European Chemical Industry Going Down the Drain, Says Ineos Chairman

Another petrochemical heavyweight has taken the stage to warn that Europe industry will lose competitiveness if it does not reduce its energy bill.

In an open letter to European Commission president Jose Manuel Barroso, also published on the company's website, Ineos chairman Jim Ratcliffe said the region's chemical industry could go down the drain within ten years, taking six million direct and indirect jobs with it.

Ratcliffe pointed to the textile industry, which in the 1980s largely decamped to low-cost Asia, as an example of what could happen to the European chemicals sector. The chemical industry is a "jewel in Europe's crown" that must be saved from extinction, he argued.

In his view, a "toxic cocktail" of high energy costs, further burdened with "green" taxes, along with uncompetitive labor, are killing an industry with revenues of $1 trillion a year. Yet, he said, "Europe "seems rather agnostic" about the industry's fate.

"Chemicals depend upon competitive energy and feedstock costs," Ratcliffe noted, adding that, "whilst intensely technical as an industry, and one of the reasons historically that Europe has been so successful, technology alone will not save it."

Making the pitch for exploitation of unconventional energy sources, the billionaire who according to reports owns a majority of his company's capital, explained that gas prices in Europe are three times higher than in the U.S. and electricity costs 50% higher. "There are no cheap feedstocks in Europe."

In the U.S., where $71 billion worth of petrochemical expansions based on shale feedstock have been announced, and the numbers are "predicted to grow to over $100 billion," the new source of energy "has transformed both the country's competitiveness and its confidence," Ratcliffe continued. 

In contrast, he said, "Europe announces closure after closure. In the UK, we have seen 22 chemical plant closures since 2009 and no new builds."

At the same time, the Ineos supreme chief warned that China "is building relentlessly" and soon will be self-sufficient.  "In the face of this competitive onslaught," he asked rhetorically, "does Brussels, or the countries of Europe themselves, have a master plan? What defenses do they have in mind?

I can see green taxes, I can see no shale gas, I can see closure of nuclear, I can see manufacturing being driven away. I can see the competition authorities in Brussels blissfully unaware of the tsunami of imported product heading this way and standing blindly in the way of sensible restructuring. It's not looking good for Europe, we are rabbits caught in the headlights, and we have got our trousers down," Ratcliffe concluded, while urging the Commission to "take urgent steps to protect Europe's chemical industry."