The chemical industry, the country’s largest manufacturing exporter, has seen a halt in the extent of the 2020 decline in sales with half of companies now reporting stability or improvement.
In a survey of member companies of the Chemical Industries Association half of the businesses said that in quarter two exports to the EU and to the Rest of the World had remained at current levels or improved as had capital expenditure and business utilisation. Eighty per cent of companies reported stability and growth in employee numbers and the amount spent on Research & Development. CIA Chief Executive Steve Elliott said “Given the huge challenges earlier in the year, it is good to see some stability has been reached. Our member data also confirms what we’ve seen in the official figures from the ONS for the first 5 months of the year”.
Looking to the next three months, 80% of businesses see stability and improvement to domestic sales and global exports and over 70% see the same happening to their EU exports and to capital expenditure with any job losses and R&D expenditure reductions happening in around 10% of companies. Steve Elliott continued “We cannot say yet that we are on an economic path to growth - the next quarter looks OK, but that is building on a very challenging second quarter and we can all see that sustained economic recovery is unlikely to be smooth or predictable.”
Elliott said “As businesses predict the next twelve months, some optimism remains but it is very hard to be clear. A return of levels of the pandemic to those we saw earlier this year, coupled with Brexit means we cannot be confident to the degree we would like. While the majority businesses are predicting an even stronger export performance (52%), ramping up and stability of new orders (75%) and the same prediction for production levels, jobs and R&D, plus greater capacity utilisation, the uncertain outcome of the Brexit talks and any Covid-19 spike means the tremendous hard work shown by businesses in the sector could be at risk. I hope this is not the case and we will continue working to support the need to fight the pandemic and deliver strong business performance.
In a call to Government, Elliott said “Some of the markets we supply to (healthcare; food and drink and some consumer good areas) are clearly performing better than those such as automotive, aerospace and construction. An autumn demand stimulus package for those manufacturing industries that have been hardest hit will help the entire supply chain. More directly, what we as a sector need is a successful conclusion to the UK:EU trade talks including tariff-free frictionless trade and regulatory consistency; taxation reform through a reduction in corporation tax; improved incentives for R&D and a new green energy deal with a serious review of energy costs”
He concluded “In this uncertain world there is now the chance for the Government to set a clear business agenda for the future that creates investment opportunities across the whole of the UK and the chemical sector hopes they will rise to that challenge. With the right conditions we can maintain and grow our significant export performance, providing a strong and resilient UK chemical supply chain that underpins all other industrial sectors, jobs and growth across the country”
For further information and/or to speak to Steve Elliott please call Simon on 07951 389197