Cogent Industries

Chemicals

The Chemicals industry is one of the UK’s largest manufacturing industries. Over the last decade it grew more than five times faster than the average for all industry. It is manufacturing’s number one exporter, with an annual trade surplus of just under £5billion. It spends over £2billion a year on new capital investment. All chemicals end up being used in products and services purchased by the consumer. There may be many stages between the processing of a chemical and the final consumer, but it is estimated that each UK household either directly or indirectly spends around £30 per week on chemicals. The Chemicals industry in the UK has a relatively higher proportion employed in medium-sized enterprises when compared to other European countries. On average, full-time employees’ hourly earnings are 19% higher than in manufacturing generally. This reflects high skill, productivity and training levels.

Trends
Total Turnover in the Chemicals Industry 1995-2006

Approximate gross value added at basic prices in the Chemicals Industry 1995-2006

Total Average Employment in the Chemicals Industry 1995-2005

Total turnover in the Chemicals industry remained stable since 1997 and has incurred an increase between 2005 and 2006. Gross Value Added in the industry has also remained stable. Total employment in the Chemicals industry has decreased by 53,000 since 1998. The total number of enterprises has also decreased by 350 since 1998.

Research and development

After a decline in R&D between 1999 and 2002 there has been a steady increase in Chemical industry spend. R&D in the Chemicals industry is predominantly (83%) funded by the industry itself rather than the UK government.

Total Expenditure UK Government Overseas Own Funds Other UK Businesses
£675m £4m £28m £558m £85m

Source: R&D in UK Businesses 2006, ONS, January 2008

The skills gap


For direct employment in the Chemicals industry:

  • There is an under supply of people qualified to S/NVQ level 2 and 3 compared to the proportion of jobs at those levels
  • There is a 16% deficit of people qualified at S/NVQ levels 2 and 3
  • Level 2 and 3 occupations such as process operators, technicians, skilled trades and business administration account for 53% of the overall workforce.
The future of the industry

The industry will need fewer, but more highly skilled and technology literate, employees who will be expected to operate more flexibly and have crosscutting and change-management skills.

Technology will be the main driver for upskilling the workforce and filling skills gaps.


Competency standards, which individuals must achieve before they are allowed to operate, are likely to extend into the Chemicals industry.

Priorities

The UK Chemicals industry remains resilient in the face of high energy and raw materials costs and international competition. Through a number of reorganisations, mergers and acquisitions, the industry has achieved a high level of performance in lean manufacturing and process efficiencies.

The industry invests significantly in training and upskilling of its workforce. However, the workforce is getting older and there is a vital need to increase the supply of young people with the right skills and aptitude for the industry. Shortages of technical and engineering skills such as technicians, fitters, operators, and so on, remain a Europewide problem. These shortages are intensified by competition for skilled labour by the offshore oil and gas, and increasingly, the nuclear, sectors.

These factors suggest a remaining major need to achieve a cultural step-change in appetite for innovative thinking at all levels from shop floor to senior management. There are opportunities for radical redesign in processes and products. Successful initiatives such as the Chemistry Innovation Knowledge Transfer Network and National Skills Academy for the Process Industries are crucial for the continued prosperity of the Chemicals Industry.