The optimism of the year 2000 has receded and numerous Chemical Companies have issued profit warnings since the beginning of the year. Declining results for the first half of 2001 and revisions to the forecast decline of results for the whole year are increasing, except for Groups with dominant pharmaceutical interests.

The main reason is the increase of the oil price to 25 dollars per barrel, that increases the price of the chemical industry's raw materials. The slowing of American economic activity (with an exceptionally high gas price) entails a slowing of growth and pressure on prices as margins decrease on a long-term basis in all intermediate products with high energy content. The increase in the exchange rate of the euro against the dollar will slow down exports that are always a source of important income for the European Chemistry.

The American Chemical Industry is expected to fall 0,3% (volume) this year, as well as the Japanese Chemical Industry 0,5%. The Asian Chemical Industry found again its dynamism with a growth of 7-8% in 2001 and 2002. In stock markets, as the new economy collapsed, Pharmaceuticals served a as refuge to investors. Another very solid sector was oil, where majors strengthened their positions in 2000 and continue to make important profits.

Diversified Chemical Companies continue to report weak figures with stock values well below the leaders. The top five diversified chemical groups (Du Pont, Bayer, BASF, Dow, Akzo Nobel) have a stock value / turnover ratio of 1,3 while the top five mainly-pharmaceutical groups (Pfizer, Merck, GSK, J&J, Novartis) have the same ratio equal to 6,0.

The Speciality Chemicals, launched with media fanfares, is not living up to its promises and concerned groups do not resist the current slowing of growth, as well as of the economic climate (rise of the cost of raw materials and energy).

ICI, one of the original leaders of the world Chemical Industry, put up a good resistance and its CEO ensures that measures are taken in order that the Group improves its performances.

Rhodia, previous number one of the French Chemical Industry, had a disappointing first half year.

A new logo and corporate design have been developed for CEFIC. The former is to show the evolution of the organisation to one with dynamic attitude and objectives, reinforcing a new mode of work, more open and more direct with its members.

Jean-Pierre Tirouflet, President of CEFIC, is resolutely optimistic for the growth of European chemical industry: 3,6% in 2000, 2% in 2001 and 3% in 2002.

Splits and mergers continue in all areas of the chemical industry (see annex)

GlaxoSmithKline (GSK) is as big as Pfizer, number one of the pharmaceuticals.

DuPont sold its oil sector at a bad moment.

Dow is confident in its merger with Union Carbide, but transaction and restructuring costs are high (1,4 billion dollars).

BASF sold its pharmaceuticals to the profit of the group Abbott with an exceptional appreciation of 6 billions euros on an amount of transfer of 6,9 billion dollars.

Syngenta was created as world leader in Agrochemicals, with a great number of jobs suppressed. Aventis sold its Crop Science division to BAYER, after having abandoned the concept of "Life Sciences" and after the resignation of its CEO, Alain Godard. However Bayer, that wanted to preserve its diversified structure, was in difficulty because of problems with a drug and announced a change in strategy.

Atofina is the result of the rearrangement of the chemical activities of Elf, Fina and Total with a reorganization in depth and the suppression of a research center.

EON, which is refocussing on its energy activities, is ready to sell its chemical activity Degussa, born of the fusion of Degussa-Hüls and SKW Trostberg.

Sanofi-Synthelabo displays a dynamic growth of its new products and L’Oréal continues to be a model Company in the sector of Cosmetics.

Chemicals has to face the emergence of new environment constraints coming from international regulations:

The Commission sets out the path towards a sustainable use of chemicals

On 13th February, 2001, the European Commission adopted a White Paper setting out the strategy for a future Community Policy for Chemicals. The main objective of the new Chemical Strategy is to ensure a high level of protection for human health and the environment, while ensuring the efficient functioning of the internal market and stimulating innovation and competitiveness in the chemical industry. Commenting on today's announcement Environment Commissioner Margot Wallström said: "This is one of the most important initiatives the Commission has taken in the context of sustainable development. We have decided on a step-by-step approach to phase out and substitute the most dangerous substances – the ones that cause cancer, accumulate in our bodies and in our environment and affect our ability to reproduce. This decision is crucial for future generations".

Enterprise Commissioner Erkki Liikanen said: "Today's decision is crucial to get good and reliable information on the basis of which we can start analysing the many chemicals on the market on which we have no knowledge of their effects on the environment and our health. At the same time the decision is important to create a proper internal market for chemicals products – and thus a level playing field for our industry. The scheme which we have agreed today will also help stimulating innovation and will provide industry a clear framework within which they can work on a competitive footing with other global players.

Chemical companies are anxious

Of the 30,000 chemical substances currently sold, 80% are produced in very small quantity (less than 100 tons per year) and are judged inoffensive. For these substances, manufacturers will have simply to bring "more information" by 2012, the European Commission white paper recommends. But, for 15% of these 30,000 products, i.e. approximately 5,000 substances manufactured in quantities over 100 tons and suspected to be potentially harmful, the future is quite different.

To continue to sell some ethers, gas or chlorinated products, manufacturers will have, for example, to conduct thorough tests (by 2005 when the production exceeds 1,000 tons and by 2008 when it exceeds 100 tons) so as to prove that they are harmless in the long term. This will cost the manufacturers approximately 2 billion euros in total.

For the remaining 5%, i.e. 1,500 products, a withdrawal or a severe restriction of marketing are already counselled by the white paper. It concerns substances judged potentially carcinogenic, eg asbestos or benzene, mutagenic or toxic to reproduction, or extremely polluting. The objective is to replace them rapidly by less harmful products.

The European Parliament debated the proposed Directive on the European Company. The European Confederation of Managers (CEC) met the German Rapporteur Winfried Menrad to explain its position, and to insist on the capacity of specific representation of managers. It proposed amendments to achieve this.

Commission urges greater Corporate Social Responsibility in Europe

Shortly after the European Commission's communication on quality of work, Commissioners Anna Diamantopoulou (Employment and Social Affairs) and Erkki Liikanen (Enterprise and Information Society) presented a Green Paper on promoting a European framework for Corporate Social Responsibility , whereby companies decide voluntarily to contribute to a better society. The paper, intended as a launch pad for debate, takes up the "triple bottom line" concept, whereby companies voluntarily take on board social and environmental concerns besides their economic ones. In line with the Commission's proposal for a Sustainable Development Strategy for Europe, recently endorsed by the Gothenburg European Council, the paper argues that all three elements can dovetail to create more productive and profitable business. Announcing its publication, Commissioners Diamantopoulou and Liikanen said, "More and more firms are realising the link between profitability and best ethical and environmental practice. Conscientious firms not only attract and retain the best workers, they can also get ahead in the technology game, vital for that all-important competitive edge." The paper is a direct contribution to the goal, backed by EU leaders at the March 2000 Lisbon European Council, of making the EU "the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion." Part of this challenge lies in combining business profitability with the twin concepts of sustainability and accountability. It is also about striking the appropriate balance between flexibility and responsibility in creating a business-friendly environment.

The purpose of this document is to consult the social partners, in accordance with Article 138, paragraph 2 of the EC Treaty, on the possible direction of a Community action on the protection of workers' personal data.

Employers collect personal data on job applicants and workers for a number of purposes, including to comply with law, to assist in selection for employment, training and promotion, to ensure personal safety, personal security, quality control, customer service and the protection of property.

Directive 95/46/EC fully applies to workers' personal data. However, it could be argued that, given the specific nature of the employment relationship and considering the general nature of the Directive, there may be a need for detailing out the application of the principles in the employment context.

The Social Policy Agenda adopted by the European Commission on 28 June 2000 states (point 4.1.2.2) that a communication on financial participation and an action plan will be prepared in 2001.

The purpose of financial participation is to associate a company’s employees with its profits and/or results. Financial participation schemes can take different forms. They may apply to senior managers or to all staff.

The Commission is interested in particular in the schemes that apply to all a company’s workers or, at any rate, to the great majority.

This paper classifies such schemes under three headings: profit sharing, share ownership and share options.

1. Profit sharing implies the sharing of profits by providers of both capital and labour, by giving employees, in addition to a fixed wage, a variable income directly linked to profits or some other measure of enterprise results.
2. Employee share ownership provides for employee participation in enterprise results in an indirect way, i.e. on the basis of participation in ownership, either by receiving dividends, or the appreciation of employee-owned capital after the selling of the shares, or a combination of the two.
3. Share options give employees an option to buy company shares at a certain price (normally at or below the market price at the time the option is granted) for a specified period of time. In the past, schemes have been targeted mainly at senior management, but they are increasingly being opened up to a wider group or even to all employees.

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