Startup Guide for Chemical Manufacturing Business

Summary: Starting a chemical manufacturing business is a big investment. It involves large and capital-intensive construction, the purchase of expensive equipment, and the hiring of different kinds of professionals. What does one need to consider when starting up so that he gets it right from the beginning?

Read from our basic guide.

Chemical manufacturing is a capital-intensive business and typically, a large-scale one. Building a chemical plant involves the construction of an entire facility housing not only the processing unit but also the offices that take care of the administrative and management functions of the entire company. For operating one needs to purchase expensive equipment and vehicles, hire people from utility personnel to machine operators, accountants, engineers and managers. Finally coordinating functions to ensure a continuous and smooth flow of the processes and meeting environmental standards.

Factors to Consider When Starting a Chemical Manufacturing Plant

Before a chemical facility is built, intensive studies are done to come up with cost and profit projections, determine plant design feasibility, test marketability and establish the viability of the project. Some of the basic factors to consider include:

• Market – for a plant that would manufacture intermediate product, will there be other industries that will need such raw materials for their own manufacture? If the plant plans to manufacture consumer goods like soaps, toothpastes, bleach, is the market enough to support such business?
• Resources – where would the raw material come from? If the material will be sourced locally, can local resources sufficiently provide for the capacity of the operation? Where would the manpower come from? Is there enough skills among the locals for all the jobs available, or would the company hire people from other places?
• Location – how is the proposed site located in relation to the source of the raw materials and to the intended market? Will it conveniently and cost-effectively receive raw material shipment and dispatch products for distribution? Does the site conform to the land use classification of the place and meet all other regulatory requirements?
• Waste disposal – how will manufacturing waste be disposed? Is the proposed location suited for the waste disposal design of the plant?
• Viability – considering all these factors, can the project be operated profitably?

Typically, chemical manufacturing plants are situated near the source of raw materials and near end users of their products. That is why it is usual for them to be near ports and be located near other industries – industries to which they sell the substances they produce.

Chemical manufacturing has certain adverse effects to the air, soil and water, which in turn could negatively affect people, plants and animals. As such, it is heavily regulated by the government. A chemical plant’s location must meet zoning regulations and its operation must conform to strict standards of environmental safety. It is subject to periodic tests and is penalized for non-conformance.