German Chemical Industry Predicts 3% Annual Growth in Production Through 2020

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Researched by Industrial Info Resources (Sugar Land, Texas)--Innovative products remain the most important factor for lasting success, said Dr. Ulrich Lehner, President of the German Chemical Industry Association, at a conference in Frankfurt. Because of this emphasis on innovation, German companies have strongly increased their research budgets. Over the past ten years the research spending of the chemical-pharmaceutical industry in Germany has risen over $3.9 billion to $9.5 billion annually. Research spending has been especially strong in the pharmaceutical sector, he said.

The German chemical industry has worked for and achieved clear advantages in global competition, Dr. Lehner said. Since the start of the economic upswing in 2003, annual growth in the German chemical industry has averaged over 4% each year, which is more dynamic than the growth rate for the chemical industries of the U.S., Japan and other EU member states, where annual growth averaged only 2.6% in the period from 2003 to 2007.

Exports, comprising 75% of revenues, are a strong feature of the chemical sector. The growing economies of central and Eastern Europe have gained importance in Germany because of their increasing demand for chemical products. Exports to central and Eastern Europe totaled $25 billion in 2007, representing 12% of the chemical exports from Germany.

Dr. Lehner said that current figures show the German chemical industry has become more robust than it was in the difficult conditions of the past. Over the past few years, German chemical companies have optimized their processes, structures and in-house methods so that production costs have fallen significantly, resulting in much higher earning power and increased potential for growth. "We think we can increase production in the German chemical industry by an annual 3% on average up to 2020. But we need adequate political framework conditions to be able to do so, and it was imperative to continue to further develop the reform policy of the federal government," Lehner said.

Dr. Lehner sees the plans of the EU commission for an emission trading system as a major threat to this long-term growth and stated that the chemical industry would face immense costs. As early as 2013 the financial burden for German companies alone would be over $1.6 billion per year and would rise to $3.2 billion per year by 2020. He emphasizes that the chemical industry is a key to successful climate protection. Currently, a wide range of products contributes to more efficient uses of energy and the reduction of greenhouse gas emissions in chemical processing plants and other industries. Many chemical products save more energy on balance than is needed for their production.

Urging political decision makers not to put an excessive strain on industry with emissions trading, Dr. Lehner said that the EU commission wanted to put such a heavy burden on the chemical industry that it would create obvious cost advantages for competitors in Asia and the U.S., causing production in Germany and the rest of Europe to become less profitable and diverting investments to other parts of the world.

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