Business developments of the German chemical-pharmaceutical industry in the year 2016

A mixed year for the German chemical industry

Production increase by 0.5 percent; drop in sales by 3 percent ++ Investments are stable at a high level (7.1 billion euros) ++ No change in employment (446,300 staff) ++ Forecast 2017: production increase by 0.5 percent, sales increase by 1 percent ++ Chemistry 4.0: using the chances of digitalisation and sustainability.

VCI President Kurt Bock: "It can be assumed that there will be no noteworthy dynamics in the chemical business 2017, either. This applies even more as the political uncertainties and economic risks on foreign markets around the globe have intensified. " - Photo: © VCI / René Spalek
VCI President Kurt Bock: "It can be assumed that there will be no noteworthy dynamics in the chemical business 2017, either. This applies even more as the political uncertainties and economic risks on foreign markets around the globe have intensified. " - Photo: © VCI / René Spalek

2016 was a mixed year for the German chemical-pharmaceutical industry. Irrespective of a difficult environment in the global economy, the investments, capacity utilisation and employment were stable in Germany’s third largest industry. But the production growth was lower than had been anticipated. At the same time, sales fell due to another drop in producer prices. Altogether, chemical production increased by 0.5 percent. Excluding pharma, the production volume was stagnating. Kurt Bock, President of the German chemical industry association Verband der Chemischen Industrie (VCI), notes: “In view of the political turbulences in Europe and the uncertainty among many market players, this result might not come as a surprise. All the same, it is unsatisfactory for us.”

Forecast: Also for chemical production 2017, the VCI sees no stronger dynamics, predicting a production increase by 0.5 percent. With a slightly rising price level, total sales should improve by 1 percent to 185 billion euros. The VCI expects that only foreign business will contribute to growth.

Bock on the prospects of the industry: “Sales were back on the rise towards the end of the present year, but we do not yet see a trend reversal in this increase. It can be assumed that there will be no noteworthy dynamics in the chemical business 2017, either. This applies even more as the political uncertainties and economic risks on foreign markets around the globe have intensified. Contributing factors are the uncertainty about the persistent growth weakness of emerging markets and the anxiety about the stability of Europe.”

Facts & figures on business developments 2016 in the German chemical industry

Sales: With a drop in prices by 2 percent, total sales of the chemical-pharma-ceutical industry fell by 3 percent to 183 billion euros – irrespective of a slightly higher production volume.

Customers from other industries in Germany ordered clearly fewer chemicals. Consequently, sales declined by 4 percent to 71.5 billion euros. Business abroad was hardly better: Compared with the previous year, foreign sales fell by 2.5 percent to 111.5 billion euros.

Employment: Even in this weak business environment, there was no change in the number of jobs in the chemical and pharma industry in 2016 (446,300 persons employed).

Investment and research budgets: After four years of rising investments, the spending stagnated in Germany in 2016. Chemical companies invested 7.1 billion euros so that the investment level was almost the same as back in 2015 (-0.3 percent). Foreign investments of the industry saw a drop: Investments abroad by German chemical companies amounted to just under 8.4 billion euros, i.e. 3 percent less than in the previous year.

The research budgets in the industry increased once more in 2016. In total, the companies spent roughly 10.7 billion euros on research and development – 2 percent more than in 2015.

Chemistry 4.0: innovations for a dramatically changing world

Short and medium-term economic fluctuations are normal in a market economic system. But beyond that, in the long run the world of the chemical industry is undergoing fundamental change: the shift of growth centres to Southeast Asia and the driving forward of innovation processes in emerging markets and industrial nations make international competition fiercer for companies which manufacture at the location Germany. Moreover, the globalisation and digitalisation of value chains make it necessary for the industry to get ready for changes in its production methods and business models.

VCI President Bock emphasizes: “I am convinced that we once more need to set a course for the future. This is expressed in Chemistry 4.0 which is much more than another digitalisation of the chemical industry. Chemistry 4.0 stands for the strategy to generate sustainable growth for the industry through innovations at all levels. With Chemistry 4.0 we are working to maintain our top position globally – and to make our contribution to the location Germany also in the future.”

The intensive use of digital data and the progressing horizontal linking of value chains change the interplay between the companies across the industries. Chemistry is part of this development: Predictive maintenance of plants, pinpoint application of crop protectants and fertilisers in agriculture through “digital farming” or a better steering of logistics are just a few examples for fields of application where digitised information is already used to improve cost and resource efficiency. Research and development, too, strongly benefit from the evaluation options for huge volumes of data. With Chemistry 4.0, so the VCI, the chemical industry also wants to further develop its function in the value chains. The goal: The industry’s role should not be limited to supplying inputs, the industry also wants to become an established provider of all-round solutions for customers. 3D printing is an example of a new business model.

Bock underlines: “Chemistry 4.0 is more to us than just using the chances of digitalisation. Sustainability become the comprehensive guiding principle and the concept for the future in the actions of our industry. This is highlighted by our sustainability initiative Chemie3.” According to Bock, this includes the possibility of chemistry assuming an important function in a circular economy by recovering carbon-containing waste and, in the mid-term perspective, also by using hydrogen from renewable energies in combination with CO2 for basic chemicals production.

Please note:
All materials around the press conference - full statement of VCI President Kurt Bock, charts in diverse formats and a set of photos- are available in the download section at the top ot this page. An interactive overview with more information about the four development stages from 1865 (Chemistry 1.0 to Chemistry 4.0) is available with the link underlying this sentence (onliy in German language, sorry).


The VCI represents the politico-economic interests of over 1,650 German chemical companies and German subsidiaries of foreign businesses. For this purpose, the VCI is in contact with politicians, public authorities, other industries, science and media.The VCI stands for over 90 percent of the chemical industry in Germany. In 2016 the German chemical industry realised sales of around 183 billion euros and employed 446,000 staff.

Contact: VCI Press Dept., Phone: +49 69 2556-1496, E-Mail: presse@vci.de

Please note: VCI news about the chemical industry is also available via Twitter: http://twitter.com/chemieverband

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Contacts

Dipl.-Pol. Oliver Claas

E-Mail: claas@vci.de