FEATURE ARTICLE

Business as usual

Published: July 31, 2017

Brexit looms, and in the wake of a disastrous (for the current government) election, the UK finds itself on an unsteady footing. Yet amid apparent chaos, it’s ‘business as usual’ for the chemicals industry.


Nestling in the north of England, Yorkshire includes the Moors and Dales, and part of the Peak District National Park. Yet alongside the landscape for which it is famous, the region sat at the heart of England’s industrial revolution. It has a long history of heavy industries (e.g. coal mining, steel) and 100 years ago there were 300 textile mills in Bradford alone. Now, the region is home to the chemical industries: fine and speciality, polymers and composites, pharmaceuticals, biotechnology, bio-resources, petrochemicals, biofuels and low-carbon materials. Speciality Chemicals Magazine toured Yorkshire at the end of June to discuss how the industry is performing under the current economic and political climate.

As industry has flourished, a pool of professional and skilled personnel has formed in the area. All the companies that we spoke to agreed they had good access to a local workforce. However, many also employ staff from Europe, raising concerns over Brexit. For example, BASF frequently turns to Europe to find skill sets that might not be available locally, and five of Grotech’s 30-strong workforce come from Poland, Spain or Portugal. “We’re counting on Mrs May to make sure they can stay,” said Martin Usher, Director at Grotech, a contract manufacturer in Goole.

UK labour costs are high, but companies say they overcome this by focussing on products that elevate them out of the commodity end of the market. Indeed, according to Richard Smith, Managing Director of Surfachem, a distribution company based in Leeds, the UK is one of the most innovative countries in the world. “Many of our international partners look to the UK as a market for added value, especially in terms of new trends and knowledge,” he said.

“We have some very good niche speciality chemical manufacturers based in the UK and in Yorkshire,” added Steve Foster, Managing Director at Vickers Laboratories, a chemical manufacturing, packing and logistics company.

A top concern arising from Brexit has been overseas trade, although people seem optimistic that the high regard held for UK innovation and quality could minimize impact. For example, Vickers Laboratories’ Steve Foster thinks “The UK is seen by overseas and emerging countries as a place of quality. They want their products manufactured in the UK for that prestige value.”

Stephenson Group’s CEO Jamie Bentley added, “I believe Britain is respected throughout the world for its products and its manufacturing… I have no doubt we can compete [with Asia] both on innovation and technology.”

Recent exchange rate changes have also made the UK more cost effective in overseas markets, but it is acknowledged that these gains are a trade-off against increased costs for raw materials. “Most of our raw materials come from mainland Europe, so it’s a double-edged sword,” explained Derek Gray, Sales Director at Biolink, a company that provides biocides to the agricultural industry.

“We’ll be keeping a close eye on any changes to import tax amidst BREXIT,” said Airedale’s Daniel Marr. “Although there is the possibility of cost repercussions on sourcing raw material overseas, we will ensure that provisions are made to maximize supply options.”

Brexit negotiations on regulatory matters are another concern. Regulatory requirements are already a burden; if the UK does something ‘different’ to Europe, an added level of complexity (even more work and expense) will inevitably arise.

“Legislation is incredibly complicated, and it could get a lot more so,” stated Richard Elsmore, Managing Director of JSC International. “What we want to avoid is having to jump through different hoops for the UK and Europe, after Brexit.”

One organization that is working actively to help industry is YCF (founded 12 years ago as Yorkshire Chemical Focus, re-branded Your Connected Future in 2012). As Jill Mooney, CEO of YCF explained, “Our mission is to give our industry a voice.” With an associate list of about 1200 people, YCF, which is funded by its members, focusses on organizing events and collaborative projects. Recently, it launched a Cosmetics Cluster, which has already attracted offers of collaboration from French Valley and the Barcelona Beauty Cluster. A new Chemicals Cluster is also planned for launch later this year, and in 2018 a Food and Drink Cluster will follow. Initiatives such as these help to bring UK industry together, potentially aiding a more positive Brexit.

“BASF still thinks the UK is a good place to do business,” reassured BASF’s David Calder. “We are still getting significant investment, and we’re receiving clear positive messages about Bradford as a site.”

“British industry is straightforward, honest and simple,” declared Surfachem’s Greg Barton. “Yorkshire is a great place for business with good transport links, vibrant cities, excellent universities and a well-established chemical manufacturing hub.”

“Yorkshire is home to some very successful companies,” said Croda’s Chris Sayner. “It has excellent universities and transportation links across the country. A very historic county, today businesses and cities seem to be booming and we are proud to have our global headquarters here.”

Stephenson Group’s Jamie Bentley agreed, saying, “My home and business have always been based in Yorkshire and we are a hard-working, honest, understated community with an enormous manufacturing heritage – making products and innovating new ones.”

Grotech’s Martin Usher concluded “The ramifications of recent political changes are difficult to predict, but I’m glad to be here. Yorkshire is a good place to do business.”

The Yorkshire chemicals industry is already talking with one voice. While hoping for greater support from government, and for a ‘good’ deal with Europe, these companies are preparing themselves for whatever Brexit may bring. Meanwhile, it’s business as usual.

This is the short version of an article published in the July/August issue of Speciality Chemicals Magazine. To read the full version, visit http://www.specchemonline.com/magazine.html – the July/August issue was published on 24th July 2017.

 

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