Chemical Industry “American De–Industrialisation Weakens Chemical Industry,“ German Chemical Association Says

Editor: Dominik Stephan

Harsh words from the German industry association VCI (Verband der Chemischen Industrie): The American de–industrialisation stresses business in the chemical industry and undermines the effort of America's innovative chemical companies, says a recent VCI statement. The association sees only little perspective in shale gas explorations.

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(Picture: Process)
(Picture: Process)

Frankfurt/Germany – The chemical industry in the US is still struggling with the aftermath of the financial crisis: productivity fell by more than 25 percent between 2007 and 2009. Despite moderate growth in the last 30 month, the industry has not yet reached the pre-crisis level, says the VCI. According to the association this is not the fault of the modern, innovative and competitive American chemical companies but of an ongoing de–industrialisation process in the US: Both a lack of request by the industry and the crisis within the country's automobile and construction industries are the main causes for the recent drop in domestic demand.

Unlike export oriented countries like China or Germany the US chemical industry – with its export quota of only 24 percent – can not compensate this domestic slump by export figures, says the VCI. The association also expects only little change from another bearer of hope: Shale gas, often praised as a 'game changer', could not compensate for structural deficiencies.

Shale Gas Production Won't Compensate Structural Deficiencies

Conventional reservoirs of crude oil and natural gas in the US are slowly depleting, resulting in rising prices for raw materials and energy. The so called 'shale gas' could bring a change: This natural gas, produced from shale, has become an increasingly important source of natural gas in the United States over the past decade: A recent study expects gas to supply as much as half the natural gas production in North America by 2020. The production of shale gas, nevertheless, is technologically complex and subject of severe environmental concerns.

Due to the country's great reserves, the US economy expects high profits and low gas prices from shale gas. Especially the chemical industry would profit from low prices for energy and raw materials, insiders believe. The America Chemical Industry Council ACC even expects a boom in investments: It expects capital inputs of about US $ 16 billion within the next years, says the ACC. These enormous expenditures could bring turnovers of more than US $ 130 billion and create about 400,000 jobs, analysts believe. Good news, compared to the 200,000 jobs that were lost between 200 and 2011.

The VCI nevertheless remains sceptical: The positive effects for the competitiveness of the industry could not be denied, the association states. But these singular effects could just not be enough to compensate for structural deficiencies and weak exports.