Market Intelligence: SMEs shoulder Reach

07 June 2013 09:59  [Source: ICB]

The cost burden of the EU's Reach programme has Germany's chemicals trade association VCI concerned about the future of small businesses

Two down and one to go, but it doesn't get any easier. The second registration deadline for the EU's gargantuan chemicals control legislation, Reach (Registration, Evaluation, Authorisation and Restriction of Chemicals), was on 31 May. This phase of the process to register, evaluate and eventually authorise for sale chemicals in the EU has swept up substances in the 100 tonnes to 1,000 tonnes of annual production band - a great number of specialty chemicals and smaller volume fine chemicals.

 Reach registrations are causing headaches for SMEs

Copyright: RexFeatures

The burden of collecting and collating health and safety data has fallen widely, but increasingly on Europe's army of small and medium-sized chemical producers (SMEs). The fewer the number of producers or importers of a particular substance, the greater the cost burden has been.

Indeed, the cost of registration has risen to surprisingly high levels with many complaints about the cost of letter of access to substance information held by closed groups of producing/selling companies in Substance Information Exchange Forums, or SIEFs.

SIEFs - which companies are legally obligated to join if registering the same substance - were set up to address cost issues and reduce the replication of research, but costs associated with obtaining registration documents from other SIEF members can represent over half of an SME's registration costs.

The large industry trade associations and the executive arm of the EU, the European Commission, have become concerned about registration costs and are looking at ways of reducing the burden.

And Germany's chemicals trade association, the VCI, highlighted the fact that there has been no break for companies in Reach implementation.

"During the second registration period under Reach, the workload and time pressure were immense for the companies - especially for small and medium-sized enterprises," said the VCI's director of science, technical and environmental affairs, Gerd Romanowski.

More than 32,000 registration dossiers covering nearly 6,500 different substances have been submitted to the European Chemicals Agency (ECHA) under the Reach rules to date, the VCI said.

More than 8,000 of those registrations, for over 3,500 substances, have originated in Germany.

Germany's is a €186bn ($242bn) turnover chemical industry and the VCI represents 1,650 companies of German and foreign origin.

The ECHA has given potential registrants a great deal of help but the complexity of the task, and the time it takes to prepare a registration dossier, have been criticised.

The agency had scrambled to reduce the cost for SMEs in recent months. Registration fee reductions of up to 95% for SMEs had been at least partially floated by price hikes of 4% for registrations and 3.5% for authorisations for large companies.

In March, the ECHA announced fee reductions of 35-95% for registrations and 25-90% for authorisations for SMEs.

On 3 June, the ECHA announced that 9,084 registration dossiers have been submitted by 3,215 companies. The final number of successful registrations and substances submitted will be available in early September when all dossiers have been processed, it noted.

The agency said 20% of all registrations were submitted by micro, small or medium sized companies and 80% came from large companies. 23% of the registrations were made by "only representatives" on behalf of non-European companies.

Registrations were received from 26 EU Member States and three European Economic Area (EEA) countries, with the highest percentages coming from Germany (31%), the UK (12%), and Italy, France and the Netherlands (each 8%).

"This second Reach deadline is yet another milestone on the journey towards the safe use of chemicals in Europe. Overall, the registration process worked well and industry responded actively to the 2013 registration deadline, although a significant number of lead registrants registered in the final days, which has put some members under unnecessary time pressure," said Geert Dancet, executive director of the ECHA.

Since the start of Reach in 2008, a total of 6,598 substances have been registered, according to the agency

The VCI and other trade associations in Europe are most concerned about the impact on smaller chemical operations, in other words on the vibrancy and diversity of the European chemical sector.

The ECHA says a medium-sized chemical company is one with fewer than 250 employees and a turnover of less than €50m. A small company has fewer than 50 employees and an annual turnover of less than €10m. Micro concerns are defined as having fewer than 10 employees and an annual turnover of less than $2m. Clearly, they are dwarfed by the industry giants.

These smaller enterprises need to get working on the next step of Reach, or rather working towards the next registration deadline of 31 May 2018, which is for substances sold in the EU in the 1-100 tonnes/year band.

"This phase of Reach implementation, too, is going to make heavy demands on SMEs," Romanowski said. "The registration costs for low volume chemicals are relatively high, as compared with sales."

By far the majority of chemical firms in Germany (93% of the 2,000+ concerns) are identified as SMEs.

At least these companies' worries have not been ignored with calls for more consideration of the challenges SMEs face from Germany's regulatory control council, Normenkontrollrat (NKR), and other groups.

"SMEs in the chemical industry need direct contact persons at ECHA," according to Romanowski.

"Moreover, possibilities for dossier submission and information requirements should be simplified and tailored to the lower volume band. Here, online registrations could be one example."

Companies have found communication along supply chains difficult, particularly with extended data sheets for the substance concerned.

European Commission-sponsored studies have shown that these safety data sheets are seen as "overly comprehensive and rather unintelligible, both by those compiling them and by users," the VCI said.

"Industry and competent authorities should jointly agree the further course of action," said Romanowski. "Primarily, this is about simplifying and harmonising the approach for safety data sheets - in order to make them more manageable also for SMEs."

Additional contribution from Tom Brown in London

By: Nigel Davis
+44 20 8652 3214

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