European chemicals industry could be wiped out in a decade, says Ineos boss

That is before Europe is hit by a wave of exports from America – the result of a $71bn (£42bn) spend to 2020 by the US chemical industry as it capitalises on a shale gas revolution that has brought energy prices down to a third of Europe’s.

“I recall the extinction of the European textile industry happening before my eyes as a young graduate at Courtaulds in the 1980s. Chemicals could go the same way. It could well be another European dinosaur,” Mr Ratcliffe says in his letter.

He points out that the chemicals industry is “a rather larger species” than textiles, rivalling the automotive sector as Europe’s biggest manufacturer, with revenues of $1 trillion a year and responsible for 1m direct and 5m indirect jobs.

Adding chemicals are “omnipresent”, whether in “our watches, deodorants, iPhones, cars and Nike shoes”, he says: “Strategically and economically, no large economy should abandon its chemical industry.”

Some 32 of Ineos’s 60 chemical plants are in Europe, but their profits have halved in the past three years while the group’s US profits have tripled. The situation is exacerbated by growing competition from the Middle East and Asia.

Mr Ratcliffe points out that Ineos’s major rival, BASF, in a European market spanning around 200 chemical plants, has also “for the first time ever announced a strategic cutback”.

Pointing out that, in the UK “we have seen 22 chemical plant closures since 2009 and no new builds”, Mr Ratcliffe says of the European plight: “I can see green taxes, I can see no shale gas, I can see closure of nuclear, I can see manufacturing being driven away. It’s not looking good for Europe, we are rabbits caught in the headlights, and we have got our trousers down.”

Speaking to The Daily Telegraph, Mr Ratcliffe said the letter was not a prelude to the announcement that Ineos was closing plants – or to a change of plan at the Grangemouth petrochemicals plant in Scotland, which he reprieved last year after a bitter stand-off with the unions. Neither was he expecting immediate intervention from Brussels over the industry.

But, he said politicians “need to think about the consequences of it all disappearing. If they think about it too late, it will be too late. It’s all fine and dandy having the highest green taxes in the world but if that closes down your manufacturing industry, it’s not so good.”

more