According to a March PricewaterhouseCoopers survey, North American companies are woefully unprepared to assess their exposure to REACH, the EUs Registration, Evaluation and Authorization of Chemicals law that went into effect in June 2007. A staggering 55 percent of North American companies had little or no awareness of REACH; the number was higher for smaller companies.

We want to instill a sense of urgency, Richard Kraska, Kraska Consultants, told the Independent Lubricant Manufacturers Association meeting near Albuquerque, N.M. on April 12. The EU is changing the way chemicals are managed in a fundamental way, and every company in the supply chain needs to participate, directly or indirectly, to preserve its business in the EU and with customers that have business in the EU.

Any company that wants to preserve business in the global economy or the automotive supply chain must work with its customers and suppliers to assure that substances in all products exported to the EU are properly registered, Kraska said.

The basic problem for North America-based lubricant exporters, said Kraska, is that the law requires EU importers to register the substances they import, requiring the non-EU supplier to disclose compositions – that is, formulations – of products. The principal alternative is for the exporting lubricant manufacturer to register for its EU customers using an Only Representative (OR), but this becomes very complicated. It may not relieve the importers preregistration/registration requirements, and product composition information from additive suppliers is still needed. The European Chemical Agency advises that non-EU formulators should appoint their own ORs.

Kraska urged non-EU lubricant companies exporting to Europe to preregister, to be able to continue exporting to EU customers after Nov. 30.

Mick Wragg, Lubrizols manager of product stewardship for Europe, pointed out some of the most common misconceptions about preregistration: My EU affiliate will preregister the substances, so export from our non-EU customers is covered. Dont count on it, said Wragg. Someone else will preregister this substance, so we dont have to do anything. Maybe, but the list of preregistered substances will not be published until Jan. 2009, well after the Nov. 30 close of preregistration, warned Wragg. Its a natural, harmless substance, so it will be exempt. Be careful. Only four substances have been exempted so far, Wragg said; one is water.

Wragg tackled the sticky question of how additive companies can help their lubricant manufacturing customers with REACH preregistration. As companies based outside the EU cannot preregister directly, the simplest option is to rely on EU-based importers to preregister. But this would require full compositional disclosure of the additives. Realistically, additive companies want to protect their formulas, Wragg said, ruling out this option.

An alternative is for additive companies to appoint an OR to perform the REACH duties of the importers, but this is not a simple scheme. The OR must know the annual volume of each substance exported to the EU, the identity of each EU-based importer, and the use of the substances. Thus the additive company would provide knowledge of product composition directly to the OR; the lubricant blender would provide the volume of additive exported, the identity of the importer(s), and the use; so the OR would then know the total volume of each substance and the identify of importers.

REACH, said Wragg, has become a non-tariff trade barrier. Guidance for the OR scheme is confusing, and it requires certainty in the supply chain. The additive companys customer needs to be certain that the additive companys compliance statement is accurate, and the additive company (and/or its OR) needs to be certain that it can capture 100 percent of the export volume and know the identity of 100 percent of the importers.

Because future REACH compliance statements could be conditional on customers providing export information back up the supply chain, Wragg emphasized that additive suppliers could make this a condition of sale.

[REACH] is about trade and business, not the environment, John Phyper of Atrion said. In Europe, its an opportunity to increase market share. Phyper described his companys detailed REACH checklist, designed to help companies assess and prepare for REACH.

A.J. Guikema of TetraTech highlighted the REACH requirements of auto industry suppliers. OEMs are currently specifying materials and parts for model year 2012 products, he noted, and we wont know which substances of very high concern to focus on until late 2008 or 2009 when EU publishes the first candidate substance list. Global automotive industry groups have developed a REACH guideline, the Automotive Industry Guide, available at www.acea.be/reach.

General Motors, which alone has more than 30,000 suppliers, has set up www.GMreach.com, said Guikema. Ford is requiring suppliers to confirm that they understand and will comply with REACH. And Chrysler is implementing its approach to REACH based on business units affected.

The preregistration window is very important to automotive customers, said Guikema, and automakers are using the Automotive Industry Guide to publish their requirements for suppliers.

REACH compliance is complex and expensive, Kraska concluded. Will the value of your export business to the EU be worth the costs? Even if not, all industry players must at a minimum be REACH literate; at the very least, customers will require information from their lubricant suppliers for their own REACH compliance.