Survival of the fittest: Energy and skills

The chemical sector contributes a staggering £10bn to the Northwest economy. It is the UK Manufacturing industry’s number one exporter, with an annual trade surplus of £5billion. From petroleum to perfume, it’s a strong and varied industry - and the Northwest, in particular, has a strong claim on its success. With the sector becoming increasingly innovative, how does it fit within the wider manufacturing sector and what might the future hold?

It’s exciting to see a diversity of new markets popping up in the chemical and pharmaceutical businesses across the region. In fact, many of the products being created go on to supply the rest of the manufacturing sector as raw materials.

Success stories include AM Technology who recently won an innovation award for developing a new flow reactor for the continuous manufacture of chemical compounds; meanwhile Leighs Paints has become a global leader in the development of high performance coatings for the civil engineering, oil and gas, and marine industries; and PennWhite was nominated for the HSBC Commercial Banking-sponsored Business of the Year Award, as well as the UK Trade and Investment (UKTI) backed International Trade Award.

Other success stories in the region include McBride - a serial winner of the Grocer Magazine’s award for the best company in private label household and personal care market. Victrex is another. It is the sole manufacturer of Peek brand polymer (a high performance thermoplastic used in diverse items from car breaking systems and aircraft landing gear to mobile phones).

Carbon control and skills

But, whilst new ideas are the things which will take the sector forward, it also seems clear that the industry faces some life-threatening issues over the next few years. Perhaps the most obvious are energy prices and energy uncertainty. Athough equally pertinent is the unreplenished skills gap that could leave a gaping void in the industries future plans.

The challenges of tougher carbon control are, of course, key. The UK could face widespread and frequent power outages following 2020, without drastic government intervention in the energy market. It’s an issue the energy regulator Ofgem warned about in February 2010, talking about the challenges facing the privatised energy market, as it attempts to meet electricity needs over the next decade.

There will need to be more than £200bn invested in the UK’s energy infrastructure in the next 10 years. Added to that is the problem of regulation. Ofgem also supports intervening in the European Union Emissions Trading Scheme, which restricts the amount of emissions a company can produce by issuing a certain number credits.

A tougher directive

Controls such as this will only become a bigger burden as time goes on. In a CIA survey of business investment attitudes, 68% of British chemical and pharmaceutical business leaders said they had felt overburdened. They suggested some regulation in the UK would act as a barrier to further investment. The survey also showed 53% of those questioned said energy security and price would act as a key barrier, while 37% cited the problem of credit availability.

Speakers at Chemical Industries Association’s (CIA)Improving Business Performance event in February, agreed. They were in no doubt that high material and labour costs, along with fluctuating currency rates, have brought businesses under incredible pressure to be more competitive.

Finding the right people for the job

Demanding that they not only survive but also flourish, CIA's Steve Elliott believes it is UK innovations such as those seen in the Northwest that will lead the way in the transition to a low carbon economy.

Steve comments; "Whilst we might have the know-how, we are lacking in people. CIA figures show the industry has lost 10% of its workforce in the current crisis and does not expect to return to pre-recession levels of output until at least 2012."

The official industry body has called for a new emphasis on education for science, a wider recognition of technical skills and an "appropriate" regulatory regime focused on outcomes rather than processes.

It is also seeking wider recognition for the sector in an advanced manufacturing economy. "We urge support for our sector’s role in delivering a low-carbon economy. Central to this will be a challenging but pragmatic and simplified system of incentives," Steve proposes.

The skills dilemma seems to rest with changing the perception of the industry itself. ICIS went so far as to say the sector faces "total re-invention" as the UK moves towards a low carbon economy.

Vanda Murray OBE, Chair of Business Link Northwest, said at the 2009 Chemical Northwest Awards: "I have heard about how companies are being more innovative and sustainable in the current climate and I hope that helps to improve the public view of the chemical industry."

And showing them how it’s done is Widnes-based company Pentagon Fine Chemicals, which scooped the inaugural Company of the Year Award for their active promotion of the chemical industry in the region. At the same time, Hockley International was awarded the International Trade Award for successfully expanding into difficult markets and having a high percentage of turnover generated from exports. They are also winning accolades for resource

A new future

Ed Miliband, Secretary of State for Energy and Climate Change said those companies who are becoming more sustainable and innovative in their approach to protecting the environment must be praised. "Climate change is a particular challenge for the chemicals industry, with its many energy-intensive processes."

ABB’s Dai Richards implores the industry to help itself. "Short term decisions like investing in R&D, new tech, people etc. all of those things are hard to do but, if we don’t, it will be even harder in the long term."

Hard times but if they make the right investment they may come out the other side and industry will be viable and buoyant want.

CIA chief executive Steve Elliott summed it up when he outlined a blueprint for UK manufacturing: "As we search for those infamous ‘green shoots of recovery,’ we have an opportunity to change how the UK encourages manufacturing and return it to the heart of our economy".

Do you agree? Have your say in our Future of Manufacturing .


Did you know?

Most of the UK’s ageing nuclear power plants will be decommissioned by 2023. New facilities will not be operational until 2018. The UK has a goal of meeting 20 per cent of electricity generated by renewables by 2020. Yet that only accounts for 5.5 per cent our energy now.


IChemE (Institution of Chemical Engineers) is the hub for chemical, biochemical and process engineering professionals worldwide. The institution is at the heart of the process community, promoting competence and a commitment to best practice, advancing the discipline for the benefit of society, encouraging young people in science and engineering and supporting the professional development of its members.


Cogent is working with industry to develop national occupational standards and qualifications to help the sector respond to these challenges. These will be incorporated into the Gold Standards to provide a clear list of requirements for each job role.


On 16 February 2010 The European Commission launched an initiative to help chemical companies switch to renewable feedstocks and energy sources as part of a European Union drive to persuade chemical producers, to make more innovative use of existing technologies. The Euro4.5 million (£3.9 million) Biochem project has a target of helping 250 chemical small and medium-sized enterprises (SMEs) exploit the potential of bio-based business, such as industrial biotechnology, in the development of more sustainable production processes.