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    Europe Reports

    Study Concludes SMEs May be Unprepared for REACH Registration

    European coatings companies are worried that a considerable number of the SMEs may not register their chemicals.

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    Sean Milmo, European Correspondent11.06.17
    The European coatings  sector  is waiting with some trepidation for the results of  the registration of thousands of chemicals with the Helsinki-based European  Chemicals  Agency (ECHA).

    The chemicals are the last of over  30,000 substances  which have  to be registered  with ECHA with dossiers on their safety profiles  under the  European Union’s  REACH regulation on the registration, evaluation, authorization and restriction of chemicals.

    Already two tranches of  the total of industrial chemicals on the EU market have been registered since the regulation came into  effect  10 years ago. The last tranche, which have to be registered by the end of May next year, is the largest covering around  25,000 substances, which are produced  or imported  in annual amounts  between 1 and 100 tons.

    The vast majority of the producers or importers of the chemicals – comprising around  60,000 registrants –  are SMEs   supplying niche  markets  like those for speciality additives  for coatings and related formulations.

    European coatings  companies  are worried that  a considerable number of the SMEs  may not  register  their  chemicals  because of  the  costs and administrative  burden of registration.  To avoid breaching the regulation, unregistered  chemicals will have  to be taken off the market  after the mid-2018  deadline.

    Since they are downstream users of chemicals, most coatings companies have no registration obligations except to provide  their  chemicals suppliers with information about the ways substances are applied  for inclusion in the registration dossier.

    But some coatings companies, especially SMEs  in speciality segments,  make or import  some of their formulation chemicals  which they have to register.  Also some coatings distributors, many of them SMEs, import  or even produce  themselves chemicals which require  registration.

    “The impact  of  REACH  registration costs on SMEs  is a big worry,” said Marco Susnik, REACH  specialist  at The European Association of Craft, Small and Medium-sized  Enterprises (UEAPME), which has many members in the coatings value chain.

    “There are a lot of complex  supply chains in the coatings and other sectors where SME producers are importing raw materials to make  specialist  chemicals,”  he explained.  “They could stop making these products because the  registration costs  are too expensive, which will affect hundred and probably thousands  of downstream formulators like coatings producers.”

    The European Council of the Paint, Printing Ink and Artists’ Colours Industry (CEPE), the European trade association for coatings, has been keeping a close eye on the REACH  registration process through its membership of a chemical  customers’ alliance called the Downstream Users of Chemicals Co-ordination Group (DUCC).  The downstream users organization is a member  of the Directors’ Contact Group (DCG), a body representing the European Commission, the EU executive,

    regulators  and industry which has the task of  sorting out difficulties with REACH registrations.

    “We are  concerned that  the portfolios  of chemicals suppliers, particularly for low-volume products, might not be 100-percent the same after registration,” said Janice  Robinson, CEPE’s  product regulations director. “There is no cause for panic yet.  We would like suppliers to signify as early as possible which chemicals they will not be registering so that chemical companies  have sufficient time to look for alternative sources of supply.”

    A study on SMEs,  commissioned  by ECHA and published in October (2017), found that a large  proportion of  smaller  companies are not preparing themselves properly for the mid-2018  deadline.  “Unfortunately, a sizeable number of  SMEs  have moved too late  and will face tough decisions in terms of rationalization of their substance portfolio,” it said.

    The report, by Risk & Policy  Analysts (RPA), Loddon, Norfolk, England, segmented  SMEs into six  groups ranging from those  which have already started  organizing their registrations to those who currently cannot afford the costs of registration or are taking no notice of the REACH rules.

    Even among  groups  which are aiming to register  as much of  their portfolios as  possible companies have not yet  begun the registration process, according to the study.

    A  group which RPA calls the Planners, accounting for 35-40 percent of  SME chemicals sector, tend to take registration the most seriously with many having had experience already with REACH  registrations.  But   49 percent of medium-sized,  64 percent of small and 77 percent of micro Planners  had not yet put in place  the administrative resources and budget  needed for registration.  Around a third were intending to reduce parts of their portfolios after the registration deadline.

    Companies  in another group – the Key Component  Manufacturers who make specialist chemicals and are key suppliers to low volume, high margin coatings producers – are aiming to rationalize their portfolios  by withdrawing the least valuable substances from the market. 

    Some of  their products  are so vital to coatings and other customers that  an average of 10 percent of purchasers  are  helping to finance  the suppliers’  registration costs. In Italy the proportion is  20 percent.

    The most vulnerable  to the impact of  the registration  are  three groups -- the Strugglers,  No-Hopers  and Ignorers – who might make up as much of 40 percent  of the SME  sector, according to RPA.

    Companies within these  groups  may have to withdraw  large proportions of   portfolio  products just to offset  registration costs.  “(The No-Hopers) have gone or will go out of business once they have verified and understood the cost of registration of their  substances,” predicted  the report.

    One  strategy by companies in all three groups could be to reduce  the output of individual chemicals so that it falls below the one tons-a-year  threshold above which compliance with REACH registration rules is required.

    The most expensive part of the registration process is the price  of the safety  data required  for registration dossiers, a high proportion of which is owned by large chemical producers providing basic  or intermediate  chemicals.  Charges  for access to safety data can range from €10,000 – 25,000 ($12,000- 30,000) to as much as €250,000, according to RPA.

    ECHA  put forward a  proposal  in October (2017) for giving SMEs  free access to safety data.  But this has been opposed by the Brussels-based  European Chemical Industry Council (CEFIC) representing the larger chemical producers.

    Just how many chemicals are registered by SME  by the middle of next year  could depend on a compromise thrashed out within the DCG  by SME representatives,  like UEAPME  and CEFIC. 
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