Chemicals producers in Germany are facing an uphill battle to compensate sluggish business in Europe which is in the grip of a protracted sovereign debt crisis. The industry will see a marked drop in output this year. Germany\'s export-oriented chemical companies are being forced to decrease their output levels as the eurozone debt crisis sees demand steadily declining in many nations of the 17-member single-currency bloc. The German Federation of Chemical Industry (VCI) said on Thursday it expected production in the sector to drop by three percent in 2012 year-on-year. \"Business is currently stagnating in the chemicals industry,\" VCI President Karl-Ludwig Kley said in a statement on behalf of the over 1,600 firms represented by the umbrella organization. Robust employment In the third quarter, output declined by 0.5 percent, with domestic sales dipping by one percent. Export sales, however, saw a one percent increase due to heightened demand in the US, South America and Asia, making up for a steep drop in exports to European nations. \"There\'s no sign of a turnaround on the continent,\" Kley said. \"We see very little chance of a pick-up in Europe as a whole.\" So far, declining production levels have not yet translated into massive layoffs across the industry. On the contrary, while the sector employed 428,000 people in 2011, the overall workforce has since risen to 437,000.