BUSINESS
But there the similarity ends. The primary goal of Du Pont's Environmental Remediation Services is to service internal requirements. Dow" s A WD Technologies' goal is to be a leader in the commercial market. Ferrier cites hazardous waste management as one area in which new technology can hurt traditional management companies. Primarily, it will reduce waste volumes. It also will offer alternative methods of treatment, and it will enable companies that generate the waste to treat it themselves. Hugh Holman, an analyst at Alex Brown & Sons, also sees the nineties as a decade in which technology will significantly change the hazardous waste industry. He sees a shift under way from physical waste management to chemical approaches. By 2000, Holman believes that the hazardous waste management indus-
try will more closely resemble the chemical industry as it is structured today. The hazardous waste segment won't be the only portion of the environmental industry touched by change. Growth for the entire industry will pick up after the recession of the past two years. But double-digit growth will be a thing of the past. Coming out of the recession, says Ferrier, the environmental industry will be a lagging indicator. Ferrier's trend analysis of all 12 environmental industry segments indicates that growth will decelerate. Inevitably, he says, the industry "as we know it today" will shrink. Eventually, the focus will shift from cleaning up old environmental problems to preventing or reducing new ones. Ferrier's warning to environmental companies: Lead the shift or be absorbed by the industries you now serve. [J
CEFIC weighs European industry's woes Halfway through 1993, the picture for the Western European chemical industry remains clear—and gloomy: 1992 was not a good year, and the prospects for 1993 remain poor. That was one of the primary messages at the recent annual meeting in London of CEFIC, the European Chemical Industry Council. Another message: The only way for the industry to come out of its slump is to improve its international competitiveness by a variety of what will be difficult and complex measures. The geography covered by CEHC was widened at its meeting. CEFIC has long been a pan-European organization, with member federations and companies from both European Community and non-EC countries. Central Europe is rapidly becoming part of its area, as well. This year, CEFIC accepted as associate members the chemical industry associations of the Czech and Slovak republics, to be effective as soon as the two countries have become members of the Council of Europe later this summer. The move follows granting of associate memberships last year to Hungary, Poland, and Turkey. Each of the five new members have pledged to support the Responsible Care program—part of CEFIC's requirements—and CEFIC guidelines for protection of the environment. According to the forecast released at its annual meeting, CEFIC predicts that in 1993, chemicals output is set to fall by 16
JUNE 28, 1993 C&EN
Outlook dim for European chemical industry in 1993 change from previous year
Output
Capital spending
Employment
Source: European Chemical Industry Council
at least 0.5%, compared with expected growth of nearly 5% in the U.S. Employment in the industry is expected to drop in 1993 on top of declines in 1992. That results in part from Western European manufacturing showing a decline of 1.2% in 1992, and another decline of 2.5% forecast for 1993. Major customer industries for chemicals, such as automobiles, agriculture, textiles, and building and construction, are suffering from falling demand. Although production in the Western European chemical industry was up in 1992 compared with 1991, CEHC notes
that producer prices have edged down, especially during the second half of 1992, because of slack demand and overcapacity, and because of the currency turmoil in Europe in September. The result is that sales in the industry have been flat, accompanied by sharp falls in profits. As Jacques Puéchal, chief executive officier of Elf Atochem and president of CEFIC, pointed out, combined sales for the 10 largest European chemical companies decreased 5% in 1992, and combined profits dropped about 40%. According to Puéchal, for the European chemical industry, the challenge can be summarized in one word: competitiveness. "We have to remain competitive if we want to maintain the rank of our industry on the world scene—the European chemical industry ranks number one in terms of sales, investments, and R&D spending; maintain its place as a major industrial sector in the European economy—it currently represents 3% of West Europe's gross domestic product and about 15% of manufacturing investment; and maintain its role in the development of Central and East European countries and their transition to a market economy." Some of the ways the industry can maintain its competitiveness on the world scene, he suggested, are through actions its companies alone can take. For example, high on all industry analysts' lists of needed actions is reorganization, brought about by cooperation between companies. "There are vast possibilities for new deals, new restructuring, new business swaps, new joint ventures," he said. There are also other ways in which the industry can act. For example, it can improve and increase involvement with its customers for life-cycle product care. It can continue to support the voluntary initiatives already begun, including those of Responsible Care, programs in energy efficiency and chemicals transport, and recycling plastic wastes. "Voluntary approaches are good alternatives or complements to regulations. They must be recognized as such and encouraged by authorities, both at national and European levels." But there are also areas in which the industry is dependent upon overall policy and actions of national and EC governments. For example, Puéchal cited further completion of the single-market Europe to give clear priorities and a long-term view, as well as to stimulate innovation. Also
needed, he said, is a "more adapted trade policy" to promote international trade. This would benefit the European chemical industry, which is a net exporter. "We need an open world trade system based on the application of GATT [General Agreement on Tariffs & Trade] principles," he argued; "new forms of cooperation between Western and Central Europe; and strong but positive trade legislation that guarantees to our industry fair conditions of competition." And perhaps most crucially, the industry is dependent upon government policies to develop "a positive approach to environmental problems. This implies a different approach to environmental policy," including better integration of industry in the regulatory process, more reliance on science-based regulations, and use of methods such as cost-benefit and life-cycle analyses of products. "It excludes national unilateral decisions," he emphasized, "and nonscientifically based regulations," such as some eco-taxes, including a carbon dioxide tax or energy tax, now being proposed by some governmental authorities. His call for attention to competitiveness was echoed at the meeting by Sir Denys Henderson, chairman of ICI. "The chemical industry has become infinitely more competitive in recent years. If the European chemical industry is to survive and prosper over the coming decades, we cannot fight on every front—we simply do not have the resources. We must concentrate on those markets and those products where we can be profitable and add value. These factors will inevitably force us to rationalize sooner or later, and it is surely preferable to take action now rather than to have it forced upon us by dissatisfied shareholders." The Commission of the European Community, Henderson suggested, "should give the highest priority now to introducing emergency measures right across Europe to stimulate economic recovery," and the single-market Europe— whose impact has been weakened by political arguments—should be given priority over efforts to achieve political and monetary union. Moreover, he added, no measures should be introduced by the commission that would adversely affect European competitiveness with the rest of the world. "A unilaterally imposed carbon tax, for example, would be particularly unhelpful at this time." Patricia Layman
Effort aims at salvaging European petrochemicals Limited access to indigenous feedstocks, energy costs that are more than twice those on the U.S. Gulf Coast, dependence on high-cost naphtha feedstock, declining international competitiveness, structural overcapacity—these are just a few of the problems facing the Western European petrochemicals industry. And they have led some of the industry's severest critics to question whether it is fit to survive another 10 or 15 years. Indeed, the industry is doing some soul-searching in tackling that question. The Brussels-based Association of Petrochemical Producers in Europe (APPE) has embarked on a multistage effort arguing the case for continuation of the industry in Europe. The effort involves a recently completed independent analysis of the global market, and the Western European industry's part in that market. It also involves a consideration of actions the industry is taking now and those that outside organizations, such as the
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European Community (EC) and various national governments, can take in terms of infrastructure and taxation, for example, to ensure the continuation of the industry into the next century. APPE's 31 member companies are now digesting the conclusions of the analysis, "Adapting to the Global Market/' presented at a meeting in late May in Berlin. The next stage for APPE will be to present its conclusions and recommendations for supporting actions to various governmental organizations such as the Commission of the European Community. A draft of that presentation is expected to be completed by November for APPE's annual meeting. The need for APPE's action is rooted in producers' lack of earnings in the past two years, following two years of profits that rose to giddy heights. The immediate problem is serious overcapacity in petrochemicals. But as pointed out by Tony Church, chemicals analyst at the securities
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