The latest quarterly business survey conducted by the Chemical Industries Association (CIA) showed that almost half of Britain’s chemical companies experienced falls in new orders and a more than 30% have seen falls in sales, production levels and capacity utilisation. This feedback from over 40 leaders of UK chemical businesses is consistent with the latest ONS data, confirming a 5.6% fall in production over the three months to September.
Responding to the survey and data, Steve Elliott, Chief Executive of the Association, said:
”Too many parts of the UK chemical industry are battling against an unforgiving business environment, and, it has to be said, a hostile policy environment that is resulting in an increasing number of strategic reviews, profit warnings and site closures.
Capacity utilisation rates have been hovering around 70% or less for far too long, in the face of depressed demand and totally uncompetitive energy and carbon costs – many of which are a direct result of UK government policy. Add to this the ongoing uncertainty over the long-overdue UK REACH regulation and major potential implications from the current review of the country’s landfill tax and you are left with a rapidly reducing number of reasons to invest here in the UK”.
Steve added:
”The summer brought good news with recognition of the chemical industry in the Government’s new Industrial Strategy as a key foundational sector, underpinning many of the identified growth sectors of the economy. Those words now need to be converted urgently into action if we are serious about securing and building UK supply chain capability and resilience in advanced manufacturing, clean energy, defence and security and life sciences. For the chemical industry – the “industry of industries” – that means more competitive energy prices, carbon reduction costs that are sensitive to our global competition and no more regulatory stones in the backpack”.
Commenting on the survey outcome, the Association’s Economist, Léa Charbonnier said:
“Apart from the decline so far this year, the survey also indicates that expectations for Q4 do not point to a strong recovery, with most businesses anticipating sales, exports, and imports to remain broadly unchanged. Investment is expected to decline for around 40% of chemical companies, while over 30% foresee reductions in new orders, production levels, and capacity utilisation. It is only when we get to next year that we can start to even think about any improvement and that in itself does not mean it will actually happen”.