Sales slide hits chemical sector
25 Nov 2015
The Chemical Industries Association (CIA) warned last week that the UK must ”urgently address” its energy base, as the chemical sector weathered challenging economic conditions.
While the industry has enjoyed growth of 6% this year, the latest survey by the UK chemical sector’s trade body revealed a difficult third quarter.
Nearly a third of the companies surveyed by the CIA reported that sales had fallen in the last three months, with only 23% reporting export growth during the quarter.
We need to urgently address our energy base if we want a thriving UK chemical industry
CIA president Tom Crotty
The slide in sales did not dampen overall expectations, however, with more than half of respondents anticipating an increase in sales and exports in the year ahead, said the CIA.
“The last three months have reminded us all how the economic world is still a very challenging place,” said CIA chief executive Steve Elliott.
“While I am pleased at the UK’s recovery and showing against our European competitors in particular, I am concerned that we have not yet established a firm and sustainable growth platform. Our latest survey shows there is optimism to deliver that growth in the year ahead.”
Nevertheless, he warned in a speech last week that significant challenges affecting current trading conditions still remained in regard to energy, innovation, environment and skills, which would demand a better public policy framework.
CIA president Tom Crotty said: “We have the opportunity to build a new European chemical business around shale and I believe to rejuvenate our three key UK chemical clusters with energy, infrastructure and skills in Central Scotland, Merseyside and Teesside.
“We need to urgently address our energy base if we want a thriving UK chemical industry,” he said.
“If government is genuinely committed to a manufacturing resurgence they need to understand that a thriving chemical industry is vital.”
Sales figures published earlier this month by the Chemical Business Association (CBA) also reflected a general slowdown in activity for the UK’s chemical supply chain with order books weakening, sales flat-lining and margins worsening.
“Our survey of activity levels provides further evidence of a slow-down during the last three months,” said CBA’s chairman, Christopher Hayman.
“Current sales have lost their momentum and members are pessimistic about the outlook for the next three months.”
While sales margins also echoed this trend, he said employment prospects in the sector seemed to be improving.
