In August 2014, SABIC announced that it would invest for growth in the UK by modifying its cracker on Teesside into a gas cracker to take advantage of the shale gas revolution.
The investment, which has Government support, meant that hundreds of jobs were secured alongside the potential for future investment.
At about the same time, chemicals giant Ineos was underlying its commitment to the UK shale gas industry by buying rights to explore a 329 square kilometre (127 square mile) area around Grangemouth and the Firth of Forth, in Scotland.
For Steve Elliott, Chief Executive of the Chemical Industries Association (CIA), both moves were symptomatic of the kind of forward thinking that is needed by the industry if it is to compete with shale-fuelled competition from the United States and the big chemicals players in the Gulf and Asian markets.
The CIA is a key supporter of the Chemistry Growth Partnership (CGP), which argues that companies in the UK chemicals sector must, in part, set aside business rivalries and work together.
Their co-operation, Steve argues, is crucial if the sector is to both take advantage of the opportunities presented by the recent upturn in the UK economy but also counter the threats posed by foreign competition.
The group, which has been at work for just under a year, is working to implement a strategy with a vision to grow the contribution of chemical and chemistry-using businesses by 50% in less than two decades.
Chemistry Fuelled Growth of the UK Economy, which was presented by chemical business leaders to Michael Fallon, then the Minister of State for Business and Enterprise, called for rapid exploitation of shale gas, accelerated innovation and the rebuilding of UK chemistry supply chains.
According to Steve Elliott, the CGP can trace its beginnings back to former CIA President Keith Wiggins, who during his time in office, saw the necessity and potential for growth as global economic recovery beckoned.
Steve said: “Keith was fired up by the idea of growth and renaissance in the industry.
“His enthusiasm has ultimately led to the creation of the Chemistry Growth Partnership, which argues that in order to take advantage of the opportunities and counter the threats the industry has to work together collaboratively.
“The UK chemical sector is in recovery mode after the global crisis but we have to do much more to take advantage of the opportunities available, particularly since the UK economy started to turn.
“Our argument is that as key customer sectors like automotive and aerospace grow, they will increasingly need the products and services offered by chemical companies. Why shouldn’t those chemicals and chemistry increasingly be provided by UK companies?
“Also, some major companies which take their primary supplies from overseas markets are becoming concerned about the security and cost of some of those supplies and are looking to the European market for a competitive alternative supply or secondary supply.
“At the beginning of 2014, the UK Prime Minister placed his personal support behind proactive “on-shoring” and I am pleased to see real evidence of this with several chemical-dependent industries such as pharmaceuticals and agritech strengthening their relationships with UK chemical businesses.
“The CGP’s approach has respect for competition – many of the UK companies involved are rivals – but we feel that to truly take advantage of the opportunities we have to work together.
“There are threats to be countered as well. Take fracking. The Americans were the first to take advantage of the potential offered by fracking but the recent announcements by Sabic and Ineos show what can be achieved by companies here in the UK.
“There is an urgency to our approach. We have to be aware of the competition from cheap shale gas from America and also from competition in the chemicals sector in the East. Working together as a UK industry will have its rewards, but the clock is ticking.”
That sense of co-operation mirrors the work of the Chemical Industries Association, which is the organisation that represents chemical and pharmaceutical businesses throughout the UK.
The CIA is well placed to bring companies together. The most powerful collective voice in the industry, it represents all sizes of chemical and pharmaceutical businesses and has strong UK and international connections: approximately 70% of its members are headquartered overseas.
CIA activities are split between influencing the policy agenda, offering provision of advice and services to members and working to bring together the disparate strands of the industry as evidenced by its work with the CGP.
Steve himself joined the association in 1997, spending four and half years as Head, International Trade with additional responsibility for Sustainable Development before in 2002, he was promoted to the position of Director, Trade & Competitiveness and subsequently Director, Business Environment.
Steve, who was appointed Chief Executive of the CIA in February 2006, said: “We have 250 member companies who account for about 75 per cent of UK chemical output. Our key role is to lobby decision-makers to ensure the best possible trade and investment conditions for UK chemical companies.
“Our support for the CGP is different in that it is not so much about lobbying but much more about practical projects to secure that longer-term competitive future. For example, we recently took a delegation of UK agrochemical companies to Germany, Switzerland and France, to engage with four of the five biggest customers in the sector. The purpose being to demonstrate an innovative and competitive UK supply base to multi-national customers.
“We are also involved in other initiatives to bring UK companies to the attention of big companies considering developing alternative supply lines because they are concerned about the security and cost of their main supplies from historically low cost countries in Asia.
“We believe in the CGP approach. We think the rewards are there if we work together. What we want to do now is build on the start we have made in energy, innovation and supply chains, engaging the views and contributions of as many as possible in our industry and all those who have a stake in its future.”
