Scattered but fruitful

23 October 2000 00:00  [Source: ICB]

The spread of the French chemicals industry along the Channel coast and in the south was no marketing or supply ploy, but to keep such crucial plant away from invading armies. Now, many locations qualify for state aid to investors as well as being good places to live. Doris Leblond reports

The scattered pattern of France's chemical industry has its roots in history. It stems from the need, during the two world wars, to keep production sites well away from the battlefields.

In addition, until 1981, when the socialist government nationalised and restructured the main groups, the industry was not only in dire straits, it was also a very complex tangle of private and public companies, small and large, French and foreign.

While subsidiaries of international groups, like Shell Chimie, Esso Chimie or Hoechst, led a life of their own, French companies had no strategy - barring the urge to bring out more products and weave themselves into an intricate net of common subsidiaries and avoid the need to compete.

Constant government intervention was more a hindrance than a help. The scene cleared in 1982 when the socialist government took control of the chemicals industry. Saint-Gobain, Péchiney and then Total withdrew from chemicals, handing over to Rhône-Poulenc, Atochem and CdF Chimie.

Typically, Péchiney Ugine Kuhlman's chemicals division alone had 12 different sites. The scene cleared further when the government split up CdF Chimie between Elf and Total. The spoils of CdF Chimie - the chemicals division of the national coal utility Charbonnages de France - involved sites scattered over the country.

This explains how current large groups in France have such distant sites, a far cry from Germany's concentration of chemicals on the Rhine.

Growth

The Dunkirk region is an example of growth following state intervention. The government, for political reasons, decided it was necessary to build a large steamcracker there in 1972, then in partnership with the Qatari government. The cracker, Copenor, is now jointly owned by EniChem and Union Carbide.

The regional chemicals industry grew up around Copenor and, in turn, spawned a large plastics manufacturing industry around Dunkirk. Other advantages were, of course, the two refineries - Total's and BP's - France's largest nuclear power plant, the industrial gases facilities of Air Liquide, a well-situated maritime port within reach of the UK and northern Europe, and a spread of sites away from built-up areas.

Fine chemicals, paints and pharmaceuticals tagged along too and now many international groups, such as AstraZeneca, Cyanamid, DuPont and Tollens are there. The region now boasts 280 chemicals and related production sites with a workforce of 22 000.

Dunkirk still qualifies for aid to start-up companies in the region under the EU's 'objective 2' classification because its unemployment rate has remained around 12.3%. The aid is set at between 25% to 33% of total investment. There is also a five-year business tax exemption, with an added-value ceiling provided the investment is no less than FF800 000 ($106 000) and 30 direct jobs are created.

'What also counts,' says Dunkirk communications manager Olivier Thierry, 'are the indirect aids such as enhanced depreciation of equipment over six years instead of five'.

The next development stage of the Dunkirk area is being prepared by the Dunkirk Promotion-Economic Development Agency which has just completed a feasibility study to create an 'activity area with global services' on 30 hectare of spare land away from built-up areas. It wants to attract fine chemicals, cosmetics and pharmaceuticals players which are likely to invest between FF50m and FF500m. It hopes to have an integrated site prepared by 2002.

The number of advantages listed by Dunkirk Promotion is impressive. The recent arrival of Norway's natural gas through the Norfra gasline, which has its terminal and pumping station at Dunkirk, is added to the other energy sources. These are oil, natural and industrial gas, wind, nuclear and France's two largest cogeneration plants, which are to be built by Air Liquide and planned for the Total sites.

Dunkirk has good raw material availability, intermediates, coproducts and industrial products; modern port terminals; good road, river and rail connections. There are research and university centres nearby and last, but not least, 'substantial financial backing,' says Dunkirk Promotion.

The Rhône-Alps region is an older seat of the chemicals industry, but it is still growing strongly. The chemical industry started clustering there towards the middle of the 19th century. The initial focus was Lyon and later Grenoble, where firms could take advantage of hydroelectricity, from the Rhône and Isère Rivers.

Rhône-Poulenc, now Rhodia, and Elf Atochem, now AtoFina, have established a tight network of plants. Smaller companies gather around these to enjoy the spin-offs of these two large groups and the infrastructure they have developed, explains Yves Guitton, general delegate of the Regional Chemical Trade Chamber.

This is especially well developed around Lyon where an R&D network, universities and chemical schools have grown up. Besides the Lyon and Grenoble poles, another chemical area has recently developed, to escape the strong urban pressure which has increased over the last 40 years around Lyon and Grenoble.

This is the Ain plain, 35km from Lyon, adjoining the Rhône and the Isère. It is populated by fine and speciality chemicals companies and pharmaceutical and agrochemical firms. These have colonised the region in preference to heavier chemicals which lack a sea port for exports.

The move away from heavier chemicals is highlighted at Brignoux, where AtoFina will develop acrylic emulsions instead and will move its PVC production from St Fons and Balan.

SouthBut south of Lyon, along the Rhône Valley, called the 'chemical corridor', there is still a substantial oil industry around the Feyzin refinery (including ETBE production) and a steamcracker. This is where Rhodia and Atochem built their main sites, linked by a network of ethylene and propylene pipes. These are being extended to Carling, in the north. It will finally link AtoFina's far-flung site inherited from CdF Chimie.

The output of the steamcracker will be especially useful as it will add ethylene supplies to the Rhône-Alps region, which will promote new developments there. River transport on the Rhône is also being developed.

The chemicals and pharmaceuticals industries in the area employ around 34 000 people. 'But,' said Guitton, 'apart from the Ain Plain, no new sites are allowed within the prescribed area. Companies must expand or develop new products on existing sites.'

The aim is to reach a balance between environment, safety and logistics. 'There are no new projects,' he says, 'but site and product transfers have multiplied with the restructuring of the industry within their new portfolios'.

While petrochemicals are on the decline in the Rhône-Alps area, they are still dominant further south within the Fos-Lavéra-Berre complex. Here excess capacity is being shipped north into the Rhône-Alps chemical industry. But the regional Marseilles authorities which control planning in the Fos-Lavéra-Berre area have also been trying to develop a fine chemicals base in Fos.

A 450 acre site has been pinpointed for this around the Fos deep-water harbour. Fine chemicals are targeted but petrochemicals would also be welcome. The project has been on the drawing board since 1997, but not yet come to fruition.

Michel Peronnet is taking over the marketing management at the end of October. This is as part of a new organisation which aims to give new life to the project steered by the Port of Marseilles. He says a new marketing plan would be worked out and the project would be extended from 2002 to 2010.

'What chemical investors need to find near their plant are efficient container terminals, low-cost logistics and service facilities, not only raw materials and intermediates of which the region has plentiful supplies,'he said.

The Fos project should benefit from the larger Euro-Mediterranean project being developed by the Port of Marseilles since the late 1990s, designed to take the port into the major league of European ports.

Logistics

Most likely to attract the chemical industry is its multi-modal logistics scheme to be located 50km north of Marseilles and 20km from Fos. This will form the hub of a transport infrastructure network linking road, rail, air and navigable rivers at the crossroads of the north/south Rhône valley and its chemical corridor and the east/west Spain-Italy axis opening up the Maghreb countries.

Meanwhile, the Fos area is not without its attractions as AtoFina has chlorine and VCM production, Lyondell its propylene oxide and MTBE facilities and Basell a PE plant. There is also a large utilities complex with Air Liquide and Gaz de France, as well as a complex at Mole being built dedicated to storage and warehousing of hazardous cargoes.But the modular waste treatment facility capable of treating biodegradable non-biodegradable and toxic waste water has yet to be built, as has the cogeneration plant which is to be fed through the refineries of the Lavéra-Berre-Fos triangle. Also planned is the treatment of sludge by the Merex incineration plant. The steam is to be supplied by Société de Polyethylene de Fos located close by.

However, the 450 acres of 'spare prime land' away from urban areas, being prepared to host small- and medium-sized chemical industries, has access to all the the standard utilities - road, rail and water transport and power. The whole region will also benefit from government financial aid for new enterprises.

This includes tax rebates and decreasing exemptions on the professional tax which is levied locally but total aid, as elsewhere, cannot exceed 25% of the full investment outlay.

ICIS Copyright © Reed Business Information 2009

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