Skills and regulation hold back the chemicals sector

Ask Dr Jenny Clucas what needs to happen to promote the well-being of the Northwest’s £10.2bn chemical sector and her answer is unequivocal. "There needs to be security of energy supply, less regulation, more attention to skills shortages and an improved taxation system," she explains.

Dr Clucas has been chief executive of Chemicals Northwest : which is largely funded by the Northwest Regional Development Agency (NWDA) - since December 2007. Based in Runcorn's Heath Business and Technical Park, it focuses on improving skills in the sector, promoting sustainable and innovative working practices and promoting the industry.

In addition to contributing £10.2bn to the Northwest's economy each year, it is responsible for directly employing more than 50,000 people and supporting a further 120,000 workers. What's more, it accounts for 50% of the region's total exports each year and 27% of all chemicals manufactured in Britain originate from the Northwest.

But while these facts bears witness to the success of the Northwest’s chemicals sector, just what does the future hold?

An industry wish-list

Dr Clucas places both security of energy supply and ‘appropriate’ regulation at the top of her wish list. "The chemicals sector is an energy intensive industry and one of the best ways that the new government can help businesses is by taking the volatility out of the market place.

"There has to be security of supply - and the doubts which exist about how our future energy needs will be provided must be addressed. Regulation is also a massive burden on the sector. Gone are the days when the industry was shrouded with a bad reputation. If businesses are to flourish in the future then regulation has to be appropriate and in line with competitor nations."

Dr Clucas said that just as important for the chemicals sector - like most other manufacturing sectors - is the ongoing issues surrounding skills shortages. She added: "From process operators through to the scientists working in the laboratories, skills are paramount. The chemicals sector has an ageing workforce and decisive action needs to be taken now to resolve this issue."

Dr Clucas believes that more resources need to be given to promoting science as a career to both primary and secondary school pupils. Representatives from Chemicals Northwest regularly visit schools across the region and also take part in the Children Challenging Industry initiative, which aims to generate enthusiasm for science among youngsters.

"In addition, I think that there are many benefits to be found for chemicals companies if the taxation system was simplified - it is a burden which firms operating in other parts of the world do not always face to such an extent.

"The government should remember that global players have a lot of choice about where they site one of their factories. And if one country is offering financial benefits for those companies to move there then it is easy to see why they will win rather than another location."

The Northwest's Chemical sector today

In contrast with many other manufacturing industries in the Northwest, the chemicals sector has retained a positive balance of trade.
Dr Clucas also points out that the sector witnessed a 20 per cent growth in exports to up-and-coming nations like China, India and South Korea between 2001 and 2008.

Membership of Chemicals Northwest consists of small firms like Manchester University spin-out Nanoco, which is headquartered in Grafton Street, and manufactures quantum dots which reduce power consumption in flat screen TVs. At the other end of the spectrum are giants like international chemical additives company Innospec which is based in Ellesmere Port, in Cheshire, and global polymer firm Victrex, which has its corporate headquarters in Thornton Cleveleys, in Lancashire.

Dr Clucas adds: "The chemicals sector in this region consists of small and medium sized enterprises (SMEs) through to multi-national global players."

"The diversity of the chemical products manufactured here is another reason why the sector has continued to do well in comparison with other sectors over the past few years."Some companies will even tell you that 2009 was one of their best ever - which can be attributed to the 'lipstick effect'.

"It has been shown that in recessionary times, many people choose to spend more on consumer products - like lipsticks and shampoos - and that has a beneficial impact on the chemicals sector."

Dr Clucas adds that one reason why some companies have maintained their financial results during the recession is because they have manufactured the same volumes after cutting jobs and other costs.

"In the future, the industry in this region - and elsewhere in the UK - will also face stiffer competition from lower wage economies. But there definitely continues to be an air of optimism among the 650 chemicals companies operating in the Northwest."

So what are the ramifications for the Northwest's chemicals industry resulting from the new coalition government?

Dr Clucas asserts that it is just too soon to say and greater information about policy is now required. "It is still early days, but the government must clearly state its position for the manufacturing sector. There was a general feeling among our members that Lord Mandelson - the former Secretary of State for Business, Innovation and Skills - had been friendly towards manufacturers.
And now manufacturers in the chemicals sector - like all other manufacturers - must wait to see what happens to future policy."