Reach: Many product lines will make a loss, warns Cefic

27 April 2005 13:34  [Source: ICIS news]

BRUSSELS (CNI)--Latest research into the potential impact of Reach, the European Union’s (EU's) controversial new chemicals policy, on European industry shows that many product lines will be made unprofitable,  Alain Perroy, director general of the European chemical industry council, Cefic, stressed on Wednesday. 

 

Perroy said it was clear that chemical suppliers and formulators will do all they can to keep substances on the market to retain market share. But when confronted with the administrative cost and burden of Reach registration, the costs they absorb could mean that significant parts of their product portfolios drop into loss.

 

He was speaking a conference organised by the European employers' federation Unice and centred on the release of a new industry sponsored Reach impact study from business advisers and accountants KPMG.

 

Cefic's Perroy

“The hot potato which has to be passed along is the cost (of Reach),” Perroy maintained. “Who is going to pay?” he asked. “Chemical suppliers and formulators expect to pass costs along the supply chain. But where the balance of power rests in favour of the downstream user, in reality it is the chemical companies who will have to bear the costs,” he declared.

 

According to Perroy, the KPMG report gives no support to the European Commission (EC) idea that Reach will encourage European producers to be more innovative. “Faced with the new regulatory environment, chemical companies will focus effort on retaining their current product portfolios and market share. This will divert resources away from productive research and development (R&D) – at the formulation level – into meeting the cost of Reach registration. (Reach is the acronym for registration, evaluation and authorisation of chemicals.)

 

“Of course companies will try to reduce the impact of Reach, by addressing less strategic and less critical substances,” the industry association head said. But this could lead them to “initiate product portfolio rationalisations”.

 

Reach as it stands, said Cefic, will have a magnified impact on SMEs (small to medium sized enterprises). They may see costs go up as much as twentyfold. Cefic said that lower tonnage products will be affected disproportionately by the proposed regulation and that SMEs will be harder hit because they have less influence on downstream users.

 

Cefic also has concerns that issues of confidentiality and sensitivity of company information have not been addressed in the Reach proposals. According to Perroy, these considerations are “at the heart of the Reach process” and need to be taken into account in any further revision of the Reach draft.

By: Martin Todd
+44 208 652 3214

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly