Right noises, wrong actions

Date: 20/06/1996

By Fiona McHugh

EUROPE is slipping behind in the race for global markets, according to a string of reports published last month. But that comes as no surprise to Yves Bobillier.

The boss of a multi-billion-ecu business, he has to fight tooth and nail to maintain Dow Europe's competitive position. With higher energy, labour and transport costs than in the US, the odds are stacked against him.

“Everywhere I go, I hear people making the right noises,” he complains. “They talk about reducing production costs, cutting back on regulations, and no longer penalising labour. But I have yet to see anyone taking action. So, there is a low level of confidence in Europe, there is not enough consumer demand and insufficient investment.”

Pulling no punches, he adds: “That is why we are suffering - and we will continue to suffer until something is done. Markets are daily becoming more global, but the EU institutions are not keeping pace - so there is a crisis.”

But despite the recent downturn in Europe's - in particular France and Germany's - economic fortune, Bobillier insists the decline is not irreversible.

“Nothing is inevitable,” muses the Dow chief, clearly one of industry's optimists.

Bobillier, a devotee of the internal market and an ardent supporter of the single currency, argues that the answer to the problem is more Europe, not less.

“We need to accelerate the Europeanisation process,” he insists.

“Some people say there is too much Brussels, but I say there is not enough.”

So what would Bobillier tackle first if given Jacques Santer's job?

“The energy sector,” he replies, without hesitation. “We have tried desperately to help the Commission in its efforts to liberalise, but so far we have failed. There is tremendous resistance to progress in Europe.

“Our industry, and others, spend between 50&percent; and 100&percent; more on electricity than do our rivals in the US (depending on the country), and electricity accounts for more than 20&percent; of our costs. That means that if a company is planning to open a plant with high energy consumption, it will choose the US instead of Europe.”

That sad fact, of course, has not escaped the Commission, which for several years has been trying, without success, to open the electricity market to competition. A recent agreement between Germany and France could produce the long-sought after breakthrough, but if no progress is made, Bobillier would like to see Competition Commissioner Karel Van Miert intervene.

The Competition Commissioner is something of a hero for the man from Dow Europe. “This is one area where I have no complaints - Van Miert is doing extremely well,” says Bobillier.

Which is more than can be said for Europe's railroads. “The rail transport system is probably ten years behind the US. It is still broken into national territories, so we cannot transport material across the continent by rail. We have to take the more expensive option - roads,” he says.

“This is vital to the competitiveness of a business which transports million of tonnes of goods per year - and it makes no sense from an environmental point of view.”

Which, of course, raises the next obvious question: to what extent is the chemical industry guilty of damaging the environment?

“Ten years ago we were the baddies, but we have made a lot of progress in recent times. It is not in our interest to use up valuable resources. That is why 50&percent; of our R&D budget is environment-driven,” stresses Bobillier.

He welcomes the Commission's likely shift towards voluntary agreements - deals which set environmental targets, but allow industry to decide how best to achieve them. “In Germany, we achieved a real breakthrough in terms of dioxine emissions as a result of a voluntary agreement. If I were to burn a wood fire in my house today, the dioxine emissions from that fire would equal about a third of the emissions from all of our plants in Germany,” he says.

Tax, however, is Bobillier's biggest bugbear. “We have too much tax in Europe, it is as simple as that. And we levy most of it on labour so we have high unemployment too,” he argues.

Bobillier believes Europe should cut the cost of labour to prevent the migration of jobs to developing countries.

“In the US, they have created employment, despite the restructuring of industry, but we have not been able to create new jobs,” he points out, adding: “We protect things long after they need to be protected. The Common Agricultural Policy (CAP) is an example of that.”

Bobillier's fiercely pro-competition stance sits uncomfortably - if it sits at all - with his company's willingness to accept huge grants from Bonn for the purchase of outdated chemical plants in East Germany.

But in fact, the industry chief insists, there is no contradiction. “The agreement with the German government has a sunset clause. We are given money to restructure old plants, but it will only last for four years. After that we are on our own,” he explains.

“It is like the Marshall Plan when the US gave money, under favourable conditions, to rebuild Europe. But the money only lasted until the job was done.

“That is totally different from governments pumping money into loss-making industries,” says Bobillier, with the smile of one who has just won a well-rehearsed argument.