VCI forecast: Slight production drop in 2009

Chemical industry stagnates in 2008

The financial crisis and the global downturn are clearly impacting the German chemical industry. Weaker demand in the 2nd half 2008 resulted in a drop in chemical output, after the 2nd quarter of the present year. In the 4th quarter a small number of production plants were even shut down for the time being. No growth is recorded for the chemical industry in 2008 as a whole. The German chemical industry association VCI in Frankfurt assumes that companies will further reduce production activities in early 2009. As VCI believes that the weak phase of the economy will last far into next year, VCI is expecting a production drop by 1 percent for 2009 – after four years of good growth rates. When excluding the pharma sector, the chemical industry will shrink by 2.5 percent in 2009.

Professor Ulrich Lehner, President of VCI, said in his statement to the press: "The falling demand from industrial customers – and in particular from the automotive and construction industries – as well as the reserved consumption behaviour of private consumers make themselves felt strongly." He attributed a stabilising effect only to the pharma sector, which is largely independent of cyclical trends. Lehner: "With a package of measures, our member companies are preparing themselves for the recession. They are doing whatever they can to keep their permanent staff. We very much hope that they can hold out until we have passed the trough and the demand picks up again."

Sales: In 2008 total sales of the German chemical industry rose by 3 percent to 178.8 billion euros, solely because of higher prices. Business with customers abroad increased by 3 percent to 97.9 billion euros. Domestic sales rose by 2.5 percent to 80.9 billion euros.

Foreign trade: Thanks to the still strong demand for chemicals from newly industrialized countries and for pharmaceuticals in general, the export business remained a mainstay of the chemical industry – irrespective of the global economic downturn. In 2008 exports - this term comprises foreign sales by chemical companies, re exports and chemical exports by other industries – went up by 8 percent to 140.1 billion euros. Compared with the previous year, imports increased by 4 percent to 97.7 billion euros.

Employment: Irrespective of the clearly less favourable business situation in the 2nd half of the present year, employment in the German chemical industry was more or less stable - with 438,500 staff in the annual average for 2008. For classification reasons, official statistics show a drop by 0.5 percent compared with 2007.

Investment: In a difficult economic environment, investments by German chemical companies in 2008 totalled some 6.8 billion euros and thus rose by 5 percent against 2007. Companies increasingly invested in new plants. Some 3 billion euros went into production capacities, i.e. twice as much as back in 2005.