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Torben Robertson

10 mins

The Chemicals Industry and Vehicle Programs

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Introduction

The chemicals industry in the United States stands as a cornerstone of the nation’s economy, contributing significantly to various sectors such as manufacturing, agriculture, healthcare, and technology. As of 2024, it remains a vital and diverse sector, encompassing the production of basic and specialty chemicals, agricultural products, and pharmaceuticals. 

The industry’s intricacies extend beyond the manufacturing processes, influencing how its workforce operates in the field, particularly concerning the use of single occupancy vehicles. The vehicle programs chosen for employees in roles such as sales representatives, field service technicians, chemists, inspectors, researchers, and delivery drivers play a pivotal role in ensuring operational efficiency and cost-effectiveness. 

Major multinational players like Dow, DuPont, BASF, and ExxonMobil navigate the challenges and opportunities within the industry, emphasizing the importance of choosing the right vehicle programs. Raw materials, regulatory oversight, innovation, sustainability, and global trade characterize the industry’s landscape. In the face of challenges, including the impact of the COVID-19 pandemic, the U.S. chemicals sector continues to evolve, emphasizing sustainability, technological advancements, and regulatory adaptations. Amid opportunities and challenges, the industry remains at the forefront of innovation and growth.

Read a case study about how a chemical company saved $800,000 by transitioning to a vehicle reimbursement program.

The chemicals industry in the USA in 2024

The chemicals industry in the United States is a crucial and diverse sector that plays a significant role in the country’s economy. Encompassing the production of a wide range of chemicals, including basic chemicals, specialty chemicals, agricultural chemicals, and pharmaceuticals, it stands as one of the largest industries globally, wielding substantial influence on the national GDP. Acting as a foundation for many downstream industries, it contributes to sectors such as manufacturing, agriculture, healthcare, and technology.[1]

Within the U.S. chemicals industry, distinct segments play pivotal roles. Basic chemicals, involving the production of bulk chemicals like petrochemicals, industrial gasses, and fertilizers, form a fundamental component. Additionally, specialty chemicals, encompassing high-value chemicals tailored for specific applications such as agrochemicals, adhesives, and specialty polymers, contribute to the industry’s diversity. Moreover, the United States is a major player in the global pharmaceutical industry, producing a significant share of the world’s prescription drugs.[2]

Major multinational companies, including Dow, DuPont, BASF, and ExxonMobil, serve as key players in the U.S. chemicals industry. However, the industry is also characterized by the presence of numerous smaller and specialized companies, adding to its dynamic and competitive landscape.[3]

Raw materials are a critical aspect of chemical production, with the industry heavily relying on feedstocks like natural gas, crude oil, and various minerals. Changes in the prices and availability of these raw materials can significantly impact the profitability of chemical companies.

Given the potential environmental and safety risks associated with chemical production, the industry is subject to extensive regulation. Regulatory bodies such as the Environmental Protection Agency (EPA) play a crucial role in ensuring safety, environmental protection, and product quality. Innovation and research are also integral to the U.S. chemicals industry, with significant investments in research and development to stay competitive and address evolving market needs. Notably, there is a growing emphasis on green chemistry and sustainable practices within the industry.[4]

Actively participating in global trade, the U.S. chemicals industry engages in both exports and imports. Nevertheless, it faces stiff competition from other major chemical-producing regions like Europe and Asia, reflecting the global nature of the industry.

Challenges abound in the industry, including fluctuating raw material prices, global economic conditions, and the need to adapt to evolving environmental and regulatory standards. However, amidst these challenges, there is a concurrent focus on sustainability, with efforts to reduce environmental impact, improve energy efficiency, and develop eco-friendly products.

The COVID-19 pandemic has not spared the chemicals sector, causing disruptions such as supply chain challenges and changes in demand for certain chemicals. Despite these challenges, the U.S. chemicals industry continues to evolve, driven by technological advancements, market dynamics, and regulatory changes. As with any industrial sector, it faces both opportunities and challenges in the quest for sustainable growth and innovation.[5]

Driving single-occupancy vehicles in the chemicals industry

In the chemicals industry, various employees use single occupancy vehicles for transportation, particularly when the nature of the work involves travel between different locations, client sites, and fieldwork. 

Here are some examples of jobs in the chemicals industry where single occupancy vehicles are commonly used:

  • Sales Representatives:
    • Sales representatives in the chemicals industry often need to travel to meet with clients, visit manufacturing facilities, and attend industry events. This role may involve significant time on the road to build and maintain relationships with customers.
    • Sales representatives often have company cars or car allowances that allow them to use regular, non-specialty vehicles to attend client meetings.
  • Field Service Technicians (FSTs):
    • Technicians responsible for installing, maintaining, or repairing chemical equipment or machinery may need to travel to different job sites. This could involve servicing equipment at client locations, manufacturing plants, or research facilities.
    • Depending on the nature of their work, FSTs would either have a specialty vehicle or a normal car. If they have a specialty vehicle, they would normally be on a fleet program, where the company owns or leases vehicles for their employees; whereas they might also have a personal vehicle, for which their company reimburses them in a mileage reimbursement program.
    • Other roles that have similar vehicle ops to field service technicians include the following. Depending on the nature of their work — especially as concerns whether they are transporting dangerous or sensitive goods, or very heavy or large equipment (this would require a specialty fleet vehicle) — they may have a car allowance, a vehicle reimbursement program, or a fleet vehicle.
      • Field Chemists:
        • Field chemists may work on-site at client facilities, conducting tests, analyzing samples, and providing technical support. They might need to travel to various locations to perform their duties.
      • Quality Control Inspectors:
        • Inspectors responsible for quality control may need to visit manufacturing facilities to ensure that chemical products meet specified standards. This may involve periodic on-site inspections.
      • Field Research Scientists:
        • Scientists conducting field research related to the development or testing of new chemical products may need to travel to various locations for data collection and experimentation.
  • Delivery Drivers:
    • Drivers involved in transporting chemicals from manufacturing facilities to distribution centers or directly to customers may use single occupancy vehicles. This is common in the transportation and logistics aspect of the chemicals industry.
    • Delivery drivers would normally have a specialty vehicle, like a heavy duty truck, that the company owns or leases within a fleet operation.
    • Fleet vehicles, which are owned or leased by the company itself, may be less sustainable than employee-provided vehicles, since the latter are share resources between employer and employee.

How to choose a vehicle program for your employees

Choosing the right vehicle program for your chemicals company is a critical decision that involves considering the specific needs of your workforce and the nature of their roles. Among the various job roles in the chemicals industry, many (including those listed above) commonly involve the use of single occupancy vehicles, and selecting the appropriate vehicle program is crucial for both cost efficiency and operational effectiveness. 

Sales representatives, frequently on the road for client meetings and industry events, are better suited for vehicle reimbursement programs, specifically Fixed and Variable Rate (FAVR) programs, instead of fleets of company cars or car allowances. Car allowances can be less tax and cost efficient as they are taxable and may not fully cover the variable costs associated with frequent travel. Fleet programs, while providing company-owned vehicles, can be expensive and logistically risky, as well as presenting potential sustainability downsides.

In contrast, FAVR programs offer a more tailored and efficient solution for sales reps. With FAVR, representatives receive a fixed monthly allowance to cover fixed vehicle costs like insurance and depreciation, coupled with a variable rate to address variable costs such as fuel and maintenance. This approach ensures that sales reps are adequately reimbursed for their actual expenses while maintaining tax efficiency for both the employee and the company. FAVR programs provide the flexibility and fair compensation that aligns with the unique needs of sales representatives, making it a preferred option over traditional fleet programs and car allowances.

Field Service Technicians (FSTs), responsible for the installation, maintenance, or repair of chemical equipment, may require specialized vehicles depending on the nature of their work. For those using specialty vehicles, a fleet program where the company owns or leases vehicles is a viable option. Alternatively, FSTs with personal vehicles can be enrolled in a mileage reimbursement program, offering a tax-efficient solution for both parties.

Similar considerations apply to roles such as field chemists, quality control inspectors, and field research scientists, who may need to travel for on-site work. Depending on the nature of their tasks, they might require specialty vehicles for transporting sensitive goods or large equipment. Offering car allowances, mileage reimbursement, or fleet vehicles should be determined based on the specific needs and risks associated with their transportation requirements.

In the case of delivery drivers involved in transporting chemicals, the use of specialty vehicles, such as heavy-duty trucks, is common. Fleet programs are often necessary for this category to ensure compliance with safety regulations and the specialized nature of the vehicles required.

While fleet programs may be the most expensive option, they become essential when specialty vehicles are necessary for specific roles. Balancing the tax and cost efficiency of mileage reimbursement for employee-provided vehicles and the practicality of fleet programs based on job requirements is essential for making informed decisions that align with the needs of your chemicals company. Ultimately, the right vehicle program should optimize both operational efficiency and financial considerations while meeting the unique demands of each job role in the industry.

Conclusion

Navigating the vast landscape of the chemicals industry, especially in terms of employee transportation, requires a strategic approach to vehicle programs. Jobs demanding single occupancy vehicles, such as those of sales representatives, field service technicians, chemists, inspectors, researchers, and delivery drivers, present unique challenges and opportunities. Choosing the right vehicle program is paramount for optimizing cost efficiency and operational effectiveness.

While fleet programs and car allowances may have their place, Cardata prefers vehicle reimbursement programs, specifically Fixed and Variable Rate (FAVR) programs, for our customers in chemicals. Tailored to meet the diverse needs of employees, FAVR programs offer a fair and flexible solution, ensuring adequate reimbursement while maintaining tax efficiency. As the chemicals industry moves forward, aligning vehicle programs with the distinct requirements of each job role becomes essential for sustainable growth and innovation.

Sources

[1] Statista

[2] CISA.gov

[3] Zippia

[4] American Chemistry Council

[5] Ibid.

Disclaimer: Nothing in this blog post is legal, accounting, or insurance advice. Consult your lawyer, accountant, or insurance agent, and do not rely on the information contained herein for any business or personal financial or legal decision-making. While we strive to be as reliable as possible, we are neither lawyers nor accountants nor agents. For several citations of IRS publications on which we base our blog content ideas, please always consult this article: https://www.cardata.co/blog/IRS-rules-for-mileage-reimbursements. For Cardata’s terms of service, go here: https://www.cardata.co/terms.

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