The Netherlands: The chemical portal to Europe

Strong chemical community + High level of technology = Business acceleration

The chemical sector plays a significant role within the Dutch economy, contributing about 3% to the country’s gross domestic product and employing 65,000 people. In 2010, the estimated turnover was Euro 47 billion Euro, while in 2009 it was Euro 38 billion.

Significant exports

Chemical products comprise a significant 19% of The Netherlands’ total exports. The Netherlands exports about three quarters of the chemicals products it manufactures. Of its total export volume of Euro 60 billion, three-fourths are exported to countries within the EU and the remaining to non-EU countries. In 2009, exports to non-EU countries increased significantly, by about 4.5%.

Strength in partnerships and regional clusters

Besides strong trade and investment links to Europe and the rest of the world, the Dutch chemical industry is particularly competitive because of its integrated nature. Chemical companies not only purchase from and supply to one another, but also work together in public-private partnerships in areas like innovation, production and regional clustering. These clusters are more competitive than the sum of the individual companies. Some examples of strong regional clusters are the industrial biotech/specialty chemical cluster in south-west Netherlands; the high performance materials/specialty chemicals cluster in south-east Netherlands; and the industrial biotech/high performance materials cluster in north-east Netherlands.

Delivering value through integration and innovation

Typical to the Dutch industry across sectors, the chemical industry also works in a tri-partite partnership where private sector companies, knowledge institutions and the government all join hands to address the sector’s needs. The Dutch chemical industry is highly innovative and spends around 2.5% of its turnover (approximately Euro 1.3 billion) on research and in-house development. Roughly two-thirds of the companies in the sector are delivering product and process innovations.

Interesting examples of open innovation are the Centres for Open Chemical Innovation (COCI), like Chemelot and Plant ONE. In these communities, established companies, start-ups and small businesses, develop innovative ideas and test their feasibility using the infrastructure, services and expertise of the companies present.

With the goal to double GDP and cut CO2 emissions by half, an industry-wide innovation programme was launched in 2007. This programme was developed through intense co-operation between the most important partners in government, academia and the private sector. This has resulted in public-private partnerships like BE-Basic: Bio-Based, Ecologically Balanced Sustainable Industrial Chemistry; the Institute for Sustainable Process Technology; the Dutch Polymer Institute; and the TASC innovation programme.

On the Rise

Although the global economic recession had a significant negative impact on the Dutch chemicals industry, the last quarter of 2010 and the first quarter of 2011 have shown a positive trend. According to Statistics Netherlands, the Chemical Processing Industry in the Netherlands, for instance has grown its output by 3% and increased sales by 22% in the first quarter of 2011 as compared to the same period last year.

Attractive to the Indian chemicals industry

The US$ 30 billion strong Indian chemical industry is the twelfth largest in the world by production volume and is growing rapidly. About one-thirds of the chemicals produced are consumed domestically and Europe is the 2nd largest export destination after other Asian countries.

Indian chemical companies are looking to expand their global footprint and the European market is still large and attractive. From this perspective, Indian companies seeking to establish a base in continental Europe would find various advantages in choosing The Netherlands as their investment destination of choice.

The Netherlands boasts of Rotterdam, Europe’s largest port and one specially equipped to service the oil chemicals industry, with excellent transportation connections into Europe via pipeline, road, barge and rail. About 60% of the port’s land is dedicated to oil and chemicals and the port boasts18 third-party tank storage and distribution terminals for oil and chemicals. The presence of processing capacity as well as suppliers, buyers and service industries offers multinational companies makes Rotterdam particularly attractive. Over 1,000 international companies are located in the city and it’s a growing number.

Furthermore, cooperation between companies ensures minimum wastage and lower costs for companies as one company’s waste is often another’s input material. This has been a real differentiator for Rotterdam Port and the Netherlands in being attractive to companies in the oil and chemicals industry. The Netherlands’ also offers tax advantages, an internationally oriented business environment, and a quick set-up time owing to investor-friendly rules and a host of organisations that assist new investors.

Indian companies in other sectors, especially information technology, have already recognized the benefits of locating in the Netherlands. United Phosphorus Limited (UPL) and Dishman Pharmaceuticals are some Indian companies from the chemicals sector that have invested in The Netherlands recently. More are likely to follow.