Sharp drop in output prompts Cefic to appeal to the EU

The European Chemical Industry Council (Cefic) has become so alarmed by the sharp deterioration in chemicals output that it has urged the European Union and its member states to take quick action to help the sector. 

The trade association of European chemical companies paints a bleak picture. It says the drop in the last quarter of 2008 was more severe than anticipated, and the expectations for the upcoming months are "even more negative". It predicts that there will be no real signs of improvement before the third or even fourth quarter of this year. 

In a letter to the European Commission, Cefic has called for measures to give companies better access to financing through initiatives such as accelerated repayment of VAT, tax credits for R&D and government provision of credit insurance. It also suggests that invoice payments to small and medium enterprises (SMEs) should be guaranteed to avoid short-term cash-flow problems. 

Cefic wants the removal of EU policies that distort trade by preventing the chemical industry access to raw materials at world prices. Sugar, for example, is subject to import tariffs to protect EU farmers. 

Investment projects in infrastructure should also be brought forward, according to Cefic. It cites a number of schemes that it believes would improve the competitiveness of the chemical industry, including the closing of missing links in the European Olefins pipeline network, energy feedstock pipelines, intermodal terminal capacity in ports and transalpine rail connections. 

With the recession presenting an opportunity to speed up the shift to a more sustainable economy, Cefic wants greater financial support for new environmental technologies and new production processes. 

The group calls for more backing for housing insulation, ’green’ cars and renewable energy projects, all of which the chemical industry can play a major role in. 

Financial support in the region of €40-60 million (£37-55 million) to demonstrate and promote new technologies is also on the organisation’s wish list. Money is particularly needed for multi-technology schemes involving several industry sectors, it says. 

Some of the Cefic’s proposals were recently recommended in a February report issued by the EU High Level Group on the competitiveness of the chemical industry, which concluded that the sector could be a major contributor to reducing carbon dioxide emissions. 

’The High Level Groups’ recommendations were measures to be carried out over the next 5-10 years or for the medium to long-term,’ explains Rene van Sloten, Cefic’s executive director for industrial policy. ’Because of the current economic crisis we believe that the implementation of some of them can be speeded up. When your house is on fire you’ve got to take quick action. The sooner these steps we suggest are taken the faster their benefits will be reaped.’ 

Sean Milmo