relied upon by any company or client or other third party. IeC do not give investment advice and are not regulated under the UK Financial Services Act. If, notwithstanding the foregoing, this Research Note is relied upon by any person, IeC does not accept, and disclaims, all liability for loss and damage suffered as a result. International echem All rights reserved 23

24 Chemistry & the Economy: 2015 Mid-Year Review Mark Jones Executive External Strategy and Communications Fellow, Dow Chemical Paul Hodges Chairman, International echem Recordings will be available to ACS members after one week Contact ACS Webinars at 47 Upcoming ACS Webinars Thursday, June 11, 2015 Science Communication in the Digital Media Age Nathan Allen, Moderator of /r/science, Reddit Chris McCarthy, Social Media Manager, American Chemical Society Thursday, June 18, 2015 Advanced Pyrotechnics 2: Ignition, Sensitivity, and Analysis of Energetic Materials Chris Mocella, U.S. Customs and Border Protection Laboratories Darren Griffin, University of Kent Contact ACS Webinars at 48 24

25 Chemistry & the Economy: 2015 Mid-Year Review Mark Jones Executive External Strategy and Communications Fellow, Dow Chemical Paul Hodges Chairman, International echem Recordings will be available to ACS members after one week Contact ACS Webinars at 49 How has ACS Webinars benefited you? ACS Webinars allow me to gain knowledge from respected people in the field, which is fantastic. I also like that a good portion of the session is Q&A! Patience Wright, Chemistry Graduate Student, University of Georgia Be a featured fan on an upcoming webinar! Write to acswebinars@acs.org 50 25

26 youtube.com/acswebinars 51 Benefits of ACS Membership Chemical & Engineering News (C&EN) The preeminent weekly news source. NEW! Free Access to ACS Presentations on Demand ACS Member only access to over 1,000 presentation recordings from recent ACS meetings and select events. NEW! ACS Career Navigator Your source for leadership development, professional education, career services, and much more

27 ACS Webinars does not endorse any products or services. The views expressed in this presentation are those of the presenter and do not necessarily reflect the views or policies of the American Chemical Society. Contact ACS Webinars at 53 Upcoming ACS Webinars Thursday, June 11, 2015 Science Communication in the Digital Media Age Nathan Allen, Moderator of /r/science, Reddit Chris McCarthy, Social Media Manager, American Chemical Society Thursday, June 18, 2015 Advanced Pyrotechnics 2: Ignition, Sensitivity, and Analysis of Energetic Materials Chris Mocella, U.S. Customs and Border Protection Laboratories Darren Griffin, University of Kent Contact ACS Webinars at 54 27