Chems sector buoyant as capital projects press on
STRONG QUARTER: The chemical industry is performing well according to Steve Elliott, CIA chief executive. Left, RB (above) and IGE Solutions.
By Hull Daily Mail | Posted: 5 Feb 2018
STRONG recent growth in sales and exports has been reported across Britain’s chemical and pharmaceutical industry – with the Humber playing a huge part.
Recent performance has prompted a positive outlook for 2018, with major global economies all experiencing booms, an ideal scenario in an export-driven industry.
Steve Elliott, chief executive of the Chemical Industries Association, said: “The chemical industry is in reasonably optimistic mood, with the economies of China, Europe and the US all growing simultaneously, to the benefit of an export-intensive industry such as ours. However, like many other sectors of the UK economy we are increasingly worried by the ongoing uncertainty with regard to our future relationship with Europe.
“Minimal disruption to chemicals trade and investment flows would represent a very positive outcome from the negotiations for UK chemical businesses, but there remain many challenges in achieving that outcome.”
The positivity has emerged from the leading industry body’s quarterly survey, and showed a balance of +35 per cent growing export sales, with +23 per cent enjoying healthier overall sales. The balance is the difference between those companies reporting an increase, minus decreases.
Looking ahead, the industry is more optimistic than at the time of the last survey in October 2017. A balance of +39 per cent of companies seeing growth in overall sales and +42 per cent expecting growth in exports volume.
Mr Elliott said: “We do see continued strong growth in capital investment (+32 per cent), and while we have growth in research and development spending (+16 per cent), it has reduced a little since our last survey. There are also reports of jobs growth to help meet growing demand in 2018.
“Weak sterling and strong European growth are expected to be key drivers for 2018. Expanding markets in Asia and North America are also seen as opportunities in 2018. However we cannot escape Brexit uncertainty, with 48 per cent of companies reporting this as a worry. The higher oil price and the weak exchange rate have also elevated concerns over rising raw material costs and energy costs – both critical to an energy-intensive manufacturing sector.”
The chemical and pharmaceutical industry adds £18 billion of value to the UK economy every year from total annual turnover of £50 billion. This represents around 11 per cent of the value added by the whole of UK manufacturing. The Humber alone is home to 15,000 employees across 120 companies, contributing nearly one fifth of the UK turnover.
On the North Bank Croda and RB have both announced major expansions, with the latter to open a new £105 million research and development centre, while a £58 million wood chip plant is being brought forward at Saltend Business Park by Tricoya Ventures UK Ltd. Last summer pharma firm Indivior also opened a £23 million R&D base. South of the river and Catch has just opened a new training facility, with potential for delegate accommodation being explored, while Lenzing Fibers is investing £10 million to boost capacity and sustainability, while significant scale plastics and tyre reprocessing centres are being worked up for Grimsby and Stallingborough, with ICE Solutions and Mishergas behind them, respectively.
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