HELSINKI CHEMICALS FORUM

Framework Conditions for a Sustainable and

Competitive Chemical Industry in Europe

Hubert Mandery CeficHelsinki, 21 May 2010

COMPETITIVENESS – FINANCIAL CONSTRAINTS

“ Chemistry will undoubtedly remain the central science in the 21st century. After bringing to mankind the fundamental discoveries which have changed our daily life for the last two centuries, it will now be at the heart of a new scientific era, where many sciences will merge and cross-fertilize for the benefit of innovation. Thus, chemical creativity and knowledge will be needed everywhere.”

Prof. Jean-Marie Lehn – Nobel Laureate 1987(Chemistry for Life 1997)

Chemistry – The Central Science in the 21st Century

1

The European Chemical Industry: Still a Successful Global Player

• Contributes to 29% of the World’s chemical sales

• Represents 29,000 companies (96% SMEs)

• Employs 1.2 million people

• Generates € 455.8 billion of revenues

• Creates a trade surplus of € 42.5 billion

Source: Cefic; 2009 figures; excluding pharmaceuticals

PL 2.3%SE 1.4%AT 1.3%FL 1.3%CZ 1.1%HU 0.8%PT 0.6%RO 0.6%

Others 2.3%

2

EU Chemical industry losing share in a fast growing global market

11,4%

17,3%

7,0%

20,9%

29,0%

14.4%

2008: € 1950 billion

34%

11%

5%11%

29%

10%

EU27

Asia exclud. China & Japan

China

Japan

NAFTA

Other Regions

1998: € 1095 billion

Source: Cefic Chemdata International3

Geographic Breakdown of World Chemical Sales - 1998 vs. 2008

High Level Group on the Competitiveness of the European Chemical Industry (2009)

Recommendations on

Innovation and Research 10

Regulation 3

Human Resources 3

Energy & Feedstock 5

Climate Change Policy 5

Logistics 5

International Competitiveness & Trade 8

394

NAFTA20.5

32.2

LAC**3.1

7.0

Africa2.4

8.0 Rest of the World

1.4

5.4

Rest of Europe

29.5

19.5

Asia*29.6

22.5

Japan5.3

5.1

Source: Eurostat and Cefic

* excl. Japan; **Latin America and the Caribbean

EU Chemicals Trade Flows in € Billion (2009)

5

EU Chemicals Trade Balance with other Countries/Regions

EU has a trade surplus but its positive

competitive position weakened

EU has a trade surplus and its healthy competitive position improved

EU has a trade deficit and its competitive position weakened

EU has a trade deficit but its weak competitive position improved

USA Japan Brazil Russia India ChinaSouth Korea

Middle East Asia

Rest of Asia

Basic Inorganics                    

Petrochemicals                    

Polymers

Specialty Chemicals

Consumer Chemicals

Chemicals (sum)

(2000-2004) vs. (2005-2009)6

Trade and Competitiveness: Open Markets

and Fair Competition

• No weakening of the current European Trade Defence Instruments

• EU to pursue Free Trade Agreements (Korea, India, etc. )

• Address double pricing

• Strive for more global harmonisation of customs procedures

• Level playing field for access to raw materials

7

Smart Regulation: Still a Dream

• Plethora of chemical legislation: about 1000 EU legislative texts in 15 years

• Inconsistencies: lack of coordination (Toys Directive, RoH’s, Construction Materials, etc.)

• Uneven enforcement in Member States: IPPC

• No or weak enforcement: imported pharmaceutical ingredients

• REACH: publishing of notified research substances

• € 1 bn burnt and only few results: Biocides Directive

8

REACH: Unique, Complex and Ambitious

• Industry is highly committed to make REACH work

• EU substance legislations must be consistent with REACH (RoHS,

Biocides, ...)

• Uniform enforcement within EU wanted

• Regulatory convergence ? Not on the ambitious level of REACH

• Conceptional flaws to be remedied (SIEF concept …)

• REACH: a barrier to trade?

• GPS (Global Product Strategy) – industry’s contributions to

regulatory convergence and to the SAICM goals

9

Climate Change – a Global Challenge requiring Global Solutions

• Unique European ETS : unilateral burden for EU manufacturers

• Chemical Sectoral Agreement: no partners outside EU found

• Border Tax: risk of trade war

• Premature and overly ambitious: -30% carbon reduction goal by 2020

• Action on climate change is a huge business opportunity, but Europe must get it right; Guiding principle: resource efficiency

10

Innovation Essentials

• Educating and attracting talent: meet new skills demands

• Topical innovation networks on key societal challenges

• New innovation policies and instruments

• Cooperation throughout the value chains and across sectors and borders

• Intellectual property protection & fight against counterfeiting

• Confidence and trust from consumers, customers and investors

• Smart regulation

11

Logistics Recommendations

• Further develop local cluster platforms

• Foster wider use of intermodal transport

• Revitalise railway freight transport

• Address the massive congestion of the road network

• Close gaps in the olefin pipeline network

12

Conclusions: Quality Cooperation between Industry and Politics needed

• Innovation is key for more growth with less resource consumption

• Smart regulation takes the competitiveness of

industry into account

• Level playing field for sourcing energy and feedstock

• Open markets with fair competition13