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Big-name chemical firms join business e-commerce trend

A group of big chemical and petroleum companies are teaming to form an electronic marketplace.

A group of big chemical and petroleum companies today said they are teaming to form an electronic marketplace, becoming the latest industrial firms to join the business e-commerce trend.

Expected to be in operation by the third quarter, the new marketplace, dubbed Envera, is designed to connect and automate chemical and petroleum process companies, as well as handle spot auctions and purchases, the companies said.

Some of the big-name backers of the venture include BF Goodrich, Eastman Chemical, Sunoco Chemicals, Castrol, and Rohm and Hass.

Several members of the group will join the new marketplace while maintaining their own e-business exchanges for their suppliers and partners. For instance, last week Eastman Chemical announced it was partnering with exchange broker VerticalNet to build an online marketplace for the paint and coating industry.

The consortium follows similar moves in the auto industry where car manufacturers have teamed to build unified marketplaces for their suppliers and common business partners. Last month, General Motors and Ford Motor announced plans to merge their Internet-based supply exchanges.

"We are going to see more competitors coming together like this, because they don't want to lose control of the Industry," said Erica Rugullies, an analyst with Giga Information Group.

These deals follow a laundry list of similar efforts by traditional and Internet companies rushing to jump on the business-to-business bandwagon.

Most research firms have pegged the business-to-business market between $2.7 trillion and $7.3 trillion by 2004, up from about $131 billion in 1999. In comparison, Forrester Research projects business-to-consumer spending will reach $184.5 billion in 2004, up from $20.3 billion last year.

The rapid growth of the market has raised concerns about the potential need for government regulation, an issue that could lead to bitter disputes over control of the multibillion-dollar industry. That said, the market shows no sign of slowing.

Industry analysts and at least one member of Congress are debating whether the Federal Trade Commission should establish some form of oversight for marketplaces, such as the recently announced agreement among Ford, General Motors and DaimlerChrysler. The venture will create a single automotive-parts exchange for their thousands of suppliers and dealers.

The FTC is currently reviewing some of the bigger marketplace deals and is expected to issue comment by the year's end.

The Envera marketplace is still in its preliminary stages. It is based on XML and the consortium said it is in discussions with leading business-to-business technology providers including IBM, Oracle, XML Solutions, and WebMethods to provide the software and services needed to get the project underway.