Willich – November 06, 2026 -- Consultancy Santiago Advisors is calling for a fundamental restructuring of the German chemical industry. Partners Dr. Juan Rigall and Dr. Hermann Schiegg say high energy and labor costs, regulatory demands and structural shifts in global markets threaten Germany's competitiveness as an industrial location. They want action from both companies and policymakers.
China's strength and US market closure reshape competitive conditions
The consultants name three priorities: realigning global site strategies, accelerating innovation and deploying digital technologies. China's strong position in global chemicals and growing protectionism in the US market are changing the competitive landscape. Customers, meanwhile, show only limited willingness to pay the extra cost of more sustainable raw materials and products.
Schiegg calls for industrial policy with clear priorities and a longer horizon
Schiegg argues Germany will never be the cheapest chemical location and must therefore compete on innovation. He points to China, which built competitive advantages through long-term priorities. Europe, he says, should strengthen key value chains and ease investment through simpler, faster and more predictable approval and administrative procedures. He sees a role for joint industry-research innovation campuses and publicly funded pilot plants to move new developments into industrial use faster.
Rigall tells companies to link site, portfolio and investment decisions
Rigall says companies must tie location, portfolio and investment choices more closely together and think less in German terms. The core questions are where to produce, where to invest and innovate, and what role each site plays in the global network. More efficient production, optimized procurement and logistics, and leaner organizations could add cost savings and responsiveness. The consultants see innovation capability as the biggest long-term lever, because European chemical firms have a strong research base but must convert it into commercial results faster.
Digital twin simulates thousands of scenarios for a Santiago client
Santiago Advisors developed a digital twin with a client that links material flows, production capacity, inventories and demand. It can simulate thousands of scenarios and automatically assess options for action. Schiegg says this cuts manual planning effort and makes risks and alternatives more transparent in volatile networks. The firm also cites computational innovation methods, which can shorten materials development times and improve the accuracy of property predictions.
Santiago Advisors' CHEMonitor study, titled "Courage to Take Risks – Deciding Offensively Under Uncertainty," examines how companies assess these challenges. Results are due in November 2026.