The year 2008 has been proved as a critical year for Dyes and chemicals industry ,since there have been many ups and downs in the market throughout the year for various reasons like Olympics, Pre-registration of REACH, and Global Meltdown etc. In order to prepare the country for 2008 Beijing Olympic Games, Government of China had taken necessary action to focusing on the aspects of environmental protection. As a part of this plan, the Government had set about halting production, and closing down factories. As many as 1000 dyeing and printing factories had been shut down in Zhejiang Province while many others in Hebei, Henan and Shandong Province had stopped their production.
EU REACH was put into effect from June 1, 2008. Under this law, it is mandatory for exporters to provide specific details of the chemical components in the products. They are required to prove their safety, or else the products are not allowed to enter the EU market. The six-month REACH pre-registration period closed on 1 December at midnight. EU/EEA-based companies submitted well over two million pre-registrations covering more than 100,000 substances. Reportedly, several leading Chinese enterprises had set up a special department in charge of REACH rules. However, many SMEs were having serious problems, especially due to lack of knowledge and finance. These domestic enterprises were unable to follow REACH rules and most were seriously considering giving up EU as a market.
In the last quarter of the year, industry was contaminated by global meltdown which was started from US, and spread across the world. BASF-the world's largest chemical company in terms of sales has been slashed its production, due to enormous decline in demand for its products. The company has temporarily shut down 80 of its plants; worldwide. In total, cuts and closures represent 20 to 25 percent of the company's global production capacity. It is believed that around 20,000 employees have been affected by this major step.
The Dow Chemical Company has taken a series of aggressive actions to accelerate its transformational strategy in light of current economic realities. As part of the actions announced, Dow has eliminated approximately 5,000 full-time jobs, closed 20 facilities in high-cost locations and divested several non-strategic businesses. The job reductions represent a reduction of roughly 11 percent of Dow's global workforce. Once fully implemented, these actions are expected to result in $700 million in annual operating cost savings by 2010 and are additional to the previously announced cost synergies of $800 million in the same timeframe for the anticipated Rohm and Haas acquisition. In order to cope up with the current scenario, Dow has been temporarily idled approximately 180 plants and significantly reduced its contract workforce worldwide by approximately 6,000 as predicated by reduced operations.
Huntsman Textile Effect has cut 470 jobs in a new effort to trim costs in the unit that makes textile dyes and chemicals, which represents around 12 percent of the 3,900 employees in the textile-effects unit, acquired from Ciba Specialty Chemicals in June 2006.
Export of dyestuff declined in major Asian countries because European countries were the principal consumer of dyes and chemicals and their demand drastically decreased. Textile chemicals, auxiliaries manufacturers have been in trouble due to the inventory cost of higher price in raw materials, which they purchased couple of months back. The price of major dyes, and other key chemicals from China, Korea, Japan, Taiwan, Hong Kong, Malaysia, and other countries have been decreased suddenly. Prices of major key chemicals and intermediates have been decreased by 40- 50 %.
Looking at the present scenario, year 2009 could be worse for the Textile Industry as compared with 2008. It is believed that the situation will be remain the same for next 2-3 years and in such case, production will shift to low cost areas such as Vietnam, Honduras, Indonesia and Bangladesh. However, to sustain in the market companies has to focus on environmentally friendly products, Continuously Innovation in products, process and technology, Cost cutting strategy, etc to manage their business successfully.