Businesses in Britain’s second largest manufacturing exporter – the chemical industry - have reported declining sales, production levels and capacity utilisation.

Results from the Chemical Industries Association latest quarterly business survey show that compared to three months ago, 86% of companies expect their sales to remain the same or reduce, and 57% report lower production levels and capacity utilisation. Domestic demand remains low with only 4% of businesses reporting an increase in their domestic sales.

With the onset of winter energy costs, tough internal economic conditions that weaken demand and cheaper foreign imports saturating the European and domestic market, optimism remains low with over a third of responders expecting performance to get worse.

Steve Elliott, Chief Executive of the Association, said: “There is no hiding the fact that these survey results make for grim reading, with nine out of ten businesses anticipating reduced or, at best, static sales and optimism drifting further out with each passing quarter.  In the short term we must do all we can to minimise the industry’s cost base – especially energy prices over the coming winter – and secure a more competitive net zero policy environment and funding landscape for our sector.  Success here will give us a stronger platform for UK chemicals trade and investment growth when those global economic conditions start to improve.”  

Michela Borra, Economist at the Association, said “With over two-thirds of companies foreseeing challenging operating conditions and weakening demand, coupled with production costs that remain over 20% higher than pre-pandemic levels, there is little room for medium-term optimism within the industry."

ENDS

NOTES

The Association’s survey was carried out at the end of September, with 50 chemical businesses across the UK reporting.

For more information or to interview Steve Elliott, please get in touch - Simon Marsh at [email protected] or 07951 389197. 

• The CIA’s Q3 Business Survey was carried out at the end of September and completed by 50 chemical companies who have operations right across the UK and encompass, small, mid-size and large corporate businesses.

• The survey focuses on performance in the third quarter of 2023 (July, August and September), what is expected in the fourth quarter of this year and in 12-months’ time.

• Businesses who make chemical products and solutions are integral to something like 96% of all manufactured goods.  Whether it is ingredients for food and medicines; paints and coatings for cars and planes or materials for mobile phones and electric vehicle batteries, the chemical industry is truly the “industry of industries” – also playing a critical role in the nation’s response to Covid-19 through its supply of hand sanitiser, PPE and vaccine ingredients.

• Chemical businesses are located throughout the UK, with many of them clustered together in the North East of England, North West of England and Central Scotland.  These factories and laboratories, operated by a highly trained and skilled workforce, make a significant contribution towards the UK’s productivity performance.  

• Nearly 145 thousand people are employed in the sector and nearly half a million have roles that are dependent on the sector. Chemical workers typically earn around 25.4% more than other manufacturing industries and almost 37% more than the average worker.

• From Runcorn to the Humber Bank; from Teesside to Grangemouth, chemical businesses and their employees right across the country are essential to the Government’s levelling-up agenda.

• We are the country’s second biggest manufacturing exporters, sending goods to the value of more than £50 billion to other countries. The EU represents our most important market, but we continue to work closely with Government to inform and secure UK trade deals with other key chemical markets such as Japan and the USA.