Chemicals

The French chemical industry ranks fifth in the world, after the United States, Japan, Germany and China. In France, the industrial chemicals industry is comprised of 2,600 companies employing a total of over 241,000 persons, making it the fourth largest employment sector in France. France is also the third largest exporter of chemicals and pharmaceuticals in the world with 59 % of its trade made on the international marketplace.

The majority of these 2,600 French companies are SMEs. In fact, only 130 of the 2,600 are considered “major.” These 130 major companies, however, account for three quarters of France’s total chemical output. The 130 major companies, which include international groups (Bayer, BASF, Exxon Chemical, Rohm and Haas, etc.), are divided as follows: 87 of the 130 produce organic chemicals (total workforce of over 34,000); the other 43 produce inorganic chemicals (total workforce of just under 7,000).

In 2003 French production of chemicals declined for the third straight year, a 1.4 percent decrease from the previous year. 2003 proved difficult for the French chemical industry as it suffered from reduced investments, tightened profit margins resulting from higher raw material prices, limited volume and a strong Euro.

The chemical production without pharmaceuticals recorded an average growth lower than the one of the whole manufacturing production over the period 1994-2004: + 1,2 % per annum from 1994 to 2004 for chemicals against 1,9 % for manufacturing industry. The whole of the chemical industry including pharmaceuticals progressed over the same period by 3,2 % per annum.

Although the French chemical industry is a key player in the global market, it is feeling the pressure of increasingly stiff competition from emerging economies such as China and India. Since it can no longer rely on being at an economic advantage, the industry must focus on other ways of maintaining its edge. Innovation is the only sure route towards reinforcing local production volumes and guaranteeing acceptable margins, and therefore, the only way for France’s chemical industry to maintain its position as the 2nd largest producer in Europe and the 5th largest in the world. However, given that the French chemical industry has expertise in specific areas, notably in speciality chemicals such as oleochemicals, fine pharmaceuticals and catalysts, it must focus on establishing centers of excellence and strategically productive industrial relationships with leading downstream industrial sectors such as aeronautics, agri-foodstuffs, pharmacy, and cosmetics.

The French chemical industry, ex-pharma, made good progress over the first quarter of 2005, increasing overall production volume by 3% with respect to the preceding quarter.

However, different sectors within the industry experienced very different degrees of recovery, and the improvement was, in part, due to a marked slowdown in production at the end of 2004, compared with average annual activity.

For 2005 as a whole, UIC confirmed a moderate recovery for the chemical industry, with a predicted overall growth rate of 2.2%, a figure which takes into account the slower rate of growth observed in Europe’s economy.

Following the previous cessation of certain production lines in 2004, the inorganic chemicals sector and that of soaps, perfumes and cosmetics, and household products should once again find themselves on a positive path of growth, in tune with their underlying potential for development. As in 2004, growth is forecast for the organic chemicals sector. In the meantime, specialty chemicals are thought to be heading for a more modest growth rate, owing to an already successful performance in 2004.

An overall trend of growth is likewise forecast for 2006. This prediction is based on a positive outlook of solid growth for organic chemicals, and is expected to hold true in spite of the downturn predicted for inorganic chemicals due to warnings of the cessation of certain production lines.