Top manufacturing exporter battles through economic challenge
Companies in one of Britain’s biggest manufacturing industries are fighting the toughest of economic battles. Chemical companies across the UK, who export 90% of what they make, have seen sales fall dramatically, with the latest survey of members of the Chemical Industries Association confirming that nearly 60% of companies saw a fall in sales in Quarter 2 of 2023, up from 33% in Q1.
The industry, which has consistently demonstrated huge resilience in navigating tough times, is however continuing to innovate and to export. Despite very challenging trading conditions for the first half of 2023 – and conditions that are unlikely to ease any time soon – over half of the companies in the survey predict a sales increase in 2024, led by European, and increasingly global, exports.
Commenting on the latest survey results, Steve Elliott, Chief Executive of the Association stressed that "the ongoing reduction in immediate demand and the lack of visibility of any near-term improvement in that demand is of huge concern and UK chemical businesses are taking all measures to ride out the economic storms of 2023. Looking ahead, I welcome the more optimistic outlook for 2024, but, in an election year, sustained economic recovery and growth – with advanced manufacturing, including chemicals, at its heart – will require a political commitment to long term policy stability and a competitive funding landscape for innovation and investment”.
The Association’s Economist, Michela Borra, noted, “There is hope in that supply chain pressures and some running costs are easing with over 40% of businesses seeing a decrease in input prices and almost 50% a decrease in energy costs”. However, she warned that “The biggest challenge this quarter was weakening demand, followed by labour costs. Demand and labour costs are expected to worsen but we hope that input related issues continue to improve”.
Steve Elliott concluded, “The future investment stakes could not be higher, but securing that combination of a competitive policy and funding environment will give chemical companies from the Solent to South Wales; Humberside to Teesside and the north west to central Scotland, the very best chance of seizing the opportunity to deliver a low carbon economy for the country, underpinned by sustainable chemistry and highly productive jobs”.
Notes:
For more information or to interview Steve Elliott, please get in touch - Simon Marsh at MarshsS@cia.org.uk or 07951 389197.
- The CIA’s Q2 Business Survey was completed by 60 chemical companies who have operations right across the UK and encompass, small, mid-size and large corporate businesses.
- The survey focuses on performance in the second quarter of 2023 (April, May and June), what is expected in the third quarter of this year and in 12-months’ time.
- Businesses who make chemical products and solutions are integral to something like 96% of all manufactured goods. Whether it is ingredients for food and medicines; paints and coatings for cars and planes or materials for mobile phones and electric vehicle batteries, the chemical industry is truly the “industry of industries” – also playing a critical role in the nation’s response to Covid-19 through its supply of hand sanitiser, PPE and vaccine ingredients.
- Chemical businesses are located throughout the UK, with many of them clustered together in the North East of England, North West of England and Central Scotland. These factories and laboratories, operated by a highly trained and skilled workforce, make a significant contribution towards the UK’s productivity performance.
- Nearly 145 thousand people are employed in the sector and nearly half a million have roles that are dependent on the sector. Chemical workers typically earn around 25.4% more than other manufacturing industries and almost 37% more than the average worker.
- From Runcorn to the Humber Bank; from Teesside to Grangemouth, chemical businesses and their employees right across the country are essential to the Government’s levelling-up agenda.
- We are the country’s second biggest manufacturing exporters, sending goods to the value of more than £50 billion to other countries. The EU represents our most important market, but we continue to work closely with Government to inform and secure UK trade deals with other key chemical markets such as Japan and the USA.
