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Chemistry Growth Strategy GroupChemistry Drives Growth.  The new report produced by the UK Chemical’s Industry lays down its claim to be heard and outline the critical importance of the chemical process industries in contributing to national economic, social and environmental well-being.

System Growth Consulting supports this report and has commented on earlier drafts.  The chemicals sector has watched as other sectors such as automotive, aerospace, digital have captured the attention of GOV.UK and received the benefits of support. So, its about time they’ve got their act together.

By design, they have done this (as have other sectors) by making things simple.

First, The Facts…

  • The UK Chemical sector has a turnover of £60bnpa and employs 500,000 people.
  • It generates trade surplus of £5bnpa.
  • Europe matters – 50% of UK manufacturing goes to the EU. Germany is the UK’s most important trading partner.
  • The US is the UK’s most important non-EU trading partner.
  • The aggregate impact of the sector on the whole economy is £600bnpa

Snapshot of the Chemical and Process Industries and Its Impact (CLICK ON)

Snapshot of the Industry and its Impact

Where Chemistry Matters

The impact of chemistry and chemicals is used and felt every single day, by everyone.

It does this through direct chemical manufacture, process technology, product development and know-how in applications and formulation.

The roots of most, arguably all industries, rely on the products and processes used in the manufacturing of basic and speciality chemically-based products. If the sector vanished overnight it would take 4 weeks for all advanced economic activity, and our way of life, to cease. So, it’s a vibrant and critical sector to economic well-being and in playing a crucial, unparalleled part in responding to the challenge of climate change.

A few examples of where the chemical sectors impact is felt,

  • Aerospoace –  bio-based fueled, light weighting and composite materials.
  • Automotive – Lubricants for efficient power-trains, new power systems, H2, batteries, Fuels Cells, Light weighting, design for end of life.
  • Construction –  coating with extra functionality, energy and efficiency and thermal management.
  • Energy – Chemical formulations for enhanced oil recovery, carbon capture process technology
  • life Sciences – well being through nutraceuticals,
  • Food – agricultural efficiency, formulations
  • Chemical Production – atom efficiency and reduced waste.

The Issues

  • Political and environmental volatility and trade and regulation complexity is a constant.  The industry needs to work within this.
  • The global economic crisis hit the sector hard, from which it is still to recover.  But the much used global-mega trends mostly favour the industry: population growth and wealth increase such as energy and resource constraint (provided innovation happens), globalization etc.
  • The UK has a good chemicals infrastructure from which to build, including universities and innovation chain, though there has been a hollowing out of the supply chain as companies moved assets to low-cost economies.
  • There exists a talent gap: too few engineers and STEM qualified staff and a national culture that hinders science and manufacturing.

The Objective

By 2030, increase the gross value added (GVA) of the UK industry from by 50% £195bn to £300bn.  Yes, the chemical and process sector is a growth industry.

The Strategy

  1. Secure competitive energy feed stocks by exploiting unconventional shale gas.  In fact, we heard Secretary of State, Vince Cable MP  only last week remind us of the importance of New North Sea gas.
  2. This is of most interest to us –  Accelerate innovation, by providing supportive funding, and physical centres such as the new National Formulation Centre. Also, that all the elements of the national innovation system must be made to operate in unison – of the 8 technologies identified by GOV.UK, 6 are chemistry based.
  3. Rebuild hollowed-out industry supply chains.  Already, there are many examples of manufacturing being re-shored from once low-cost economies and to make supply chains more reliable

These three things would be enabled by a join industry/GOV.UK growth partnership and increased investment in the skill base and by enabling industry to take its lead in pulling through the right innovations for their rewards.

The relative contributions of these 3 elements are shown in the graphic, (CLICK ON)

Chemical Value Creation

Commentary

This is a return to benevolent industrial policy in that it supports an already successful and competitive sector, that could be more successful rather than propping up  failing industries as in the 1970s.

System Growth Consulting welcomes the creation of the National Formulation Centre.  Formulations and physical processing is disproportionally important. However, it is necessary but not sufficient to the economy has a whole.  To use a farming analogy, the crop will be bountiful if enough food, water, weeding and harvesting is done at the right right time all across the farm.

Of similar importance is the circular economy concepts;  making supply chains more sustainable is absolutely necessary to activity the sectors’ potential to impacting the climate change challenge.  EU climate emissions could either rise by 22% by 2030 if things stay on track, or, if technological and social innovations are used, reduce by 30% over the same period.

Call to Action

If your are in the chemical and process industries and its supply chain, this matters to you.  A key plank of this strategy is the role innovation must play in achieving the £300bn GVA target.

Think about this – and call us at System Growth Consulting to see how we can help you benefit.

Rob Munro

So, what do you think ?

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