German chem outlook remains grim, employers group says

02 April 2009 15:41  [Source: ICIS news]

TORONTO (ICIS news)--Germany’s chemical employers do not expect any near-term improvement in the industry’s bleak outlook for 2009, employers group BAVC said on Thursday.

“Since October last year the situation has become worse and worse,” Hans Paul Frey, general manager of Bundesarbeitgeberverband Chemie said.

“We cannot say when there will be a turnaround,” he said.

The Wiesbaden-based group represents 1,900 Germany-based chemical firms which employ some 550,000 workers.

The situation was particularly hard for producers of basic chemicals and those with exposure to the automotive industry, Frey said. 

The pharmaceuticals sector and chemical production for consumer markets, such as detergents and cosmetics, were doing better, so far, he added.

Frey said the crisis was a critical test for Germany’s “social market economy” and its partnership model between employers and unions.

BAVC and chemical union IG BCE had already agreed that jobs cuts would only be the very last resort for employers amid the crisis.

To avoid job cuts, firms were reducing weekly working hours and seeking to reduce wage costs by up to 10%, Frey said.

If those measures were not enough, there was still the option to agree company-specific wage deals that would allow firms a larger scope of measures, he said.

Frey reiterated BAVC’s warning about the widening influence of government in the crisis.

While some government aid, for example in the form of guarantees, was helpful, he warned against the government taking direct stakes in companies.

“We are not prepared to bid goodbye to the market economy,” he said.

In related news on Thursday, a group representing Germany’s polyvinyl chloride (PVC) industry said the outlook for the building sector may not be all that bad.

The government’s stimulus measures included significant incentives for renovating and remodelling older buildings, but the key was for local municipalities and counties to quickly kick-start those investments, the Arbeitsgemeinschaft PVC said.

The Bonn-based association also cited a recent survey of architects that found that the financial crisis was not likely to have had a big impact on renovation and remodelling investments.

Germany’s chemical production was forecast to decline 3.5% in 2009 and sales were expected to fall 6.0%, according to a projection by the country’s chemical producers association VCI last month.

However, when pharmaceuticals were excluded, chemical production could fall by up to 6% this year, VCI said.

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