WHILE the Reach (Registration, Evaluation and Authorisation of Chemicals) legislation is not expected to have much effect on larger companies such as Huntsman, it could damage small to medium-sized businesses that produce a wider range of products, but in smaller volumes.

One company fearing the worst is Oxford Chemicals, based at Seaton Carew.

The business, founded by Dr Duncan Mullis at Oxford University in 1973, is a world leader in the global flavours and fragrance industry, and particularly uses sulphur-based chemicals.

Yule Catto acquired the speciality chemicals company in 1995, and the headquarters was moved from its manufacturing site in Northamptonshire to its present base on Teesside.

It employs about 78 people, including four staff in the US, and has an annual turnover of about £10m.

It has a product range of about 650 different chemicals, producing about 450 in an average year, in amounts from 1kg to 100 tonnes.

Managing director of the company Dr Richard Smith said: "The bulk of the chemicals we produce are in the one to ten tonne range and are primarily flavours and aromas for other chemical and food companies.

"From the perspective of the new Reach legislation, we are faced with the possibility of having to test every one of our products.

"That will put a huge burden on a small company like ours, as we will have to divert staff away from manufacturing to testing the chemicals themselves.

"Innovation within the company could be stifled by red tape."

He added: "Keeping at the forefront of technologies relevant to the business and markets we serve is one of the key issues facing Oxford Chemicals.

"We are constantly evaluating new manufacturing technologies relevant to chemical manufacturing, including biotechnology, the latest developments in purification technology and sustainable development."

"We are not against regulation, but we feel the new system should be prioritised on risk.

"Unlike the bigger producers in the speciality chemicals sector, we can't just move abroad to areas outside the EU.

"Our knowledge and skills base is in the North-East and that is where we would prefer to keep it.

"And anyway, even if we could produce the chemicals outside the EU, they would still face legislation if they were for use within Europe."

The new law will affect everyone

THE European Union's new legislation on chemicals will cause problems for the whole European industry, including manufacturers, retailers and any company that uses chemicals as a basic ingredient in its products.

James Thompson, solicitor at law firm Eversheds, in Newcastle, said: "The chemical industry has known for some time that these regulations will come into force one way or another and there have been widespread protests leading up to the close of the consultation period in July this year.

"While the intention of the legislation is commendable, it will place a huge burden on all industries which use chemical products.

"Even businesses in the retail and food sectors should not underestimate how much these regulations will affect them."

He added: "Demonstrating the safety of substances, including simple elements such as zinc, will inevitably cause chemical companies to raise their prices.

"The knock-on effect of this is extensive. It means textile manufacturers will have to pay more for their nylon, table manufacturers for their paints and sealants and all major food retailers, including supermarkets, will have to pay more for the chemicals used in food preparations."

The Reach (Registration, Evaluation and Authorisation of Chemicals) legislation will be debated by the European parliament before it becomes law, and Mr Thompson said he expected it to be watered down from its current proposed state.

But he added: "Realistically, companies will have to start long-term business planning taking into account how the legislation will affect them, both in corporate and commercial terms, and how it will affect those companies they supply chemicals to.

"While the legislation is unlikely to be enacted in its present state, it will still require the chemical industry to completely re-evaluate how it tests products. If they fail to comply, they will face huge financial and commercial losses."