French chem producers optimistic on '03; seek fiscal change

18 March 2003 17:38  [Source: ICIS news]

PARIS (CNI)--A sense of cautious optimism has pushed the French chemicals industry to stick with its earlier forecast of 2.9% higher sales volumes in 2003 despite seeing growth predictions downgraded during the previous year.

According to forecasts by French chemicals trade association Union des Industries Chimiques (UIC), an upturn in the sector's fortunes is due by mid-year. UIC president Bernard Riviere said that although expected volume growth was under the EU (European Union) chemicals industry average of 3%, prices were expected to rise by 1% this year against annual growth of 0.7% in 2002.

Last year, volume growth of France's chemical industry - including pharmaceuticals - was only 1.1% on sales up 0.4% to Euro85.4bn (about $92bn). Excluding pharmaceuticals, production volumes were down nearly 1% due to weak economies, reduced demand and decreased output.

He added that globalisation would sustain trade and help offset any short-term setbacks to the global economy from the Iraq war, leading to expected growth of about 6% this year in French chemicals exports to Euro55bn from the weak rise last year of 2.5% to Euro52bn.

Investment in the industry in 2003 is expected to rise by 7% to around Euro3.4bn after a slump of 12% to Euro3.2bn in the previous year. Expenditure on research and development (R&D) was expected to be bolstered by government credits and tax incentives, he added. The R&D spend has slid in recent years with an increasing share of the total investment going to safety measures.

However, despite the UIC's modest optimism on the industry's economic prospects, Riviere sounded renewed notes of concern over competitive disadvantage being structurally introduced in the medium-term because of increased regulatory burdens.

The UIC is advocating the "reasonable and pragmatic" implementation of the EU's white paper chemicals policy proposals to prevent relocations outside the EU, the disappearance of many small and medium companies and a technological recession that would also affect the downstream industries.

Riviere said that while the UIC supported the European Commission's (EC) white paper proposals on chemical substances as "reasonable and pragmatic", it was worried that the costs of its implementation could push business out of the EU. He added that small and medium-sized companies would come under pressure, potentially bringing about a technological recession that would also affect downstream industries. The UIC has commissioned a consultant, along with the government's industry and environment ministries, to assess the economic and environmental impact of the white paper.

Closer to home, the UIC called on the French government to introduce more flexible social laws and reform the tax regime, which is currently based on investment spending instead of profits, he said. The UIC also called on the government to make greater efforts to help attract and retain research staff.

By: Doris Leblond
+44 20 8652 3214

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