Three crucial considerations
The chemicals sector is a bellwether for the manufacturing industry and the top three issues for us continue to be energy, raw materials and people.
There is a view that this weakness is going to endure until at least the middle of 2023. Our challenge now is threefold; retaining people, recruiting people and rewarding people. Retaining people means paying them more, and the average salary increase over the past 12 months has been about 5% to 6%, though many manufacturers have made one-off cost-of-living payments too. Retention is another issue because we have a relatively mature workforce and are facing a retirement cliff. The industry is well paid, with lots of opportunities for apprentices and graduates, but we need to tell our story better, and there’s certainly more we can do to improve diversity.
Certain parts of our industry are very exposed to energy volatility right now, even with the Energy Bill Relief Scheme. There’s a review going on right now to determine vulnerability and therefore eligibility for support after the end of March 2023, but I worry that the focus will be on domestic customers, at the expense of business. Turning to raw materials, our members had 19 consecutive months where input prices were rising faster than output prices. Simply put, manufacturers don’t feel they can pass on cost increases to customers at a time when demand is so weak.
Stephen Elliott Chief Executive at Chemical Industries Association
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