EUParl Pres 31Aug04 finalhome.kpn.nl/REACH/downloads/euchemicalspolicypresentationarthur… ·...

Seite 1

New Proposals for Chemicals Policy:Effects on the competitiveness of the chemical industry(Project EP/IV/A/2003/07/03-2)

Presentation

Brussels,August 31, 2004

ERMA-conference_031010.ppt/w-af 1

The conducted study concentrates on the effects of the intended REACH legislation on the competitiveness of the Chemical industry

Objectives of the Study

The objective of the study is to specifically examine the competitiveness of the European chemicals sector in the future taken into account the amended REACH

proposal

The presentation of the results is structured in:

� Summary of results

� REACH-targets / comparison between the actual situation and the introduction of the framework legislation

� Definition of the chemical industry

� Approach for investigation

� Results of the analysis

� Consequences and recommendations

Arthur D. Little has been asked to conduct this study using its experience gained during the specific study on the potential effects of REACH on the German economy

EWG 04/165 (EU Chemicals Policy)

Seite 2


The study shows significant risks for competitiveness of European chemical industry by REACH

Results of the Study

�The effects of REACH on the chemical industry strongly depend on the effects on the downstream users and their reactions

�Applying today's legislation proposal, the calculation model simulating this dependency to the downstream users reveals severe potential production and GDP losses for the chemical industry (incl. pharmaceuticals):

– GDP loss 2,9 %

– Production loss 24,7%

�The sub-sectors are touched in different strengths:

– Base/ Fine / Specialty Chemicals : 25% production loss (main sector being touched will be Fine and Specialty Chemicals)

– Consumer Chemicals: 50% production loss

�Interpreting the four relevant influence parameters of REACH (costs, time to market, duty to authorize, duty to disclose), concrete recommendations to minimize the risks of competitiveness decrease can be given


Sustainable Development

The future EU chemicals policy targets to protect human health and environ-ment and to maintain/enhance the competitiveness of the EU chemistry

� Protection of human health and the environment

� Maintenance and enhancement of the competitiveness of the EU chemistry

� Prevention of fragmentation of the internal market

� Increased transparency

� Integration of international efforts

� Promotion of non-animal testing

� Conformity with EU international obligations according to the WTO

REACH Objectives

Seite 3


REACH applies the principles of the existing regulation for new substances to all substances

Existing substances

Production quantity

(tonnes per annum)

Present requirement

New substances

Requirement according to REACH

for all substances

Comparison of existing and new EU legislation

< 0.01 none none none

0.01-0.1 none very limited "base set" testing2)

none

0.1-1 none limited "base set" testing3)

none

1-10 none "base set" testing data on physico-chemical, toxicological and ecotoxicological properties

10-100 data on hazard classes and use to ECB 1), 4)

"base set" testing "base set" testing

100-1000 data on hazard classes and use to ECB 1), 4)

"base set" testing +"level 1" tests

"base set" testing +"level 1" tests

> 1000 data on hazard classes, use, physico-chemical properties, toxicity, ecotoxicity to ECB 1), 4)

"base set" testing +"level 1" tests + "level 2" tests

"base set" testing +"level 1" tests + "level 2" tests


REACH demands evaluations of intrinsic properties and expositionscenarios for each substance independent of the exposition risk

EU legislation versus legislation outside Europe

EU (fixed) Japan (risk contingent) USA (risk contingent)

Base SetTests

Level 1Tests

Level 2Tests

Bio-accumulation

Test

Chronic Toxicity Test

Screening Toxicity Test

Chronic Toxicity Test

Non-Biodegradable

BiodegrationTest

Safe Chemical

Non-Bioaccumulative

Bio-accumulative

Class I Specified Chemical

Class II Specified Chemical

Safe Chemical

ToxicNon-Toxic Toxic Non-

Toxic

ToxicNon-Toxic

Structure Activity Meeting

StandardReview

(Risk Ass. II)

Regulatory Action

Early Drops from Further

Review

ChemicalReviewMeeting

� Focus Drops� Exemptions

(Grant or Deny):– Test

Market– Low

Volume– Low

Exposure

FocusMeeting

(Risk Ass. I)

Seite 4


The portfolio of the chemical industry can be divided in four sectors

Portfolio of the Chemical Industry

• Base chemicals 37.7% • Specialty & fine chemicals 28.8%• Pharmaceuticals 23.3%• Consumer chemicals 10.2%

Four sectors of chemical industry(portion in %)

Perfumes & cosmetics

Soaps & detergents

Pharmaceuticals

Crop protection

Paints & inks

Other specialty chemicals

Fine chemicals

Fertilizers

Industrial gases

Other basic inorganics

Man-made fibres

Plastics & synthetic rubber

Petrochemicals


Drivers of competitiveness in the chemical industry have to be considered on basis of the specific sectors

Consumer Chemicals

Fine and Specialty

Chemicals

Base Chemicals

Price, Location Differentiation, Value added Performance

Speed, Flexibility, Management of

Complexity

Scale, Technology Cycle

Management

Co

mp

an

y I

nte

rnal D

rivers

Business Relevant Drivers

Drivers of Competitiveness of the Chemical Industry

Seite 5


Percentages shares

The chemical industry mainly acts a producer and supplier of inter-mediates within the overall industry

Application Areas of the Chemical Industry

Construction

Manufacturing

Agriculture

Service & administration

Final consumption

5,4%

6,4%

16,4%

30,3%

41,5%


The EU chemicals policy influences almost all industrial value chains – far beyond the chemical industry!

Value portion of final product

1 %

0 %

Material

10 %

100 %

Components

Sub-System

System

Final Product

Piezo-Ceramics

Ceramic Valve

Direct Injection

DieselEngine

� Reduction of gas consumption

� Reduction of emissions

Substance

Chemicalsubstance

Value Chain

Electronic/mecha-nical equipment

AutomobileOEM

Material producer

Chemical Industry

CompanyType

Automotivesupplier

Chemical Industry in the Value Chains

Seite 6


Corporate strategies

EU chemicals policy

Effects Effects Effects Effects

Industry value chain

Key success factors for the industry

– Legislative implementation

Industrialadded value

Regulatory environment

schematic

Success and per-

formance

The potential consequences have to be investigated by the key success factors for the different industries and their dependencies on chemicals

Basic Framework for the Approach


Levers of the EU Chemical Policy

Results of the Analysis

ParameterPositive Conse-

quences (examples)Negative Conse-

quences (examples)

Costs Savings due to increases in volume limits and simplification

Increase due to REACH load on today's EINECS substances

� Execution of the registration process

� Execution of the authorisation process

� Number of intermediates to be registered

� Number of use categories (intended vs. unintended)

� Degree of disclosure

Time Savings due to simplification in case of new registration

Loss by internal and external efforts for REACH

Duty of Authorization

Harmonisation of product portfolio

Potential ban of certain substances

Degree of Disclosure

Increase for interested stakeholder

Loss of know-how

Four critical parameters have been identified – their consequences will be directly dependent on the execution pattern of the EU chemical policy

Levers of the Chemical Policy

Seite 7


The estimates are based on a calculation model specifically developed on the basis of a bottom-up analysis

Design of the Community legislation

Scenario variables

Consequences for the German economy

Changes in gross added value

Calculation Model

Scenario facts

Industry data

Change in production volume of considered industries and value chains

Change in gross added value and production volume for German manufacturing industries

Scenario variables

Change in gross added value for German economy

Calculation Model

� Same/similar industry structure within the different industry sectors in EU as considered for Germany

� Same/similar ratio between end user chemicals and intermediates in EU as in Germany

� Same/similar reaction of industry towards the new legislation in EU as experienced in Germany during the study by the interviews – as a consequence, the same production losses for each industry sector as derived for the German manufacturing industry are assumed for the sectors on the European base

The model has been developed on basis of data gathered in Germany for the relevant industries. To apply this model several conditions have to set:


The model results in a production loss of about 25% for the complete category of chemical industry which includes Pharmaceuticals

Production and GDP Losses

Manufacturing industry within the EU 15 12.6 10.6

Food and tobacco industries

Textile and apparel industry

Leather industry

Wood industry (excluding furniture manufacture)

Paper, publishing and printing industry

Coking, oil refining, production of fertile materials

Production of rubber and plastic goods

Glass industry, ceramics, processing of rock, stone and mineral products

Metal production and processing, manufacture of metal products

Mechanical engineering

Production of office equipment, data processing equipment; electrical engineering

Vehicle construction

Production of furniture, jewellery, musical instruments, recycling

0.4 3.6

1.4 38.8

0.5 57.2

0.1 5.9

1.7 19.6

0.7 33.1

2.9 24.7

2.1 44.6

0.1 1.5

0.6 4.6

0.3 2.2

0.8 5.1

0.4 2.9

0.2 5.9

Change in gross value added (%)

Production loss (%)

Chemical industry incl. Pharmaceuticals

Seite 8


For further analysis the sectors of chemical industry according to the calculation model have to be evaluated

Manufacturing IndustryUsers outside the

Manufacturing Industry

Chemical Industry

Manufacturing Industry without Chemical Industry

Chemical Industry

� Industrial gases

� Dyes/pigments

� Primary materials

� Plastics

� Rubber

� Paints and coatings

� Pharmaceutical primary materials

� Adhesives

� Essential oils

� Man-made fibres

� Chemical finishing products

� Other chemical products (excluding building chemistry)

� Fertilisers

� Crop protection

� Soaps

� Personal hygiene products

� Photographic chemistry

� Data carriers, blank

� Building chemistry

Examples:

� Agricultural sector

� Other production activities

� Service providers

� Final consumers

Chemicals Sectors as defined in the Calculation Model


The consumer chemical industry will suffer significant production losses by REACH

Manufacturing IndustryUsers outside the

Manufacturing Industry

Chemical Industry

Manufacturing Industry without Chemical Industry

Chemical Industry

The production loss has been derived as the consequence of the downstream user industry. Basis has been the input-/ output data

No quantitative differen-tiation between Base Chemicals and Fine/ Specialty Chemicals can be done by this approach

The production loss has been calculated on basis of market analysis, industry data etc.

Examples:

� Agricultural sector

� Other production activities

� Service providers

� Final consumers

Production loss:25.0%

Production loss:50.7%

Consumer Chemicals

Seite 9


The production losses result from different contributions of the four identified parameters

Effect of the four Parameters

Chemical (sales outside manufacturing industry without pharmaceuticals)

22.5% 29.2% n.a. 10.0% 50.7%

Rubber 3.6% 36.2% n.a. 10.0% 44.6%

Textile 16.8% 25.7% n.a. 31.3% 57.2%

Semi-conductors 4.6% 16.0% n.a. 22.5% 37.9%

TotalDegree of

Disclo-sure

Duty of Authori-zation

TimeCosts

Production loss due to the parameter


The fine and specialty chemical industry will be touched by effects of all four parameters while the basic chemical industry is not strongly influenced

Business relevant drivers of competitiveness

REACH Parameters

Price� Costs

Differentiation Value Added Performance

� Time to market

� Duty of authorization

� Degree of disclosure

Industry

Chemical industry delivering in price sensitive areas with

high volume usage of

specialty chemicals

� Fine / Specialty Chemicals

Chemical industry delivering in areas with high innovation force� Fine/Specialty Chemicals

Base/ Fine/ Specialty Chemicals

Seite 10


The high risk of competitiveness decrease of the chemical industry by REACH is forecasted – recommendations for lowering risks are obvious (1)

Consequences / Recommendations

The time demand and cost of the system must be kept as low as possible to limit the burden on industry without losing sight of the objectives of the White Paper. The aims should be, e.g.:

� to limit the number of necessary test

� to reduce administration costs both within companies and externally

� to limit registration maintenance costs

� to take account of existing information as far as possible

� ….

The number of registered uses can be limited, for example, by introducing exposure categories.

Testing and evaluation of substances must be directed towards specific risks and guided by existing measures to use test resources optimally; exclusive orientation towards intrinsic substance properties or production quantities cannot be recommended.

The time periods required by the system (information/data generation, processing by the authorities) before the intended manufacture or use takes place must be kept short. They should not delay the market entry of new products.


Authorisations should be risk-based, if possible in conjunction with positive lists for categories of use.

The process and product knowledge of companies must be optimally protected – disclosure must be made with the participation of the affected companies

To limit the negative effect on the competitiveness of German industry, the EU should strive to achieve standard regulations for substances worldwide.

The high risk of competitiveness decrease of the chemical industry by REACH is forecasted – recommendations for lowering risks are obvious (2)

Consequences / Recommendations

Further concrete formulation of legislation proposal and/or REACH implementation processes enables additional simulation and information

Seite 11

ERMA-conference_031010.ppt/w-af 20The Architects of Your Success


Contact partners

Arthur D. Little

Arthur D. Little

Ralf BaronPractice Manager General and Process Industries

Arthur D. Little GmbH Martin-Luther-Platz 26D-40212 Düsseldorf

Tel: +49-211-8609-511Fax: +49-211-8609-511email: [email protected]

Dr. Christian WeigelPractice Manager Chemistry

Arthur D. Little Austria GmbHKärntner Ring 6A-1015 Wien

Tel: +41-1.515.4132Fax: +41-1.515.4123email: [email protected]

Seite 12


Top Management Consulting

Technology ConsultingIT Implementation

Arthur D. Little – part of the Altran network

� Strategy consulting

� Global network with more than 1,000 consultants

� www.adl.com and www.adlittle.de

� Global network with more than 200 High Tech consulting companies and with 18,000 consultants worldwide

� Listed on the Paris stock exchange

� www.altran-group.com

Arthur D. Little


Arthur D. Little combines global presence – 37 offices in 23 countries worldwide – with a strong position in the German speaking countries

Arthur D. Little in Germany / Austria /

Switzerland

280 Employees

75,3 Mio. € Revenue *

6 offices in Berlin, Düsseldorf, Munich, Vienna, Wiesbaden, Zürich

Arthur D. Little

Offices

Americas

� Boston

� Caracas

� Chicago

� Houston

� Mexico City

� Rio de Janeiro

� São Paulo

� San Francisco

� Toronto

� Washington D.C.

Asia Pacific

� Abu Dhabi

� Hong Kong

� Kuala Lumpur

� Seoul

� Singapore

� Sydney

� Tokyo

Europe

� Berlin

� Brussels

� Cambridge

� Düsseldorf

� Gothenburg

� Lisbon

� London

� Madrid

� Milan

� Munich

� Paris

� Prague

� Rome

� Rotterdam

� Stockholm

� Vienna

� Wiesbaden

� Zagreb

� Zürich

* incl. sisters / subsidiaries

Seite 13


We support our clients in many industries worldwide

Arthur D. Little

Industries

Automotive

Travel & Transportation

Engineeringand Manufacturing

Public Sector Service

Energy/UtilitiesTelecommunication Information Media Electronics (TIME)

Financial Institutions

Health Care

Chemical IndustryConsumer Goods


Arthur D. Little drives with its clients globally the change process in the chemical industry

Arthur D. Little's Global Chemprac – Our Value Proposition

Today's chemical industry

� After many years of stability the structure of the chemical industry has changed dramatically within the 90ies

� Traditional "conglomerates" in the areas of chemicals, agrochemicals and pharmaceuticals have disappeared

� New companies emerge in the market place – often due to mergers, joint ventures or divestments of single units

� Structural changes are driven by a paradigm shift – leaving business models of vertical integration and regional focus towards core competencies and global reach

"Arthur D. Little Global Chemical Practice"

� … assists and supports companies in the chemical industry with innovative, effective und efficient solutions in the industry's transformation process

� … delivers a substantial contribution to ensure the successful and sustainable development of chemical companies in a competitive environment

Seite 14


Arthur D. Little’s Global ChemPrac – Our Staff

We distinguish by the caliber of our staff, the breath and depth of our expertise and our networks

Our staff have both business and technical degrees -75% have worked in the chemical industry prior to joining ADL

Technology Expertise

. . . provides a robust basis for decisions on future technologies

Proven Methodologies

. . . safeguard efficient and yet custom-tailored projects

With our advanced sophisticated knowledge management system we secure rapid transfer of know how and best practices worldwide

ADL GlobalChemicals Practice

� Objective, holistic views

� Superior business decisions

� Successful strategies

� Improved business processes

� Sustainable innovation

. . . saves time and gets us right to the point

Side by side Consulting Approach

. . . secures buy-in and implementable results

Industry Knowledge


Arthur D. Little’s Global ChemPrac – Our Offices

Our services to the chemical industry are provided by more than 50 specialists in 14 worldwide centers of competence

Arthur D. Little centers of chemical industry expertise

SingaporeSeoulTokyo

BostonCaracasSao Paulo

Americas

Europe

BrusselsDüsseldorfLondonParisRotterdamWiesbadenZurichVienna

Asia

Seite 15


Arthur D. Little's Global ChemPrac – Our Clients

We are proud of having a continuous working relationship with most of the leading companies of the chemical industry1)

1) 80% of the chemical companies in the Global Fortune 500 are our clients

Great Lakes


Our Services to the Chemical Industry – Overview

We assist the chemical industry in all top management issues

Business Strategy & Corporate

Development

Post Merger Integration

Management

Organization & Transformation

Corporate Finance & M&A

Restructuring & Performance Improvement

Supply Chain Management

Technology & Innovation

Management

Customer Value Management

Knowledge Management

EUParl Pres 31Aug04 finalhome.kpn.nl/REACH/downloads/euchemicalspolicypresentationarthur… ·...

Documents

Transcript of EUParl Pres 31Aug04 finalhome.kpn.nl/REACH/downloads/euchemicalspolicypresentationarthur… ·...