UK chemical and pharmaceutical manufacturing: The heart of our economy
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1 UK chemical and pharmaceutical manufacturing: The heart of our economy
2 Solutions for all The products and services of the chemical and pharmaceutical industry deliver clean water, vital medicines, affordable nutritious food, clothing, housing and transport, modern communications and leisure activities for all. The innovations of the chemical sector have revolutionised our lifestyles giving us longer, safer, happier lives. Our products are the raw materials for the rest of manufacturing from aerospace to motor vehicles, electronics to environmental technologies. Without our industry there is no rebalancing of the economy or manufacturing renaissance. We are the sector that is already tackling the challenge of climate change. For every unit of greenhouse gas emitted through chemical industry production, the resulting products enable savings of 2-3 units. From home insulation to fuel efficient vehicles, the transition to a low-carbon economy needs a healthy, innovative and supported chemical sector.
3 why we matter: The facts Chemical and pharmaceutical businesses in the UK are a 60 billion industry. Every day for the past decade the sector has added 20 million to the UK balance of trade whilst the rest of manufacturing has shown a 200 million deficit. The jobs of 600,000 people in the UK depend on the chemical and pharmaceutical industry. Workers in our industry perform high quality, skilled jobs reflected in pay levels that are 20% higher than other manufacturing sectors. When people speak about manufacturing, the focus is on sectors like aerospace an important sector and a key customer for our companies. However, there is more to manufacturing than aerospace: Chemicals and pharmaceuticals represent 12% of total manufacturing, more than twice that of aerospace. Chemicals and pharmaceuticals has an average value added per employee of 92,000, nearly 25% more than aerospace. Chemicals and pharmaceuticals has paid employee costs of 42,000 per head, almost 1/10th more than aerospace. These facts demonstrate how chemical and pharmaceutical manufacturing is at the heart of the UK economy. It s simple; future growth depends on us.
4 What we want By taking action in the following areas Government can ensure the UK has a solid and sustainable manufacturing sector. Recognition The Government and all political parties should join us in promoting the chemical industry, so that the civil servants, banks and wider community understand our value to the United Kingdom. Recognition of chemicals and pharmaceuticals as part of advanced manufacturing would be a good place to start. Policy We need a long-term and consistent business policy that supports UK manufacturing and its supply chains. The time is right for a new overarching strategy that sets out the benefits for our country in having a vibrant manufacturing sector. Government should benchmark itself against competitor nations to maximise UK opportunities for business. To encourage investment across the UK, planners, regulators and policymakers need to present a joined-up approach. Taxation The UK taxation system needs overhaul and simplification through a rigorous and speedy programme of reform that benefits the UK s competitiveness and delivers wealth creation for all of society. The UK urgently needs a more competitive tax regime to incentivise research, development and manufacturing in this country. We believe a lower corporate tax rate, supporting the UK exploitation of intellectual property, would benefit knowledge-based industries including chemicals and pharmaceuticals. Such a move would send a convincing signal that the UK means business in terms of international competition. Innovation The UK chemical sector has inherent strengths in innovation and in being able to scale up with speed to manufacturing size. These strengths require a sufficient pool of scientists to be able to conduct quality R&D, an environment supportive of innovation and an academia sector with strength in key science disciplines both in teaching and research. Skills The country needs a new emphasis in the education sector for science that builds on our heritage and delivers modern learning. In an era of increasing technology and challenges, such as climate change, a better understanding of science will help everyone make more informed choices about they way they live. The UK needs to show a higher appreciation and importance of technical skills. These will be in heavy demand as we move to the new green economy. Our industry relies on vocational skills and invests heavily in making sure we have a high skilled workforce. Energy and climate change The availability of secure and competitively priced energy is a fundamental requirement for business and society. We see nuclear power and renewable energy as part of the solution. We urge support for our sector s role in delivering a low-carbon economy. Central to this will be a challenging but pragmatic and simplified system of incentives. This must give clear signals to business while still preserving the competitive position of UK industry. Regulation The chemical and pharmaceutical industry needs appropriate regulation to give confidence to society. We believe that regulation needs to focus on outcomes not processes, freeing up opportunities for innovation. The regulatory burden should only be increased on the basis of an agreed need.
5 What we offer The chemical and pharmaceutical sector has proved itself to be a corner-stone of the UK economy, responding positively to the many challenges of recession, restructuring and globalisation. Recognition and action from all those with a stake in our industry can help us continue to deliver the high quality people, products and solutions that our economy needs to grow and compete in the 21st century. Our sector is also mindful of its economic, environmental and social responsibilities. Building on our ground-breaking 2004 sustainability strategy and related performance goals, the Chemical Industries Association is now finalising challenging and forward-looking new measures for 2010 and beyond. We look forward to working with you all on this ambitious initiative. Central to our sustainability commitment is Responsible Care. This is our global voluntary initiative under which companies work together to continuously improve their health, safety and environmental performance, and to communicate with stakeholders about their products and processes. All of this work requires leadership. The leaders of our companies are proud to speak out for our industry
6 Leading the way As an international chemical company we rely on a broad range of support from the CIA. For both ongoing activities and future investment in the UK the CIA s manufacturing strategy is a vital element of this support. Bob Tyler, UK Managing Director, Rhodia Manufacturing is critical and an important employer for the UK economy. Implementation of the CIA s strategy will help ensure it remains so. Jerh Collins, Managing Director, Novartis A vibrant chemical and pharmaceutical industry is critical to the future success of the UK manufacturing sector. The CIA has a key role to play in achieving this successful outcome. John Saul, Senior Vice President Global Manufacturing and Supply, GlaxoSmithKline INEOS fully supports the CIA manufacturing strategy. Our UK investment is significant, with seven sites producing raw materials to sustain UK manufacturing. A robust UK manufacturing strategy is essential to our future and the future of the whole sector. Jim Ratcliffe, Chairman, INEOS To sustain and grow our global competitiveness, smaller companies in the UK and across Europe must continue to improve our manufacturing efficiency and technology. The CIA s manufacturing strategy will be essential to that improvement and it will have our full support. Dr Tony Bastock OBE, Group Managing Director, Contract Chemicals Limited and Vice President of the European Chemical Industry Council (CEFIC) As a company with its headquarters and several manufacturing facilities in the UK, I want to see the CIA s manufacturing agenda implemented quickly. Adrian Whitfield, Chief Executive Officer, Yule Catto plc The UK needs foreign investment; full support for and implementation of the CIA s manufacturing approach will make the UK more attractive to invest in. Paul Booth, President, SABIC UK Petrochemicals If the world is to combat climate change, it is likely that this will be underpinned by key technologies developed within our industry. The CIA s manufacturing strategy will support companies like ours in producing these technologies. Neil Carson, Chief Executive, Johnson Matthey The global economic crisis has hit every sector. Chemicals has lost 10% of its workforce and we do not expect to return to our pre-recession output until at least However as we search for those infamous green shoots of recovery we have an opportunity to change how the UK encourages manufacturing and return it to the heart of our economy. The CIA s manufacturing campaign should be supported by all SME s in every sector in the UK. Harry Swan, Managing Director, Thomas Swan and Company Our competitor countries have given support to companies who manufacture; we are now learning that lesson. We cannot rely so heavily on the service sector to deliver stability, taxes, jobs and investment for our country. Manufacturing matters! This statement sets out the essential role that the chemical and pharmaceutical industry has in underpinning our revival. I hope it will be the start of a debate and actions that lead to political and public recognition for our sector. I urge everyone to support and help us deliver a modern manufacturing industry for the UK. Steve Elliott, Chief Executive Chemical Industries Association November 2009 Kings Buildings, Smith Square, London, SW1P 3JJ Telephone @cia.org.uk
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