VCI sounds alarm over competitiveness of German chemicals industry

Frankfurt, Germany – German chemicals industry association the VCI has lowered its 2023 outlook on “disappointing” first half-year results by the country's chemicals and pharmaceuticals makers.

In a report issued 21 July, Frankfurt-based VCI revised down its production outlook to a year-on-year decline of 8%, or 11% excluding pharmaceuticals.

The figures represent a significant downgrade to the industry body's earlier forecast of a 5% overall decline, or 8% excluding the pharmaceuticals industry.

Petrochemicals and polymers suppliers witnessed a particularly sharp decline, with production falling 21% and 19% respectively.

At €114 billion, first-half sales in the chemicals & pharmaceuticals industry fell 11.5% year-on-year: a 15.5% decline in domestic sales and 8.5% drop in exports.

Orders received in the industry “have been falling almost continuously for more than a year,... [and the] "order backlog has melted away” VCI added.

Meanwhile, a recent VCI member survey found almost two-thirds of German companies reported falling profits or losses, with around 90% rating energy costs as "a decisive disadvantage."

The first-half figures "are red and the production costs in Germany are not competitive,” commented VCI president Markus Steilemann, adding that belief in Germany as a business location is "waning.” 

“This concentration of risk from high energy prices and corporate taxes, poor infrastructure, a shortage of skilled workers, digitisation backlog and bureaucratic madness robs our entrepreneurs of their confidence," said Steilemann.

“That is why we are fighting for an industrial electricity price," concluded Steilemann, who also leads Covestro. "That's the only way we can survive in international competition."