Greek chemical industry to decline in 2015-16
The chemical industry accounts for approximately 5% of manufacturing in Greece. There are around 400 chemical companies, mostly SMEs, with a total turnover of EUR 2 billion and about 17,000 employees.
Most of the businesses are downstream users of chemicals rather than producers of primary raw materials. The chemicals account for 10-15% of Greece’s total exports, mainly to the EU countries, the Middle East and the Balkans.
Since 2010, when the financial crisis broke out in Greece, the course of the country’s chemical market has been affected. It is mostly the smaller companies that face an actual problem of survival than the bigger ones that are also trying hard to get used to the new circumstances.
Vasilis Gounaris, vice president of the Hellenic Association of Chemical Industries (HACI) and Vice President of BASF Greece, described in Greek to ICIS (forms part of Reed Business Information) the current status of the country’s chemical companies.
“After the bank closures, our main problems have to do with cash flows and Greece’s image abroad; however, we are fortunate because our companies have had a long tradition of reliable transactions and that partially balances any negative impact.
“Greek chemical companies had faced similar economic problems in the past and had made important adjustments in order to serve their customers and be trusted by their suppliers,” Gounaris added.
When asked about the real impact of banking restrictions on chemical trading, Gounaris told ICIS: “The Greek chemical industry relies mostly on raw material imports. Banking restrictions affect trading in a direct and proportionate way. At the moment, the impact is not yet visible.
“However, there is a negative influence on the industry’s competitiveness. There are companies that were very well prepared to deal with capital controls whereas others are facing problems, at least in the short term.”
The ongoing financial turmoil of the country has thus affected chemical demand: “In 2014, demand was at the same level as 2013 showing signs of recovery. The problems that arose after that period, especially in relation with the banking system, have subsequently caused a reduction in demand ” Gounaris said.
ICIS also contacted the Greek Federation of Workers in the Chemical Industry (OEXBE) to gauge employees’ views on the impact of the crisis to the chemicals market. The federation consists of a wider range of related branches such as the rubber processing industry, the fertilizers and the paints industry.
Eythymios Theocharis, president of OEXBE, referred to the workers’ main problems: “Among our biggest concerns is that we work under extremely unhealthy and dangerous conditions. If chemical companies are trying to find means to reduce the pollution they cause to the environment, imagine what we have to confront on a daily basis in the factories we work in.
“In 2011 the government decided to stop listing some professions as heavy and unhealthy. This change meant that 166,000 workers would be forced to work an extra five years in order to receive a pension under circumstances that you cannot imagine”, Theocharis said.
During the first years of the crisis a number of Greek chemical companies had to shut down, forcing many people into unemployment. Theocharis highlighted some of the most severe cases: “In 2011, Petzetakis Group, one of the fastest growing plastic pipe and hose systems manufacturers worldwide, closed one of its factories outside of Athens leaving 400 people without a job. Moreover, the company closed its factory near Thessaloniki where 100 more workers lost their jobs.
“There are cases where business owners were taking bank loans which they would never invest on their companies. Instead, they would use this money for personal reasons. The case of Lavrentiadis Holdings is such a case.
“ALAPIS, one of the group’s main companies, closed in 2011 leaving 2,000 people unemployed. Another branch of the same business, near Thessaloniki, shut down the same year; it had 150 workers.”
On the other hand, apart from its negative side, the crisis seemed to have a positive aspect, according to Gounaris: “Since 2012, there was a beneficial effect on exports, since businesses tried to strengthen their presence in markets abroad. Moreover, the industry reorganized itself; the companies restrained their costs and redesigned their markets. This effort is expected to continue also in 2015 aiming to increase the industry’s turnover across borders.”
Trapped between political instability and severe additional fiscal measures, the Greek chemical industry will have to face important future challenges: “Greek chemical companies have valuable and well-trained manpower. They look forward to the implementation of reforms that will enable their operation on a level playing field”, Gounaris says.
“By removing bank barriers the market will be able to recover. Moreover, the stabilisation of the political situation in the coming months and the continuation of the European course of the country, will contribute significantly to strengthening Greek entrepreneurship.”
Referring to the industry’s outlook for the coming year, Gounaris sees an opposite trend between the European and the Greek chemical market: “As far as Greece is concerned, for 2015 and the first half of 2016 the industry is expected to have a downward trend. The European chemical industry as a whole is expected to have an upward trend, even by a small percentage.
“We have to make it clear that for Greece, it is innovation and sustainable development that will significantly determine the course of the Greek chemical industry in the coming months.”
Theocharis gave his view on the future of the Greek chemical market: “There can be no hope because of the irrationality of the Greek political parties. Every government will make us believe in a better future and it will soon let us down.”