What would happen to your business if a chemical in your production process suddenly disappears? Or a chemical in your product that makes it work the way it does is withdrawn from the market? Maybe the first response would be blind panic or heated discussions into the night with your engineers about possible alternatives. I think we can assume the last response would be calls to your customers say that, sorry, you are not able to fulfil their orders or that the products they receive won't be exactly as they had originally expected.
Unfortunately this scenario is not entirely unforeseeable. We've been blogging and writing about REACH, the EU's chemical regulation, for quite some time. I'll be frank: it doesn't lend itself to good reading. It is long, technical and complex (so I'll forgive you for not taking the trouble to read some of our previous blogs).
We've been concerned that the very nature of the legislation, and the fact that many of the early implementation deadlines were directed at the chemical industry, meant that wider businesses, particularly manufacturing, had switched off. In short, we were concerned that many manufacturers simply did not think it was an issue for them.
To test this hypothesis we commissioned a short survey in 2012 to assess awareness amongst our members and delve a little deeper into the activities that REACH was prompting. Our results confirm our worst fears. The survey shows 20% of companies still believe REACH is not applicable to them while a further 30% say it isn't important to their business. The figures rises for the smallest companies with just under a third of companies with turnover below £2m per annum unaware of how they will be affected.
Why is this important? Well, REACH is a rapidly changing area with a number of direct legal obligations falling on manufacturers . Potentially it could affect any manufacturer. And at least once a year new substances will be targeted for bans so it's a moving beast. We believe it is important that all of our members monitor developments so that they can plan for future changes by searching for substitutes, changing production processes or if there are simply no immediate alternatives, by readying to apply for permission for continued use. While in some cases there may be easily available alternatives, in others, searching for substitutes will be a more involved process. Companies may need to purposely target innovation effort and work closely with their supply chain to make this work.
Furthermore, substances could disappear from the market as a result of a separate process under REACH – registration. This year marks the second major deadline for registration. On the 1 June 2013, companies that place substances on the market in quantities between 1,000 and 100 tonnes a year are required to register them. The registration dossiers assess the potential impacts of those substances on human health and the environment and sets out risk management measures to enable their safe use. Preparing this dossier can be expensive and in some cases companies may decide not to register a substance and, instead, withdraw it from the market (this may be particularly true for speciality chemical produced in low volumes). Critically, if a substance isn't registered you can not use it within the EU. In a recent survey for the European Commission , 37% of firms said they had experienced a withdrawal of a substance as a result of the first round of registrations in 2010. Around 30% were expecting it to happen again. I'm surprised it's not more.
Armed with the right information, however, it is clear that manufacturers are responding to REACH in the way the regulators had intended. Our survey confirms that once companies are aware of REACH, they are reacting:
- 80% of large companies that are aware are considering substituting substances or have already done so. Only marginally less small and medium sized companies are doing the same.
- Of those that were aware, half were changing work practices and redesigning processes, regardless of business size.
- One in five companies said managing chemicals is a key business priority
There does remain an issue for small companies, however. Even when aware, half are not monitoring developments. This compares to 72% of large companies and 83% of medium sized who are monitoring REACH closely. This is despite concern about substance bans being most acutely felt by our smallest companies.
What does this mean? Well, we need to make REACH easy to comply with. We might not be able to make the detail more interesting but we can better communicate the changes that are occurring. This must include clearer explanations of the potential impact of these changes. And we need stronger guidance from European regulators and legislators which is easy to understand and follow.
Importantly, we all have a role to ensure that the manufacturing community has a grasp that this is an issue for us all. If you are not monitoring REACH you could make a good start by signing up to our free Substance Alert Service. You may even consider REACH training or an audit by one of our consultants.